FOR OFFICIAL USE ONLY Report No: PAD3111 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF SDR 18.1 MILLION (US$ 25 MILLION EQUIVALENT) AND A PROPOSED GRANT FROM THE AFGHANISTAN RECONSTRUCTION TRUST FUND IN THE AMOUNT OF US$50 MILLION TO THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR A TACKLING AFGHANISTAN’S GOVERNMENT HRM AND INSTITUTIONAL REFORMS (TAGHIR) November 27, 2018 Governance Global Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Exchange Rate Effective Oct 31, 2018 Currency Unit = AFN AFN 75.15335 = US$ 1 US$ 1.38213 = SDR 1 FISCAL YEAR July 1 – June 30 (World Bank) December 22 – December 21 (Government of the Islamic Republic of Afghanistan) Regional Vice President: Hartwig Schafer Country Director: Shubham Chaudhuri Senior Global Practice Director: Deborah L. Wetzel Practice Manager: Ismaila B. Ceesay Task Team Leader(s): Yousif Mubarak Elmahdi, Atiqullah Ahmadzai ABBREVIATIONS AND ACRONYMS ACCRA Afghanistan Central Civil Registration Authority ACSI Afghanistan Civil Service Institute AEP Afghan Expatriate Program AFMIS Afghanistan Financial Management Information System AFN Afghan Afghani AGO Attorney General’s Office ALCS Afghanistan Living Conditions Survey ANPDF Afghanistan National Peace and Development Framework ARA Afghanistan Railway Authority ARAZI Afghanistan Independent Land Authority ARS Administrative Reform Secretariat (General Secretariat) ARTF Afghanistan Reconstruction Trust Fund ASA Advisory Services and Analytics CAA Civil Aviation Authority CBR Capacity Building for Results Facility CBRP Capacity Building for Results Programs CCAP Citizens’ Charter Afghanistan Project CPF Country Partnership Framework CSAB Civil Service Appointments Board CSCB Civil Service Complaints Board CSMD Civil Service Management Directorate DA Designated Account DAB Da Afghanistan Bank DLI Disbursement-Linked Indicator DPG Development Policy Grant EQRA Education Quality Reform in Afghanistan EFT Electronic Funds Transfer EU European Union FPIP Fiscal Performance Improvement Plan GD General Directorates GDP Gross Domestic Product GoIRA Government of the Islamic Republic of Afghanistan GRM Grievance Redress Mechanism GPs Global Practices GRS Grievance Redress Service HR Human Resources HRM Human Resource Management HRMIS Human Resource Management Information System IARCSC Independent Administrative Reform and Civil Service Commission IAD Internal Audit Department ICR Implementation Completion and Results Report IDA International Development Association IDLG Independent Directorate for Local Governance IP DPG Incentive Program Development Policy Grant IPRs Independent Procurement Reviews IUFR Interim Unaudited Financial Reports INTOSAI International Organisation of Supreme Audit Institutions IP Incentive Program IPSAS International Public Sector Accounting Standards LMA Line Ministries and Independent Agencies LEP Lateral Entry Program M&E Monitoring and Evaluation MAIL Ministry of Agriculture, Irrigation, and Livestock MCP Management Capacity Program MEC Independent Joint Anti-Corruption Monitoring and Evaluation Committee MEW Ministry of Energy and Water MoCI Ministry of Commerce and Industry MoCIT Ministry of Communication and Information Technology MoE Ministry of Education MoEc Ministry of Economy MoF Ministry of Finance MoHE Ministry of Higher Education MoLSAMD Ministry of Labor, Social Affairs, Martyrs and the Disabled MoMP Ministry of Mines and Petroleum MoPH Ministry of Public Health MoPW Ministry of Public Works MoT Ministry of Transport MoWA Ministry of Women’s Affairs NGOs Non-Governmental Organizations NPA National Procurement Authority NSIA National Statistics and Information Authority NTA National Technical Assistance P&G Pay and Grading PAISA Payments Automation and Integration of Salaries in Afghanistan PASA Public Administration Reform ASA PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PFEML Public Finance and Expenditure Management Law PFM Public Financial Management PIU Project Implementation Unit PPSD Project Procurement Strategy for Development PRAMS Procurement Risk Assessment and Management System SAO Supreme Audit Office SCD Systematic Country Diagnostic SDU Special Disbursement Unit SMG Senior Management Group SPDs Standard Procurement Documents SRBC State and Resilience Building Contract STEP Systematic Tracking of Exchanges in Procurement TA Technical Assistance TAGHIR Tackling Afghanistan’s Government HRM and Institutional Reforms TORs Terms of Reference TTLs Task Team Leaders UNDB United Nations Development Business USD United States Dollar WB World Bank The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) TABLE OF CONTENTS DATASHEET .............................................................................................................................1 I. STRATEGIC CONTEXT ...................................................................................................... 7 A. Country Context................................................................................................................................ 7 B. Sectoral and Institutional Context .................................................................................................... 7 C. Relevance to Higher Level Objectives............................................................................................... 9 II. PROJECT DESCRIPTION.................................................................................................... 9 A. Project Development Objective ....................................................................................................... 9 B. Project Components ....................................................................................................................... 10 C. Project Beneficiaries ....................................................................................................................... 11 D. Results Chain .................................................................................................................................. 11 E. Rationale for Bank Involvement and Role of Partners ................................................................... 12 F. Lessons Learned and Reflected in the Project Design .................................................................... 12 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 15 A. Institutional and Implementation Arrangements .......................................................................... 15 B. Results Monitoring and Evaluation Arrangements......................................................................... 16 C. Sustainability................................................................................................................................... 16 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 17 A. Technical, Economic and Financial Analysis ................................................................................... 17 B. Fiduciary.......................................................................................................................................... 19 C. Safeguards ...................................................................................................................................... 20 V. KEY RISKS ..................................................................................................................... 22 VI. RESULTS FRAMEWORK AND MONITORING ................................................................... 24 ANNEX 1: Detailed Sectoral and Institutional Context.................................................... 31 ANNEX 2: Detailed Project Description .......................................................................... 35 ANNEX 3: Implementation Arrangements and Support Plan .......................................... 42 ANNEX 4: Key Tables ..................................................................................................... 50 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Afghanistan Tackling Afghanistan’s Government HRM and Institutional Reforms Project ID Financing Instrument Environmental Assessment Category Investment Project P166978 C-Not Required Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) Expected Approval Date Expected Closing Date 18-Dec-2018 31-Dec-2021 Bank/IFC Collaboration No Proposed Development Objective(s) To strengthen the capacity of selected line ministries and agencies through merit-based recruitment of key positions, improved personnel management, and better HR planning. Page 1 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Components Component Name Cost (US$, millions) Component 1: Human Resource Capacity Injection 54,000,000.00 Component 2: Personnel and Payroll Management 15,000,000.00 Component 3: Support to Administrative Reforms 6,000,000.00 Organizations Borrower: Islamic Republic of Afghanistan Implementing Agency: Independent Administrative Reform and Civil Service Commission PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 75.00 Total Financing 75.00 of which IBRD/IDA 25.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 25.00 IDA Grant 25.00 Non-World Bank Group Financing Trust Funds 50.00 Afghanistan Reconstruction Trust Fund 50.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Total Amount Page 2 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) National PBA 0.00 25.00 25.00 Total 0.00 25.00 25.00 Expected Disbursements (in US$, Millions) WB Fiscal Year 2019 2020 2021 2022 Annual 14.00 32.00 24.00 5.00 Cumulative 14.00 46.00 70.00 75.00 INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Governance Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes country gaps identified through SCD and CPF b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes men's empowerment c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  High 2. Macroeconomic  High 3. Sector Strategies and Policies  Substantial Page 3 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) 4. Technical Design of Project or Program  Substantial 5. Institutional Capacity for Implementation and Sustainability  High 6. Fiduciary  High 7. Environment and Social  Low 8. Stakeholders  Substantial 9. Other  High 10. Overall  High COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✔ Performance Standards for Private Sector Activities OP/BP 4.03 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔ Page 4 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Legal Covenants Sections and Description For the purpose of ensuring the efficient and effective implementation of the Project, the Recipient shall vest in IARCSC the overall responsibility for Project implementation, and to that shall maintain, throughout the period of implementation of the Project, Project implementation structures with mandate, resources and composition satisfactory to the Association as set out in the Operations Manual. Sections and Description Without limitation to the foregoing, the Recipient shall: (a) ensure that the High Council for Rule of Law and Anti-Corruption shall be responsible for, inter alia, providing overall strategic oversight of the Project, including ensuring coordination across line ministries and agencies and linkage to broader public administration reform processes, reviewing and endorsement of key public administration outputs delivered under the Project, and approving line ministry and agency’s civil servant staffing allocations under the Project; (b) ensure that the Board of Commissioners of the IARCSC shall be responsible for, inter alia, steering, monitoring, and evaluation of Project implementation, including reviewing and approving the strategic direction and allocation of Project resources, overseeing the development and implementation of Project guidelines and plans, and adopting required decisions for better and timely Project implementation; (c) appoint, by not later than January 1, 2019, one member of the senior management of IARCSC as the Project director to be responsible for coordinating Project implementation; (d) engage, by not later than January 1, 2019, and thereafter maintain throughout the period of implementation of the Project, the services of an independent third-party verification agency, with qualifications and experience satisfactory to the Association and operating under terms of reference acceptable to the Association, to review and verify application of sound recruitment principles and selection criteria in the recruitment of new civil servant staff supported under the Project; (e) develop, by not later than January 1, 2019, and thereafter maintain throughout the period of implementation of the Project, a mechanism for: (i) reviewing, every six (6) months throughout the period of Project implementation, each line ministry or agency’s compliance with the performance benchmarks outlined in the Operations Manual; and (ii) reducing staffing allocation of a line ministry or an agency upon failure of such line agency or ministry to meet performance benchmarks outlined in item (i) above; (f) through IARCSC, maintain, throughout the period of the implementation of the Project, a grievance redress mechanism for the Project, with staffing and operating procedures acceptable to the Association, for monitoring and addressing the concerns of people affected by the Project and building public and stakeholder support for the Project; (g) through IARCSC, ensure that all new recruitments supported under Part 1 of the Project shall be completed by not later than June 30, 2020; Page 5 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) (h) ensure that: (i) the total number of Priority LMAs shall not exceed sixteen line ministries and independent agencies at any time during the period of Project implementation; and (ii) each Priority LMA (A) is selected in accordance with the eligibility criteria and procedures in line with the decision of the Recipient's Cabinet on November 7, 2018 as set out in the Operations Manual, and with prior written no-objection of the Association; and (B) has adopted its respective Strategic Staffing Plan, in a manner and substance acceptable to the Association, prior to the release of proceeds of the Financing to support such Priority LMA’s recruitment for the civil service positions allocated to it in accordance with the provisions of this Agreement and extension of its respective CBR Appointments for the second year; (i) through IARCSC carry out performance appraisal of all civil service positions covered under the Project on an annual basis; (j) ensure, under Part 1(a) of the Project, that: (i) any new appointment may be covered up to a maximum period of two (2) years from the date of the appointment; (ii) any appointment of the CBR Appointees may be covered up to one (1) year from the date on which its eligibility under the Project has been determined; and (iii) the coverage of the CBR Appointee may be extended for one additional year as measured from the date on which the initial one-year contract ends if such a position has been identified in the Strategic Staffing Plan subject to the satisfactory annual performance appraisal conducted pursuant to sub-paragraph (i) above; and (k) ensure, under Part 1(b) of the Project, that: (i) any new appointment may be covered up to one (1) year from the date of the appointment; (ii) any appointment of the CBR Appointees may be covered up to one (1) year from the date on which its eligibility under the Project has been determined; and (iii) the coverage of the new appointment or the appointment of the CBR Appointee may be extended for one additional year subject to the satisfactory annual performance appraisal conducted pursuant to sub-paragraph (i) above. Conditions Type Description Effectiveness The Recipient, through IARCSC, has completed an initial upfront review of existing CBR positions in a manner satisfactory to the Association. Type Description Effectiveness The Recipient has prepared and submitted to the Association the Operations Manual in form and substance satisfactory to the Association. Page 6 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) I. STRATEGIC CONTEXT A. Country Context 1. Substantial improvements in development outcomes have been observed in Afghanistan since 2001 , particularly in expanded access to water, sanitation and electricity, and improved outcomes in education and health. Moreover, following the economic shock of the withdrawal of international troops, the associated decline in aid and deterioration in security, the Afghan economy has regained momentum as reforms have been implemented and confidence restored. However, some gains are now being eroded and risks are arising from the prospects of political instability around the 2018-2019 elections. Business confidence is declining, and economic activity is slowing. Civilian casualties remain at unprecedented levels in 2017 (10,451 killed or wounded) and 2018 (8,050 in the first 9 months). Some areas of the country remain difficult to access because of insecurity. 2. Real GDP growth, after accelerating to 2.7 percent in 2017 from a low of 1.5 percent in 2015, is projected to moderate to 2.4 percent in 2018 amid growing political and security concerns around the parliamentary and presidential elections. Growth is expected to accelerate further to 3.7 percent by 2021 assuming a smooth political transition after the 2018-19 elections. With the population growing at 2.7 percent, however, the projected growth path will not be strong enough to improve incomes and livelihoods for most Afghans. 3. The poverty rate in Afghanistan has increased significantly: from 38 percent in 2011/12 to 55 percent in 2016/17 . It is expected to remain high in the medium-term, driven by weak labor demand (despite an increasing labor force) and security-related constraints on service delivery. Living standards are further threatened by the worsening drought conditions and displacement (more than 1.7 million Afghans are internally displaced, and more than 2 million have been returning to Afghanistan – mostly from Pakistan and Iran – since 2015). 4. Stronger growth is predicated on improvements in security, political stability, steady progress with reform, and sustained aid. Growth could also be enhanced by mobilizing investment in extractives, energy and connectivity, building and harnessing the skills of Afghanistan’s youth and women, and taking steps to realize the job creation potential of agriculture and agribusinesses. B. Sectoral and Institutional Context 5. The size of the Afghan civil service has almost doubled since 2002 ( See Annex 4, Table 1), putting a substantial burden on the national budget. Despite this growth, few civil servants have adequate educational qualifications, especially at the sub-national level. Political vulnerabilities of public sector recruitment processes, particularly for senior (Grades 1 and 2) appointments, contribute to this situation. These vulnerabilities have a particularly adverse effect on the recruitment of women to the civil service. Although lower availability1 of candidates is a factor, there is strong anecdotal evidence of qualified women being excluded from heavily male-dominated processes due to discrimination. This reflects in headcount data2 in which women account for approximately 22.6 percent of the civil service, and just 7.3 percent of senior positions (See Annex 4, Figure 2 and Figure 3). 1 According to the Afghanistan Living Conditions Survey (ALCS) of 2016-17, 4.8 percent of women aged 18-22 are enrolled in tertiary education, as compared to 14.9 percent of males. 2 National Statistics and Information Authority (NSIA) Statistical Yearbook, 1396 (2017) Page 7 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) 6. The establishment control system (Tashkeelat) is also a constraint on the efficient allocation of human resources, inhibiting prioritization of resources to policy objectives . The Tashkeel is largely the result of historical staffing patterns. Instead of restructuring the Tashkeel to meet evolving needs, the tendency has been to add more positions without eliminating unneeded ones, as political economy considerations make such reforms more challenging. As a result, the supply of staff is often not well aligned with the demand for the delivery of services, particularly in provinces. Compounding this problem is the continued use of fragmented and mostly manual payroll verification systems. It can be difficult to assess the actual grade and step of active civil servants 3 and to validate their identities. This increases vulnerability to misuse of public funds and adds to concerns regarding ‘ghost’ employees 4 (especially teachers) or inaccurate payments. Lack of a functional Human Resource Management Information System (HRMIS) also obstructs efforts to automate payroll in the Afghanistan Financial Management Information System (AFMIS). 7. The Pay and Grading (P&G) scales introduced in 2008 brought form and structure to the civil service, but also constrained career growth in technical and professional areas. As the system is differentiated only by grade and not based on technical skill, it has restricted the career progression of technical staff and, correspondingly, pay progression. Meanwhile, the real base pay of civil servants has significantly declined since 2008 given that the P&G salary scale is set in nominal terms and has never been adjusted. 5 8. Donor technical assistance has been integral to the stabilization of state capacity but is becoming increasingly difficult to sustain, whilst also creating many perverse incentives. In the context of weak public sector capacity, many donor-funded programs have hired non-civil service staff (known as a “parallel civil service”) to address short- term capacity gaps and support urgent development objectives. Approximately 20,141 National Technical Assistance (NTA) contracted staff and advisors are employed by government through on-budget donor financing and from its’ own development budget (See Annex 4, Table 4). An additional 8,000 advisors are estimated to be employed off- budget.6 NTA has often been used to directly administer core government functions rather than building long-term state capacity, limiting ownership and accountability of policy reform. With NTA salaries generally between 8-10 times higher than comparable grades in the core civil service7 (See Annex 4, Figure 5), this form of assistance has contributed to luring talented professionals away from civil service positions. Meanwhile, the drawdown of external aid8 places the sustainability of these NTA positions at increasing risk. 9. To address these challenges, the World Bank has been providing financing for salaries at NTA rates through the Capacity Building for Results (CBR) Facility (P123845) since 2012. CBR finances the hiring of key vacant or filled civil service positions requiring upgrade in responsibilities and/or performance. CBR appointees are permanent civil servants rather than ‘parallel’ capacity but are paid salaries on the higher NTA pay scale. To date, 1,053 appointees (of which 7.2 percent are women) have been recruited under CBR. This approach has been used to build accountability and policy ownership by government. However, CBR has encountered significant implementation challenges in the recruitment and placement process, while external financing of these positions has also created a 3 For example, there are significant divergences in the distribution of Ministry of Education (MoE) employees by grade between the IARCSC’s Tashkeel registry and the MoE’ s payroll data with the IARCSC record showing 83,064 MoE employees at Grade 6 compared to 114,813 in the MoE payroll data. 4 When the Afghanistan Reconstruction Trust Fund (ARTF) Supervisory Agent conducted physical verification of government employees over 25 provinces, about a quarter of the employees were absent from work on the day of the verification visits. Of these nearly a third turned out to be individuals who no longer worked for the government (deceased, retired, resigned, terminated). Payroll data also included many employees transferred to other posts. 5 For example, a nominal salary of AFN 12,000 in 2008 had an equivalent real value of AFN 8,426 in 2017 when using CPI to adjust for purchasing power. 6 There has been no systematic tracking of such data due also to the difficulty to monitor off budget NTA. 7 According to AFMIS data, on-budget NTA (equal to just 5 percent of the entire non-uniform civil service) cost (US$212 million) more than a quarter of the annual cost of the core civil service (US$800 million) in 2017 and roughly comparable to the total base salaries for teachers (US$256 million). 8 External aid has declined following the gradual military withdrawal of international forces, and it is expected to fall even further in the coming years, to about 25 percent of GDP by 2018. Afghanistan Systematic Country Diagnostic (SCD), World Bank, 2015. Page 8 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) sustainability challenge. The experience of CBR and its framing within the broader sectoral and institutional context is discussed throughout this document and has closely informed the design of the Tackling Afghanistan Government’s HRM and Institutional Reforms (TAGHIR) Project. Refer to Annex 1 for a detailed Sectoral and Institutional Context. C. Relevance to Higher Level Objectives 10. TAGHIR directly responds to the 2017-2021 Afghanistan National Peace and Development Framework (ANPDF) – including its development priority on “Building a responsive and effective public administration system” and the objective of “Establishing, maintaining and improving professionalization (of the civil service)”. The ANPDF highlights the need for Afghanistan to establish a civil service that is responsive to national development needs with balanced participation of Afghan men and women. The ANPDF notes that Afghanistan must overcome a legacy of patronage and corruption that has led to large numbers of unqualified staff in the civil service. Reforms must uproot deeply embedded practices and convince powerful political figures that the interest of Afghanistan is best served by building a professional civil service that creates more value than it consumes. 11. TAGHIR is aligned with Pillar 1 of the World Bank Group Afghanistan Country Partnership Framework (CPF) 2017- 20209 – Building Strong and Accountable Institutions. The overall objective of this pillar is to contribute to the government’s long-term goals of state building and self-reliance10 and tackling the underlying drivers of fragility by strengthening the institutional and regulatory framework for service delivery, planning, and fiscal and public financial management (PFM). TAGHIR is closely aligned with all three objectives within this pillar, namely: improved public financial management and fiscal self-reliance; improved performance of key Line Ministries and Independent Agencies (LMAs) and municipalities; and improved service delivery through enhanced citizen engagement. II. PROJECT DESCRIPTION A. Project Development Objective PDO Statement To strengthen the capacity of selected line ministries and agencies through merit-based recruitment of key positions, improved personnel management, and better HR planning. PDO Level Indicators 12. The Project Development Objective (PDO) Level Indicators for TAGHIR are as follows:  Civil servants appointed in priority LMAs following approved strategic staffing plan for targeted capacity ‘surge’.  Civil servants in priority LMAs transitioned from project to core government budget financing. o Civil servants in priority LMAs transitioned from project to core government budget financing as permanent professional cadres.  Priority LMAs that meet minimum benchmark targets related to reduction in number of NTAs.  HRMIS/Payroll rolled-out in at least 5 LMAs. 9 FY2017–20, Country Partnership Framework (Report No. 108727-AF, Oct 2, 2016). 10 “RealizingSelf-Reliance: Commitments to Reforms and Renewed Partnership,” Islamic Republic of Afghanistan, 2014. Page 9 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) B. Project Components 13. TAGHIR includes the following three mutually reinforcing components (Refer to Annex 2 for additional detail on each of the below Project Components): (a) Component 1: Human Resource Capacity Injection (US$54 million) . This component will provide financing for a capacity ‘surge’ to support the government in the delivery of its key policy priorities. The component will support a total of up to 1,500 new (TAGHIR) and ‘legacy’ (CBR) civil servant positions at any one time. These positions will be concentrated within 16 priority LMAs that have been pre-determined by the Independent Administrative Reform and Civil Service Commission (IARCSC) and endorsed by the Cabinet of the Government of the Islamic Republic of Afghanistan (GoIRA) based on their direct contribution to key higher-level government objectives. In addition to these 16 priority LMAs, 10 percent (150 positions) of the overall recruitment ceiling will be reserved to meet (small) emerging and ad hoc needs across government. Project financing of all appointments is restricted to a maximum period of two years, with the recruitment of new positions to be completed by no later than June 30, 2020. To ensure the strategic relevance of positions to higher-level government objectives, priority LMAs are required to develop strategic staffing plans for targeted capacity ‘surge’. These plans would identify targeted ‘pockets of effectiveness’ and correspondingly list positions (including ‘legacy’) to be prioritized by the project. Developed staffing plans require vetting by the IARCSC Board of Commissioners, Bank prior review, and final approval of the High Council for Rule of Law and Anti-Corruption ahead of initiation of new recruitment and renewal of conforming ‘legacy’ positions (for a second year) within each priority LMA. To strengthen the drive towards sustainability of Bank intervention support ahead of project exit, a financing strategy and partnership has been agreed with government for all positions to be supported by TAGHIR, in line with fiscal space considerations. This is synced with the establishment of new professional cadres11 which are intended to absorb ‘high caliber’ capacity within the core civil service and on core government budget going forward. The TAGHIR approach to human resource capacity injection has been socialized through clear upfront communications by IARCSC to all the stakeholders, including the Cabinet ministers, as well as those civil servants who would be affected by the transition from CBR to TAGHIR, including those whose ‘legacy’ positions would no longer be tied to salary top-ups with Bank financing. Current Bank financing of ‘legacy’ appointees’ salary top-ups is linked to CBR issued contracts that expire at project close (December 31, 2018) and that do not include extension clauses. (b) Component 2: Personnel and Payroll Management (US$15 million) 12. This component will strengthen establishment control and personnel management and contribute to more reliable payroll management. The key activity for which financing will be provided is building a functional HRMIS, grounded in business process review. The HRMIS will be integrated with biometric civil servant enrollment, payroll, AFMIS, and e-Payment Systems. This integration will provide substantial improvements in the control of positions, personnel numbers, and budgeted costs, while monitoring and limiting LMA-level discretion for allowances and overtime. Organizational structures would be linked to the functions of LMAs and would clearly identify the level of each position and job responsibilities. Through accurate gender-disaggregated headcount data, it will also help to facilitate better monitoring of gender targets to address staffing imbalances. 11 In March 2018, GoIRA amended the Civil Servants Law (2008) to allow for a blending of the position-based civil service model with a career-based system. This will allow for the recruitment in batches (at entry) of professional staff (cadres) in common service or functional sectors with specific rates of pay. In addition to external entrants, current NTAs and civil servants including CBR and TAGHIR appointees, will be eligible for entry into relevant cadre groups. 12 The component will be developed and implemented in close coordination with other Bank-supported projects in related areas, namely EQRA Project which supports biometric registration of the Ministry of Education staff on a personnel database which eventually should be linked to the HRMIS and Payments Automation and Integration of Salaries in Afghanistan (PAISA) Project which supports digital payments of civil servants. Page 10 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) (c) Component 3: Support to Administrative Reforms (US$6 million). This component is intended as a flexible technical assistance (TA) facility for IARCSC. The component will avail discrete, specialized and primarily international consultant led technical assistance activities in support of key administrative reforms on a just-in- time basis. Technical assistance activities are foreseen around functional reviews, establishment control and personnel management, pay structure and policy, cadres’ development, and strategic management of national and international TA. These will be planned in complement to and reinforcing of an ongoing World Bank Advisory Services and Analytics (ASA) program – the Public Administration Reform ASA (PASA, P164594). In addition, the component will finance the services of an independent third-party verification agency to validate the application on TAGHIR appointments of correct procedures and selection criteria within government systems. C. Project Beneficiaries 14. The primary project beneficiaries are the 16 priority LMAs that will receive staffing allocations under Component 1 of TAGHIR. These have been pre-determined by government (See Annex 2, Table 1) in line with their contribution to the key higher-level objectives that TAGHIR human resource capacity injection is intended to contribute towards. These selected LMAs are those with responsibility for: (a) revenue generation; (b) facilitation of private sector led growth; (c) delivery of basic education and primary health services; or (d) key cross-cutting (governance) reforms. Priority LMAs are also required to have completed P&G reforms. 15. Notwithstanding this prioritization of LMAs, all government institutions will benefit from TAGHIR. Implementation of HRMIS under Component 2 targets all LMAs both in Kabul and in provinces and will contribute to strengthened personnel and payroll management across government. The administrative reforms supported under Component 3, particularly as relates to establishment control and pay will impact across all government stakeholders. D. Results Chain Page 11 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) E. Rationale for Bank Involvement and Role of Partners 16. Government is committed to transition away from CBR’s projectized approach to full budget funding of these key civil service positions but is not able to do so immediately due to fiscal constraints. The Bank will therefore help the government in this transition period through TAGHIR for which an upfront financing strategy and partnership has been agreed in line with fiscal space considerations and underlying assumptions regarding LMAs to be prioritized. TAGHIR will provide an orderly transition (‘de-projectization’) for those ‘legacy’ appointees supported by CBR that the Government deems as priority positions to avoid a disruption in government operations with nearly half of the currently contracted CBR posts key Director General and Director level positions responsible for priority government policies and programs. Appointees are also often valuable counterparts to International Development Association (IDA) and Afghanistan Reconstruction Trust Fund (ARTF) financed projects. The Bank will also use the project to further strengthen strategic HR planning (via strategic staffing plans for targeted capacity ‘surge’) and merit-based recruitment processes. 17. The World Bank is well-positioned to help guide this transition, building on its engagement in public administration and civil service reforms in Afghanistan for over a decade. Recent assistance has included ASA and the CBR program. Previous projects include the Civil Service Capacity Building Project (P086288) which included both the Afghan Expatriate Program (AEP, 2004–10) and Lateral Entry Program (LEP, 2004–07), and the Management Capacity Program (MCP, P106170, 2007–11). These engagements have deepened the Bank’s knowledge of public administration issues and the political context. Today, the World Bank is the lead development partner in this area, shaping policy dialogue with the Government. TAGHIR design has built on the lessons learned from these prior engagements and will leverage the strong partnership built with IARCSC, the Ministry of Finance (MoF), and LMAs. TAGHIR also draws on lessons learned from other projects, especially in fragile and conflict-affected countries. 18. TAGHIR will be implemented in the context of a broader process of reform which will be supported by other instruments through a programmatic approach. The role of development partners is critical to this process, including through bilateral engagements in priority LMAs, multilateral sectoral programs, and policy-based financing. The latter includes the ARTF/IDA Incentive Program Development Policy Grant (IP DPG, P164882) and the European Union (EU) financed State and Resilience Building Contract (SRBC 2018-2021). The SRBC has been designed to incentivize key reforms targeted under TAGHIR, including around pay and payroll reform and improved appointment procedures. As part of this programmatic approach, these reforms are being informed through the PASA. Donors-at-large, responsible for financing of NTA positions, are critical to transitioning from these unsustainable salary payments. F. Lessons Learned and Reflected in the Project Design 19. The experience of the CBR Facility has directly informed the design and sustainability of TAGHIR. While the Implementation Completion and Results Report (ICR) for CBR will be drafted following project completion, several initial lessons can be derived: (a) Demand for reform programs cannot be taken for granted. CBR was heavily impacted by political economy factors. This was especially in initial years – resulting in project restructuring in 2016 – during which high level and sustained government leadership was not sufficient for a national program of CBR’s magnitude. Under the original design of CBR, LMAs were expected to develop and propose Capacity Building for Results Programs (CBRPs). As LMAs demonstrated progress in these plans, staffing support through CBR would be increased. However, as the project was implemented, LMA participation and commitment to reforms was inconsistent. The Page 12 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) CBRP plans themselves were excessively complex, particularly for LMAs where capacity was most needed. Going forward, stronger top-down prioritization would be required to strengthen the basic capacity of LMAs critical to delivery of key government priorities. TAGHIR is situated within a broader context of support, providing additional momentum for administrative reforms around ensuring processes of meritocratic and gender-balanced recruitment are in place alongside transitioning to a single P&G structure. These reforms are derived from the ANPDF and are firmly government owned and driven; with legal and administrative prerequisites already completed. Existing policy-based instruments provide the incentive structure for these reforms, the development of which is being guided through foundational analytics supported through the PASA, and that were not fully available to CBR. In complement to the PASA, TAGHIR’s third component provides technical assistance to support implementation of these processes. TAGHIR would work in tandem with sector-specific interventions in health such as the Afghanistan Sehatmandi Project (P160615) and in education with EQRA (P159378). These projects carry direct entry-points, leverage, and comparative advantage as pertains to LMA service delivery standards, systems, and business process improvements. With EQRA, TAGHIR holds critical linkages to the Disbursement-Linked Indicator (DLI) on registrations of Ministry of Education (MoE) staff, which should eventually be uploaded to the HRMIS. In turn, biometric enrollment into the HRMIS is a pre-requisite to initiating digital payments to civil servants under the proposed Payments Automation and Integration of Salaries in Afghanistan (PAISA) Project (P168266). In line with this approach, TAGHIR interventions are incrementally focused. The project prioritizes meritocratic human resource capacity injection – a key pre-requisite for the mentioned administrative reforms. Higher-level government agreement to an upfront financing strategy and partnership for project-supported capacity injection is expected to help bridge towards fiscal sustainability of both new and ‘legacy’ (CBR) positions. Development of the financing strategy and partnership involved top-down decision-making on LMAs to be supported. This pre- identification factors both LMA contribution to targeted higher-level reforms, and progress and commitment demonstrated under CBR. This is expected to generate considerable time savings, in addition to enhancing the strategic impact of appointments. (b) Reform plans need to be narrowly targeted, clear, and measurable. CBR supported LMAs in producing broad reform plans that included significant structural changes. These plans proved to be over-ambitious and most were not implemented. Performance management systems were excessively complex and were largely not used. Following restructuring, CBR became more narrowly focused on strategic interventions that support delivery of key government priorities where buy-in and ownership is clear. Going forward, simple performance metrics are required to more realistically monitor progress. TAGHIR will apply performance benchmarks to hold LMAs accountable for realizing their commitments to reforms. Through these benchmarks, IARCSC will bi-annually assess priority LMAs’ contribution towards broader public administration reforms, including a reduction in NTA numbers ( captured within the project’s Results Framework), as well as to LMA-specific reforms. Failure to meet benchmarks will result in a loss in percentage of an LMAs’ new staffing allocation and/or discontinuation of project financing of a percentage of its existing positions. Similarly, if an LMA does not complete development (and approval) of its strategic staffing plan for targeted capacity ‘surge’ by agreed dates, it will begin to lose a percentage of its initially allocated positions to the 10 percent pool. IARCSC will develop a mechanism for this purpose ahead of project effectiveness. Appointees’ performance evaluation will also be carried out by IARCSC in line with the regular performance cycle; the results of which will determine renewal for up to a non-extendable second year of project financing. This will Page 13 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) help to ensure that individual key performance indicators are well-linked to LMA-level results. Recruitment compliance (procedures, timelines, and targets around the recruitment of women) – on which IARCSC has already made significant progress through the introduction of non-subjective computerized testing, competency-based interviews and creative solutions to improve gender equity such as female-only positions – will also be measured. (c) A ‘de-projectized’ approach is required to strengthen sustainability. CBR and its predecessor projects fully recognized the sustainability challenges associated with external financing of human resource capacity injection. However, given the context at the time of their design, these projects prioritized support to immediate priorities in the government development agenda critical to short-term security and political transitions, the need for which outweighed longer-term sustainability factors. In doing so, these projects implicitly envisaged continued external financing beyond completion. While this materialized in the past, today, the overall aid environment has significantly shifted. Going forward, there is a need to transition away from external financing of capacity injection. This transition is necessary not only to address the unsustainable competition for public sector skills, but also to build ownership and accountability within key LMAs. TAGHIR adopts a ‘de-projectized’ approach to strengthen sustainability, in line with the World Bank’s new engagement strategy for Afghanistan. Staff salary costs will be integrated into the budget planning cycle and medium-term fiscal framework; initiating a path towards exiting from unsustainable human resource capacity injection and salary supplement programs. This is fully accounted for within the design of TAGHIR which has not assumed follow-on external financing. Backed by a higher-level financing strategy and partnership, TAGHIR puts in place measures to transition new capacity ‘surge’, as well as existing CBR positions (which include carry-overs from predecessor projects) to direct government financing. (d) Capacity injection should be concentrated. The current distribution of CBR appointees has resulted in a thin layer of capacity spread across 47 separate LMAs and across senior and middle-level management, and technical grades. Unfortunately, this approach has not resulted in a significant scale-up in capacity, particularly in cases where very few appointees are assigned to an LMA. One example is the Ministry of Higher Education (MoHE), a very large ministry with a total workforce of 12,073, in which CBR has only provided 10 staff (around 0.08 percent). There are many other smaller LMAs in which CBR has recruited less than five (often just one) positions. Going forward, a focus on senior positions within a select number of priority LMAs will provide greater impact. TAGHIR has pre-identified priority LMAs to be supported through human resource capacity injection. These LMAs have been determined in line with the key higher-level government objectives that TAGHIR capacity injection is intended to contribute towards. This capacity injection, through strategic staffing plans for targeted capacity ‘surge’, will be concentrated in ‘pockets of effectiveness’ within priority LMAs. This more focused approach extends to the grade structure of civil servant positions, with TAGHIR only financing SMG (Grades 1 and 2) and mid-level management (Grade 3) positions, but with the possibility to retain strategic Grade 4 ‘legacy’ positions within priority LMAs. This is not intended to minimize the importance of technical level positions but rather to maximize support to ‘key agent of change’ positions that lead on development, management and execution of key government policies and programs. Importantly, it is reflective of the limited scale and impact new recruitment within Grades 4 (72,795) and 5 (111,326) could have relative to the overall proportion of Tashkeel within these grades. TAGHIR, enabled through the Amended Civil Servants Law (2018), is also better positioned to achieve gender recruitment targets. This is an area on which CBR underperformed; only able to recruit 76 women (7.2%) out of 1,053 currently contracted civil servant positions. Page 14 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) (e) Third-party verification remains an important control tool. An independent HR firm was engaged under CBR to support the IARCSC in ensuring that proposed appointees are sufficiently qualified – a very important function for countering political pressure to hire specific candidates. However, this approach did not improve core IARCSC systems. This and other responsibilities overlapped with those of IARCSC, reducing transaction times and value for money of the firm which was also compromised by time-based contracting of the CBR HR Firm including during times of hiring freeze. Going forward, this support will be transitioned to focus exclusively and more comprehensively on verification. TAGHIR will advance procurement (ahead of implementation) of a third-party verification agency to independently validate the application (on TAGHIR appointments) of correct procedures and selection criteria within government systems13. Robust deliverable-based Terms of Reference (TORs) will be developed to ensure that the verification function extends beyond (check-box) process compliance which was the case with the CBR HR Firm. The new assignment will include carrying out comprehensive reference checks and verification of qualifications of final candidates prior to recommendation for selection. Criminal, credit and other background checks (as appropriate) are also to be carried out by the third-party verification agency. The agency, however, will not engage in systems’ reform, capacity development or any other civil service management functions which were included in the TORs of the CBR HR Firm and sidetracked from its core verification function, reducing efficiency. III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 20. Policy level oversight of TAGHIR will be institutionalized within the High Council for Rule of Law and Anti- Corruption under the Chairmanship of the President of the GoIRA. The High Council, comprised of the IARCSC Chairman, Minister of Finance and relevant Cabinet ministers, provides oversight of public administration reforms more broadly, including those to be supported by TAGHIR. 21. The project will be implemented by IARCSC — without the use of a Project Implementation Unit (PIU). The IARCSC Board of Commissioners, headed by the IARCSC Chairman and currently comprised of 9 Commissioners, will steer the project. Technical interventions will be carried out by the relevant IARCSC General Directorates in coordination with LMAs (where relevant). Per the Amended Civil Servants Law (2018), the Civil Service Appointments Board (CSAB) and Civil Service Complaints Board (CSCB) will respectively handle appointments and complaints related to Grades 1 and 2 appointments (Component 1), working closely with hiring LMAs. CSAB and CSCB will oversee direct LMA recruitment and any associated complaints related to Grade 3 positions. Independent validation of project-financed appointments will be carried out through a third-party verification agency (to be availed through Component 3). The HRMIS Department of the Civil Service Management Directorate (CSMD) will lead HRMIS/Payroll efforts (Component 2), in coordination with the Ministry of Communication and Information Technology (MoCIT) and other key stakeholders. CSMD will also coordinate technical assistance support for key administrative reforms (Component 3). Administration and fiduciary management of TAGHIR will be carried out by the relevant departments of the IARCSC’s 13In line with the Amended Civil Servants Law (2018), IARCSC retains responsibility for undertaking the recruitment of Grades 1 and 2 civil servant positions under the project, with respective priority LMAs responsible for Grade 3 recruitment (under overall IARCSC oversight). LMAs are also legally responsible for recruitment of Grades 4-8 civil servants, however, project financing will not support new appointments within these grades. Page 15 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) General Secretariat — Administrative Reform Secretariat (ARS). Refer to Annex 3 for additional detail on Implementation Arrangements, including Financial Management and Procurement Arrangements . B. Results Monitoring and Evaluation Arrangements 22. IARCSC will be responsible for overall monitoring and evaluation (M&E) of the project, in close coordination with LMAs. The third-party verification agency to be contracted by the project will be required to produce quarterly reports on recruitment compliance. More broadly in terms of project-supported civil servant appointments and appeals, the CSAB and CSCB each maintains databases on ongoing packages and their status. These databases feed into monthly project monitoring tables prepared and publicly disseminated by IARCSC. Monitoring templates will need to be modified to report on LMA performance benchmarks; newly introduced to assess aggregate impact of project appointments towards targeted higher-level government objectives. IARCSC carries primary responsibility for both overall public sector performance and performance management of SMG civil servants. It is therefore well- positioned to determine appropriate baselines and to carry out appointees’ annual performance appraisal and bi- annual LMA evaluations. In line with current practice for CBR, IARCSC will report project progress as part of its Annual Achievements’ Report. C. Sustainability 23. Implementation of the project interventions is situated within a broader process of administrative reforms supported by several reinforcing instruments, including policy-based financing . This programmatic approach puts in place foundations for stronger governance, enhanced government leadership, and development partner support of project interventions, whilst directly contributing to government’s goal of mobilizing an increasing proportion of aid on-budget. The IP DPG provides a strongly positive precedent, having anchored the successful amendment of the Civil Servants Law in 2018 (as a prior action) through which many current ongoing reforms are enabled. New benchmarks will continue to be identified in a similar way as part of this DPG series. 24. TAGHIR is designed to make key contributions to both fiscal and institutional self-reliance . This starts at the operational level through the ‘de-projectized’ implementation arrangement. TAGHIR is to be directly implemented by IARCSC without the use of a PIU. This approach is in line with GoIRA’s Self-Reliance Strategy. A transition plan towards such an arrangement has been put in place through CBR. In addition to transitioning PIU staffing into IARCSC’s Tashkeel, this plan also targets the reduction of NTAs financed by CBR for LMAs14. The emphasis on fiscal and institutional sustainability extends through each of the project’s components: (a) The project’s first component supports time-bound financing of human resource capacity injection. This is intended to provide a bridge towards core government financing of these positions through regular payroll; either in current form or as permanent professional cadres (as introduction of these groups matures). The agreement that the government will cover the P&G base pay is a strong interim step in this direction. (b) Personnel and payroll management efforts, supported under the project’s second component, can have long- lasting and broader impacts. A functional HRMIS/Payroll will be put in place, for which business process review will be carried out to optimize utility. Once rolled-out, this system is expected to generate considerable savings because of improved payroll control; helping to address issues around misuse of public funds, ad hoc 14Around 40% of these NTA (positioned in LMAs) have been rationalized to date, with the remaining 13 positions planned to be migrated to Tashkeel by no later than CBR project closure (December 31, 2018). Page 16 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) arrangements, and the prevalence of ‘ghost’ employees. HRMIS/Payroll can also contribute to overall civil service professionalization efforts—facilitating enhanced efficiency of the establishment control system, improved linkage of LMA organizational structures and functions, and monitoring of gender targets to address staffing imbalances. This would represent major advances in building Afghanistan’s capacity to manage its public sector. (c) The parallel engagement on pay policy, supported through the project’s third component, is intended to further increase the fiscal sustainability of human resource capacity injection. This will progress the introduction of cadres. It additionally targets the affordability of the current NTA Scale which applies to TAGHIR contracts as well as to NTAs. Strategic management of technical assistance is targeted as part of this component through the recording and monitoring of on and off-budget donor assistance. Meanwhile successful implementation of functional review recommendations, also supported under Component 3, is expected to enhance sustainability through improvements to the efficiency of LMAs’ structure. IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic and Financial Analysis 25. Overall, given its unique context, and without undergoing the requisite reforms, Afghanistan remains quite distant from achieving fiscal self-reliance, including fiscal sustainability of government wage-bill. The TAGHIR project is proposed to help sustain, better direct and enhance the aggregate impact of human resource capacity injection. In this sense, the project is itself a transition arrangement from previous interventions, whilst also making important foundational contributions to broader wage-bill sustainability efforts. These relate to strengthened establishment and payroll control, and the rationalization of parallel systems of delivery, and associated pay reforms. To mature, these efforts will require time, and consistent and consolidated commitment. 26. In its design, TAGHIR has benefited directly from the lessons of predecessor projects . The Bank’s leadership of these and other key related engagements in Afghanistan for over a decade has deepened its knowledge of public administration issues and of the political context. This experience and the built-up relationships with IARCSC, MoF and key government and development partners well-positions the Bank to contribute significant added-value to project implementation and associated policy dialogue. 27. This design has been the result of a series of technical and high-level workshops between IARCSC, MoF, and the Bank. These sessions used a specially-developed costing tool to project the costs associated with each of the components planned under TAGHIR. The tool was particularly intended to guide the development of alternative scenarios under the human resource capacity injection component (Component 1), including options to address the fiscal sustainability challenges associated with the transition from CBR. Guided by the costing tool, several considerations were weighed in the process of determining the final scenario. These included whether to prioritize: (a) fiscal sustainability vs. capacity surge: in selecting the overall recruitment ceiling; (b) breadth vs. focus: in determining the list of LMAs to be covered; (c) leadership vs. staff: in determining the eligibility of grades to be recruited; (d) affordability vs. incentives: in deciding to alter the rate of pay for appointees; and (e) project vs. operational budget: in financing P&G base pay and/or the top-up to NTA pay. 28. This process culminated in the determination of a recruitment ceiling of up to 1,500 civil servant positions. This ceiling was weighed based on realistic and affordable capacity enhancement requirements (and intended aggregate impacts). The ceiling will prioritize appointments in senior and mid-level management positions. These positions will Page 17 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) be restricted to 16 priority LMAs and to (small) emerging and ad hoc needs across government for which a 10 percent pool (150 positions) of the overall recruitment ceiling is reserved. Project financing of these appointments will be capped at a maximum period of two years. 29. Critically, it was agreed that government would directly finance the P&G from its budget. In the Afghan context, this represents a major advance toward fiscal self-reliance and sustainability of CBR and TAGHIR human resource capacity injection. A total of approximately US$64 million15 is committed towards salary payments over the three- year implementation period. In line with TAGHIR’s financing strategy and partnership, approximately US$10 million of this amount – constituting P&G base pay – will be directly financed by government on core payroll. Government will also take over P&G base pay for those ‘legacy’ positions not carried over into TAGHIR as result of LMA prioritization and upfront IARCSC CBR Position Review. This step on its own, however, will not guarantee sustainability. In this regard, it was agreed that the project-financed top-up – up to a maximum of US$54 million – would be strictly time limited (as outlined above). As financing for individual positions ends, appointees would be transitioned into regular payroll; at a minimum on P&G for which budget provisions are already in place starting from project effectiveness (including for ‘legacy’ positions not carried over into TAGHIR), or (where eligible) as permanent professional cadres with specific rates of pay (a cadre allowance on top of base P&G pay). The cost-effectiveness of this arrangement is expected to be more so enhanced through the directives of the upcoming pay policy which is examining the affordability of the current NTA Scale, applying equally to both CBR/TAGHIR contracts as to NTAs. 30. TAGHIR further increases the cost-benefit of its investments in human resource capacity injection by limiting the spread vertically (eligible grades) but also horizontally (number of LMAs). Close to US$49million (90 percent) of the US$64million committed to salary support will be channeled towards new and ‘legacy’ appointments in 16 priority LMAs. This roughly equates to a minimum of 84-8516 senior positions in each of these LMAs when accounting for the 150 positions out of the 1,500 ceiling that will be reserved for the 10 percent pool. 674 ‘legacy’ CBR positions are currently contracted within these priority LMAs. This does not include 224 positions under various stages of process (pre-contracting) and that will also be counted as part of ‘legacy’ and accordingly be filtered through both the upfront IARCSC CBR Position Review and LMA strategic staffing plans for targeted capacity ‘surge’. 31. This form of human resource capacity injection is considered the least-cost approach to developing capacity within the core structures of selected LMAs in the absence of the ability of regular P&G to attract and retain ‘higher caliber’ staff in key positions. While civil servants financed under the project are also paid on the NTA Scale, these positions are integrated into the core parts of the civil service structure. This form of human resource capacity injection does not therefore entail the accountability and policy ownership challenges associated with NTAs and other parallel technical assistance. Balancing capacity injection needs and government’s ability to gradually absorb (‘de-projectize’) financing by project exit (as part of a financing strategy and partnership), also promises a greater chance of sustainability as compared to the NTA approach. According to AFMIS data, this approach currently costs US$212 million i.e. around 20,000 NTAs cost more than a quarter of the annual cost of the entire civilian core civil service (US$800 million) of over 400,000 employees. When viewed in the country context, the costs associated with consolidating this form of parallel assistance far exceeds the fiscal costs of the project. 15 Assumptions are made in the costing tool around both exchange rate fluctuation and the average Step of CBR/TAGHIR appointees. The final project financing amount dedicated to Human Resource Capacity Injection is simulated based on these assumptions as well as additional amounts to mitigate for potential short-fall in salary financing of new (future) appointees if variations materialize. 16 Staffing allocations under the project are not expected to be equally distributed amongst LMAs. Quantification is therefore provided for illustrative purposes only. Page 18 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) 32. The project itself is expected to generate medium-term fiscal benefits for government, both directly and indirectly . Positions to be financed will lead on policy development, management, and execution. While difficult to quantify in monetary terms, these positions – to be strategically anchored within key ‘pockets of effectiveness’ – will have direct impact towards achievement of higher-level government objectives of improved revenue generation, and facilitation of private sector led growth. Capacity injection in LMAs, which is benchmarked against reduction in fiscally and institutionally unsustainable NTA numbers in these LMAs, will also help to directly generate medium term savings for government. These efforts will be buttressed through planned project support to the implementation of broader administrative reforms related to functional reviews, pay structure and policy, cadre development, and more strategic NTA management; all of which address and are expected to contribute to reductions in the size and cost of parallel structures. The roll-out of the HRMIS/Payroll, while entailing upfront project financing of around US$15 million, is expected to significantly enhance payroll controls and address the issue of ‘ghost’ employees that is currently estimated to cost the government at least US$8 million17 annually. 33. There is a clear rationale for public provision given that planned interventions are focused on strengthening the core business of government – public institutions and generating public services. The World Bank’s Approach to Public Sector Management 2011-2020 “Better Results from Public Sector Institutions” provides a strong rationale for supporting public management improvements (World Bank, 2012). The public sector is a major contributor to growth and social welfare in all countries. The quality of the services provided by the government, and the efficiency, effectiveness and accountability of the public-sector machinery are key determinants of economic performance and development outcomes. This is especially the case in Afghanistan where strengthening public administration efficiency and effectiveness is vital not only for service delivery and economic growth, but also to mitigate conflict pressures, build state legitimacy, and drive the ongoing process of state-building. B. Fiduciary (i) Financial Management: Project Financial Management arrangements rely on country systems, with overall responsibility resting with ARS. The Financial Management team currently working under the PIU of the CBR project will merge into the IARCSC’s core Tashkeel and will provide support to the Admin and Finance Directorate of ARS in the implementation of the TAGHIR project. Government budgeting processes will apply, and the project’s budget will be part of the Government’s annual budget. The accounting records will be maintained at the central level by the MoF in AFMIS based on payment requests (M16s), and the IARCSC will maintain detailed subsidiary records. The detailed Financial Management Manual for IDA and ARTF projects will provide a comprehensive internal control framework. The Internal Audit Department of ARS will conduct the audit of the project on a semi-annual basis. The internal audit reports will be submitted to the World Bank within two months of the close of the semester. The project’s financial statements will be prepared in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and audited by the Supreme Audit Office (SAO), in accordance with the International Organization of Supreme Audit Institutions (INTOSAI) auditing standards. The audited financial statements will be submitted to the World Bank within six months of the close of the financial year. There are no overdue audit reports, Interim Unaudited Financial Reports (IUFRs) or unsettled ineligible expenditure in respect of IARCSC. The Financial Management risk rating is Substantial. 17 Physical verification by the ARTF Supervisory Agent found 80 instances of ‘ghost’ employees amongst a sample of around 9,000 civil servants (close to 1%). While actual number of ‘ghost’ employees is expected to be much higher, Supervisory Agent findings have been used as a basis for estimation. Page 19 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) (ii) Procurement: Procurement will be carried out in accordance with the Bank’s Procurement Regulations for Borrowers for Goods, Works, Non-Consulting and Consulting Services and applicable to Investment Project Financing (IPF), hereinafter referred to as “Regulations”. The project will be subject to the Bank’s Anticorruption Guidelines, dated October 15, 2006, and revised in January 2011 and July 1, 2016. The World Bank’s Procurement Manual, Standard Procurement Documents (SPDs), Requests for Proposals and Forms of Consultant Contract will be used. Human resource capacity injection planned under Component 1 of the project will be subject to GoIRA civil servant recruitment processes and procedures, in line with the Amended Civil Servants Law (2018). A third-party verification agency, to be contracted through project financing, will provide independent ex-ante validation of project-financed appointments; while the Bank Project Task Team will provide periodic ex-post review of completed recruitment files. In terms of capacity, adequate procurement staffing is in place and is in the process of being moved from the current CBR PIU into the Procurement Directorate of ARS. Procurement staff have attended the necessary procurement training under CBR. The project will implement the Systematic Tracking of Exchanges in Procurement (STEP): A World Bank planning and tracking system which provides data on procurement activities and establishes benchmarks. Based on the initial procurement capacity assessment, the threshold of High Risk Implementing Agency will apply for the prior review of the contracts under the project. A Project Procurement Strategy for Development (PPSD) outlining the oversight arrangements for procurement processes as well as contract execution has been prepared. C. Safeguards (i) Environmental Safeguards: No environmental safeguards are triggered. The project does not include any physical works and will therefore not have any environmental impacts. (ii) Social Safeguards: The project will support IARCSC's capacity on and systems for functional Grievance Redress Mechanisms (GRM). While IARCSC adopted a project-specific GRM for CBR this will not be maintained for TAGHIR. Instead project complaints’ handling will be mainstreamed (‘de-projectized’) within IARCSC’s existing GRMs, but with separate reporting for better monitoring and efficiency purposes. IARCSC currently maintains four GRMs related to: (a) civil servant recruitment complaints; (b) corruption (and fiduciary) complaints; (c) legal complaints; and (d) sexual harassment complaints. These will be utilized for the purposes of TAGHIR as will weekly public hearings, wherein the IARCSC Chairman and Commissioners directly receive complaints. In relation to recruitment complaints, handled by the IARCSC CSCB, CBR and external partner support has helped to improve processes and procedures over the last year. Recruitment compliance under TAGHIR is planned to be further supported through a third-party verification agency responsible for validating the application of correct procedures and selection criteria within government systems. IARCSC-at-large – through a legally binding procedure – is further responsible for addressing grievances of all civil servants that cannot be dealt with at LMA level or through the IARCSC’s CSCB. Overall, IARCSC’s grievance redress performance has substantially improved over the last year, with IARCSC now handling over 8,000 complaints each year. IARCSC publishes an Annual Achievements’ Report which documents complaints received and handled, as well as the current status of IARCSC-supported activities. This annual report includes updates on CBR and will do the same for TAGHIR. In terms of other citizen engagement measures, IARCSC reaches out the general public through social media, and through forums with civil society, media, and religious leaders. These measures will be utilized for the purposes of TAGHIR. (iii) Other Safeguards: None of the World Bank’s safeguard policies are triggered. Transition of project-supported Page 20 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) appointees – all of whom are permanent civil servants – will not entail loss of employment but graduation to direct government financing of their positions. Reappointment through the project of positions held by incumbents will only be considered in the event of underperformance and/or need for significant upgrade in Job Description, in line with the Civil Servants Law (No. 951 of 2008; Amended in March 2018). Incumbents are unrestricted in re-applying within the meritocratic process overseen by the IARCSC CSAB, validated by a third-party verification agency, and periodically ex-post reviewed by the Bank; with recourse for formal appeal to the IARCSC CSCB in the case of dispute. In the event of non-selection of incumbent, separation provisions will apply, as stipulated in the Civil Servants Law and Labor Law (No. 35 of 2007). Consequently, limited potential negative social impacts are expected; for which requisite mitigation through internal government regulations, processes, and structures preside and supersede. The project therefore has a safeguards risk rating of “Category C”. As an additional pre-emptive mitigation, the TAGHIR approach to human resource capacity injection has been socialized across government through clear upfront communications by IARCSC. The new approach (including the list of priority LMAs and criteria used to determine them) was endorsed by the President of the GoIRA. Presidential approval of the TAGHIR approach was followed by circulation of an official memorandum to all LMAs and a presentation of TAGHIR to Cabinet by the IARCSC Chairman. Timely upfront communications were also made by IARCSC to those civil servants who would be affected by the transition from CBR to TAGHIR, especially those whose ‘legacy’ positions would no longer be tied to salary top-ups with Bank financing. Current Bank financing of ‘legacy’ appointees’ salary top-ups is linked to CBR issued contracts that expire at project close (December 31, 2018) and that do not include extension clauses. (iv) Gender: CBR has only been able to recruit 76 women (7.2%) out of a total of 1,053 civil servant positions contracted to date. Building on new provisions introduced within the Amended Civil Servants Law – which lessons from CBR and consultations around the TAGHIR design helped to inform – TAGHIR will include renewed emphasis on increasing the number of women in project-supported positions, as well as across the civil service more broadly, especially in senior positions. TAGHIR introduces a gender quota of 10 percent for women in civil service recruitments, thereby aiming to increase women’s employment share from its current level of 7.2 percent. The gender quota provides a mechanism to circumvent some of the existing gender discrimination in recruitment processes. Supportive legislation, administrative and awareness raising/capacity building measures related to affirmative action and anti-harassment and contributing to attracting and retaining female professionals have also been enacted by IARCSC ( Refer to Annex 2 for more details on these awareness raising/capacity building measures). HRMIS/Payroll, once rolled-out, will additionally improve the monitoring of female civil service recruitment, thereby helping to facilitate the attainment of gender targets. (v) Climate Co-Benefits. The Climate Co-Benefits Assessment Team assessed the project at Concept Stage and determined that there were no Co-Benefits that the project can help address. (vi) Grievance Redress Mechanisms: Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints Page 21 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. V. KEY RISKS 34. The overall risk rating for the project is “High”. Risks in five areas are most pronounced. These relate to: (a) political and governance risks; (b) macroeconomic risks; (c) institutional capacity for implementation and sustainability risks; (d) fiduciary risks; and (e) Other risks (security). (a) Political and Governance: There are multiple sources of political and governance risk in Afghanistan. Power- sharing arrangements under the National Unity Government are a continued source of tension and potential future instability. Current political arrangements and the possibility of a change of government at the next Presidential election planned in April 2019 pose risks to achievement of the PDO in terms of potential changes in the level of political support for planned interventions or delaying TAGHIR implementation. Based on the experience of CBR, a pre and post-election civil servant hiring freeze is a particular risk which IARCSC will seek to mitigate through a Presidential exemption for TAGHIR recruitments. In addition, the project’s 18-month recruitment window (up to June 30, 2020) allows IARCSC and LMAs more than the minimum required time to process new appointments. As further mitigation, a proposed event of suspension is included in the project’s Financing Agreement, namely, the Civil Servants Law has been amended, suspended, abrogated, repealed or waived so as to materially and adversely affect the implementation of the project to ensure that an appropriate legal framework is maintained for the carrying out of the project. Political considerations could also manifest in a reversal of the decision to support only pre-identified LMAs, as was the case following the restructuring of CBR. Upfront higher-level GoIRA endorsement of the list of priority LMAs, and IARCSC consultations that socialized the new way in which positions are assigned will help to ensure understanding and buy-in from all LMAs across government. Political and governance risks are further reduced by the broad support of the planned reforms, derived from the ANPDF, being firmly government owned and driven. Ongoing policy dialogue under the IP DPG and other policy-based financing instruments such as the EU SRBC will also significantly help to maintain commitment. (b) Macroeconomic: Afghanistan’s macroeconomic outlook is subject to substantial risks given the uncertain and limited nature of both domestic and external fiscal resources, and the likely continued high level of security expenditures. These risks, should they materialize, could adversely impact government’s commitment to assume financing of project-supported civil servant positions by project exit. In this regard, a gradual transition based on an incremental financing strategy and partnership has been agreed with government, in full consideration of fiscal space. As financing for individual positions ends, appointees would be transitioned into regular payroll; at a minimum on P&G for which budget provisions are already in place starting from project effectiveness (including for ‘legacy’ positions not carried over into TAGHIR), or (where eligible) as permanent professional cadres with specific rates of pay. Other project interventions, particularly related to payroll management and NTA rationalization, are also expected to contribute to additional fiscal space but these efforts will require time to mature. More broadly, GoIRA has embarked on ambitious revenue mobilization and expenditure management Page 22 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) reforms through its Fiscal Performance Improvement Plan (FPIP) with the support of policy dialogue under the ARTF/IDA IP DPG. Improved fiscal and public financial management capacity should alleviate effects of possible macroeconomic shocks. (c) Institutional Capacity for Implementation and Sustainability: The current limited capacity of the public administration may constrain government ability to conduct ambitious civil service reforms. In recognition of this risk and directly reflecting lessons learned from both predecessor projects and similar projects in other parts of the world, especially in fragile and conflict-affected countries, TAGHIR is incrementally focused. The project prioritizes meritocratic human resource capacity injection – a key pre-requisite for eventual broader administrative reforms and bridge towards more fiscally sustainable professionalization efforts. While there is a risk that recruitments move more slowly than planned, as was the case during early CBR implementation, the performance of the project since 2016 belies this. Improvements in both the pace and quality of recruitments have continued as IARCSC has buttressed processes and its internal capacity and systems to manage these. Pre- identification of LMAs (and of ‘pockets of effectiveness’ within LMAs) is also expected to generate considerable time savings, in addition to enhancing the strategic impact of recruitments. Additional risks relate to the nature of civil service and administrative reforms; these are intrinsically prone to the prevalent ecosystem of political economy. TAGHIR’s support to reforms around meritocratic and gender-balanced recruitment, pay, and parallel structures, are those where legal and administrative prerequisites have already been completed. However, there is a risk that interventions planned within the project’s third component (e.g. functional reviews) will move at uneven pace depending on the capacity and commitment of LMAs. Situating TAGHIR within broader policy-based financing is expected to help mitigate this risk; by providing additional incentives and momentum. Sectoral projects and programs will also be leveraged to facilitate entry-points (‘de-bottlenecking’). (d) Fiduciary: Fiduciary risks are posed by the transition away from the use of PIUs. TAGHIR will be implemented by IARCSC using country systems. This is a necessary step to promote self-reliance, in terms of both fiscal sustainability and core institutional capacity. Financial Management and Procurement Assessments have been undertaken by the Bank as part of project preparation. These highlight potential risks arising from gaps in these systems (including low civil service capacity) and provide recommendations on their mitigation. To pre-emptively manage fiduciary risks, IARCSC is transitioning key CBR PIU fiduciary staff to Tashkeel positions. (e) Other (Security): Continued insurgent activity represents another source of risk to achievement of the PDO. Deterioration in the security situation could divert government capacity and policy attention from planned interventions or undermine their expected impacts. As civil service reform and public administration effectiveness are significantly affected by ongoing conflict, it is critical that government decisions factor in this dimension. On the Bank side, previous experience has shown that the Bank can successfully monitor and support . implementation of programs even with a limited in-country presence. Page 23 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) VI. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Afghanistan Tackling Afghanistan’s Government HRM and Institutional Reforms Project Development Objectives(s) To strengthen the capacity of selected line ministries and agencies through merit-based recruitment of key positions, improved personnel management, and better HR planning. Project Development Objective Indicators RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline End Target Strengthened capacity of selected LMAs through merit-based recruitment of key positions. Civil servants appointed in priority LMAs following approved 0.00 100.00 strategic staffing plan for targeted capacity 'surge'. (Percentage) Strengthened capacity of selected LMAs through better HR planning. HRMIS/Payroll rolled-out in at least 5 LMAs. (Number) 0.00 5.00 Strengthened capacity of selected LMAs through improved personnel management. Civil servants in priority LMAs transitioned from project to core 0.00 100.00 government budget financing. (Percentage) Civil servants in priority LMAs transitioned from project to core government budget financing as permanent professional 0.00 20.00 cadres. (Percentage) Priority LMAs that meet minimum benchmark targets related to 0.00 11.00 Page 24 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline End Target reduction in number of NTAs. (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline End Target Component 1: Human Resource Capacity Injection Civil servant positions held by women. (Percentage) 7.50 10.00 Civil servants that meet minimum individual performance 0.00 75.00 targets, as determined in Job Desciptions. (Percentage) Female civil servants that meet minimum individual performance targets, as determined in Job Desciptions. 0.00 75.00 (Percentage) Component 2: Personnel and Payroll Management Priority HRMIS functionalities established. (Yes/No) No Yes Component 3: Support to Administrative Reforms Database prepared on existing parallel structures, that captures No Yes information on donor assistance, including off-budget. (Yes/No) IO Table SPACE UL Table SPACE Page 25 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection This indicator measures the proportion of TAGHIR civil servant appointments that IARCSC CSAB (for are mapped to targeted IARCSC Grades 1 and 2) and Civil servants appointed in priority LMAs ‘pockets of effectiveness’ as Monthly Monitoring LMA (for Grades 3 and IARCSC following approved strategic staffing plan identified in LMA strategic Tables 4) recruitment for targeted capacity 'surge'. staffing plans for targeted databases capacity surge. These include those 'legacy' positions that are vetted again in the staffing plan. IARCSC HRMIS IARCSC HRMIS This indicator measures HRMIS/Payroll rolled-out in at least 5 Annual Implementati Department Status IARCSC progress towards roll-out of LMAs. on Progress Updates HRMIS/Payroll in LMAs. Report This indicator measures the proportion of TAGHIR civil servant appointees in priority LMAs that are IARCSC Civil servants in priority LMAs transitioned transitioned into regular Annual and Bi-Annual Bi-Annual Monitoring IARCSC from project to core government budget payroll; at a minimum on Budget Documents Tables financing. P&G rates. Achievement of this target is required to reach 100% at project effectiveness and be maintained at this level Page 26 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) throughout and beyond project completion. Budget provisions should also be in place (starting from project effectiveness) to transition financing of P&G pay of ‘legacy’ appointees not carried over into TAGHIR into regular payroll. This indicator measures the proportion of TAGHIR civil servant appointees in priority LMAs that are transitioned into regular payroll as permanent professional cadres with specific rates of pay (a cadre allowance on top of base P&G pay). The target for this Civil servants in priority LMAs IARCSC indicator is set at 20 percent Annual and Bi-Annual transitioned from project to core Bi-Annual Monitoring IARCSC by project closing. This Budget Documents government budget financing as Tables reflects that not all permanent professional cadres. appointees will be eligible for entry into a professional cadre group, the establishment of which will follow a gradual timeline. Many new TAGHIR appointments will also be receiving project financing up to the closing date of December 31, 2021 and Page 27 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) would only therefore transition into the relevant cadre group thereafter. This indicator measures priority LMA achievement of agreed NTA reduction IARCSC Priority LMAs that meet minimum IARCSC CSMD NTA targets. The indicator is Bi-annual CSMD NTA IARCSC benchmark targets related to reduction in Progress Reports directly relevant to those 11 Database number of NTAs. priority LMAs receiving new staffing allocations under TAGHIR. ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection This indicator measures the proportion of civil servant positions recruited into priority LMAs that are held by women. This includes 'legacy' appointees carried- IARCSC over from CBR. The target IARCSC CSAB and LMA Monthly Monitoring IARCSC Civil servant positions held by women. for this indicator is set at 10 recruitment databases Tables percent by project closing but this is considered a minimum benchmark. LMA quotas and creative solutions such as female- only positions will be adopted to promote an Page 28 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) increase in female participation. This indicator measures the contribution of TAGHIR appointees to LMA-level IARCSC (for Grades 1 results, as determined by IARCSC and 2) and LMA (for Civil servants that meet minimum achievement of key Consolidated Annual Grades 3 and 4) IARCSC individual performance targets, as performance indicators in Performance Performance determined in Job Desciptions. Job Descriptions. The Report Appraisal Reports baseline value for this indicator is set at 0 as CBR did not build-in individual performance metrics. This sub-indicator measures the contribution of female TAGHIR appointees to LMA- IARCSC (for Grades 1 level results, as determined IARCSC Female civil servants that meet and 2) and LMA (for by achievement of key Consolidated minimum individual performance Annual Grades 3 and 4) IARCSC performance indicators in Performance targets, as determined in Job Performance Job Descriptions. The Report Desciptions. Appraisal Reports baseline value for this indicator is set at 0 as CBR did not build-in individual performance metrics. This indicator measures progress towards IARCSC establishing and enabling HRMIS IARCSC HRMIS priority HRMIS Annual Implementati Department Status IARCSC Priority HRMIS functionalities established. functionalities through on Progress Updates which enforcement of Report reforms can be monitored and ensuring changes to Page 29 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) rates of pay and the Tashkeel are implemented in practice. These functionalities include: Civil Service Workforce Management; Payroll Management; and Position and Establishment Management. This indicator measures progress towards consolidating information IARCSC Database prepared on existing parallel and data on existing parallel IARCSC CSMD NTA Bi-annual CSMD NTA IARCSC structures, that captures information on structures which is pre- Progress Reports Database donor assistance, including off-budget. requisite to development of a phase-out plan to support institutional self-reliance in the medium term. ME IO Table SPACE Page 30 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) ANNEX 1: Detailed Sectoral and Institutional Context COUNTRY: Afghanistan Tackling Afghanistan’s Government HRM and Institutional Reforms 1. State capacity is central to Afghanistan’s Self-Reliance agenda; however, significant challenges must be overcome. The non-security sector grew from approximately 200,000 personnel in 2002 to 400,439 employees in 2017 (See Annex 4, Table 1). This growth has primarily been the result of teacher recruitment which accounted for 82 percent of the net change over this period. Notwithstanding the growth in teacher numbers, the ratio of civil servants to population, at 1.29%, is lower in Afghanistan than in neighboring countries. However, the cost of wages and salaries of the government grew to 43.7 percent of total expenditure by 2018 mid-year review (44.2 percent in initial budget), limiting fiscal space for operational and capital expenditures. This is primarily due to the dominance of the security sector in the government budget despite capital spending for the sector being financed off-budget by external partners. The security sector accounted for 42 percent of budget expenditure in 2017 – 23 percent of Gross Domestic Product (GDP). This is among the highest as a proportion of government expenditure in the world and leaves limited fiscal space for the government to maintain and expand a competitive and well-paid public administration responsive to increasing service delivery needs. 2. Despite the growth in the size of the public administration over the last 15 years, few civil servants have adequate educational qualifications, especially at the sub-national level. Development budget execution rates are low for key service delivery LMAs, reflecting low capacity in budgeting, procurement, and management. The average level of education in the civil service remains low, limiting effectiveness. For example, in the Ministry of Agriculture, Irrigation and Livestock (MAIL), 42% of staff hold only a primary education. MAIL is not an exception; low levels of education and capacity affect all ministries. IARCSC has recently made significant improvements to recruitment processes which had traditionally failed to a large extent to facilitate the recruitment of more qualified and competent civil servants. While the legal framework provides for open and competitive recruitment with posts required to be tied to objective and merit-based criteria, recruitment processes have historically been convoluted and vulnerable to political intervention. In this regard, the Independent Joint Anti-Corruption Monitoring and Evaluation Committee (MEC) asserts that 100 percent of teacher recruitment is believed to be politicized. Senior appointments (Grades 1 and 2) across the civil service are particularly subject to political bargaining. The redress mechanism of appeals has similarly been open to political influence and can be cumbersome. IARCSC has similarly been making process and transparency improvements in this area. 3. Recruitment processes have also largely failed to overcome traditional barriers constraining recruitment of women to the civil service. Although lower availability18 of candidates is a factor, there is strong anecdotal evidence of qualified female candidates being excluded from heavily male-dominated processes due to discrimination. This often discourages women from applying to public sector positions, especially at the senior level. To mitigate these traditional gender barriers, the original Civil Servants Law of 2008 ( revised in March 2018) introduced a clause barring gender-based preference in any form. This inadvertently prohibited the potential for creative solutions to increase female employment. The impact of these various constraining factors reflects in headcount data 19 in which women account for approximately 22.6 percent of the civil service workforce, and just 7.3 percent of senior positions ( See 18 According to the Afghanistan Living Conditions Survey (ALCS) of 2016-17, 4.8 percent of women aged 18-22 are enrolled in tertiary education, as compared to 14.9 percent of males. 19 National Statistics and Information Authority (NSIA) Statistical Yearbook, 1396 (2017) Page 31 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Annex 4, Figure 2). However, participation levels vary significantly between LMAs (See Annex 4, Figure 3). For instance, while women are generally underrepresented, they comprise the majority of the Ministry of Women’s Affairs (MoWA, 57 percent) and the Ministry of Labor, Social Affairs, Martyrs, and the Disabled (MoLSAMD, 62 percent). More broadly, 26.8 percent of females participate in the labor force as compared to 80 percent of men. Within this small employed population, only 10.3 percent of female labor is in salaried positions20. This suggests that female participation in the civil service, despite its low level, continues to remain an important anchor for formal sector salaried employment. 4. The establishment control system (Tashkeelat) is also a constraint on the efficient allocation of human resources, inhibiting prioritization of resources to policy objectives. The Tashkeel is largely the result of historical staffing patterns. Instead of restructuring the Tashkeel to meet evolving needs, the tendency has been to add more positions without eliminating unneeded ones, as political economy considerations make such reforms more challenging. As a result, the supply of staff is often not well aligned with the demand for the delivery of services, particularly in provinces. Compounding this problem is the continued use of fragmented and mostly manual payroll verification systems. It can be difficult to assess the actual grade and step of active civil servants 21 and to validate their identities, increasing vulnerability to misuse of public funds and adding to concerns regarding ‘ghost’ employees 22 (especially teachers) or inaccurate payments. The lack of a functional HRMIS also continues to obstruct efforts to automate payroll in the AFMIS. 5. The P&G scales introduced in 2008 brought form and structure to the civil service, but also constrained career growth in technical and professional areas. As the system is differentiated only by grade and not based on technical skill, it has restricted the career progression of technical staff and, correspondingly, pay progression. Professionals such as engineers or doctors struggle to move beyond the mid-point of the grade scale regardless of seniority or ability, since upper grades are restricted to management staff. Civil service pay is also affected by limited flexibility. Salaries cannot be adjusted for special circumstances, such as areas with higher levels of insecurity. 6. Meanwhile, the real base pay of civil servants has significantly declined since 2008 . The P&G salary scale set in nominal terms has never been adjusted. 23 While Cabinet has the authority to increase rates of pay, there is currently no central entity responsible for regularly reviewing salaries, identifying costs, and proposing changes within the medium-term fiscal framework. While the median public sector pay is higher than some non-governmental sectors, 39.8 percent of households headed by a salaried public sector worker fell below the poverty line according to the 2016-17 Afghanistan Living Conditions Survey (ALCS). 7. To offset declining real base pay, special allowances, overtime and other ad hoc arrangements have been used inconsistently across ministries. Aggregate expenditure on civilian salaries and allowances in 2016 was approximately AFN 65.84 billion (US$969 million), of which allowances and overtime were approximately 36.3 percent. The complexity of these arrangements can lead to abuse and weaken oversight. This is particularly the case 20 ALCS, 2016-17 21 For example, there are significant divergences in the distribution of MoE employees by grade between the IARCSC’s Tashkeel registry and the MoE’ s payroll data with the IARCSC record showing 83,064 MoE employees at Grade 6 compared to 114,813 in the MoE payroll data. 22 When the ARTF Supervisory Agent conducted physical verification of government employees over 25 provinces, about a quarter of the employees were absent from work on the day of the verification visits. Of these nearly a third should not have been on the government payroll at all as these turned out to be individuals who no longer worked for the government (deceased, retired, resigned, terminated). The payroll data also included many employees who had been transferred to other posts. 23 For example, a nominal salary of AFN 12,000 in 2008 had an equivalent real value of only AFN 8,426 in 2017 when using year-on-year CPI to adjust for purchasing power. Page 32 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) with overtime arrangements that are largely unsupervised and have for example been used extensively within the MoE (AFN 3.6 billion or approximately US$53 million), including to pay contracted teachers. This dysfunctional system has also led to increased wage compression between pay grades. In the education sector, it has led to calls for seniority-based progression to higher pay grades, undermining the position-based principles of P&G reform. Under the Super Skills allowance scheme, approximately 4,270 civil servants currently receive salaries of anywhere between US$300 and US$1500 per month. This scheme is unregulated and has been highly vulnerable to abuse and conducive to patronage. 8. Donor technical assistance has been integral to the stabilization of state capacity but is becoming increasingly difficult to sustain, whilst also creating many perverse incentives. In the context of weak public sector capacity, many donor-funded programs have hired non-civil service staff (known as a “parallel civil service”) to address short- term capacity gaps and support urgent development objectives. Approximately 20,141 NTA contracted staff and advisors are employed by government through on-budget donor financing and from its’ own development budget (See Annex 4, Table 4). An additional 8,000 advisors are estimated to be employed off-budget.24 NTA has often been used to directly administer core government functions rather than building long-term state capacity, limiting ownership and accountability of policy reform. With NTA salaries generally between 8-10 times higher than comparable grades in the core civil service25 (See Annex 4, Figure 5), this form of assistance has contributed to keeping talented staff beyond the reach of the public sector. According to AFMIS data, on-budget NTA (equal to just 5 percent of the entire non-uniform civil service) cost (US$212 million) more than a quarter of the annual cost of the core civil service (US$800 million) in 2017 and roughly comparable to the total base salaries for teachers (US$256 million). The drawdown of external aid26 therefore places the sustainability of these NTA positions at increasing risk. 9. Moreover, while P&G is the predominant scale for the core civil service and the NTA for donor-funded staff, over ten different pay scales are also in use across the public sector . This not only undermines the principle of equal pay for equal work but contributes to fragmentation and lack of transparency of the overall civil service that makes effective management and control of the wage bill difficult. There is a growing trend of over-reliance on international consulting assignments. The value of this support is questionable with international consultancy fees in Afghanistan amongst the highest in the world, yet many assignments are utilized for routine activities rather than being strategically assigned or responsive to critical gap areas requiring specialized international expertise. 10. To address these challenges, the World Bank has been providing financing for salaries at NTA rates through the CBR Facility since 2012. CBR finances the hiring of key vacant or filled civil service positions requiring upgrade in responsibilities and/or performance. CBR appointees are permanent civil servants rather than ‘parallel’ capacity but are paid salaries on the higher NTA pay scale. This approach has been used to build accountability and policy ownership by government. However, CBR has encountered significant implementation challenges in the recruitment and placement process, while external financing of these positions has also created a sustainability challenge. 11. The CBR Facility provides valuable lessons for the implementation and sustainability of TAGHIR. CBR was envisaged as a six-year US$350 million operation (2012-17) to build institutional capacity, develop human resources, and train civil servants. It sought to recruit and finance up to 2,400 qualified and competent civil servants. However, the project 24 There has been no systematic tracking of such data due also to the difficulty to monitor off budget NTA. 25 According to AFMIS data, on-budget NTA (equal to just 5 percent of the entire non-uniform civil service) cost (US$212 million) more than a quarter of the annual cost of the core civil service (US$800 million) in 2017 and roughly comparable to the total base salaries for teachers (US$256 million). 26 External aid has declined following the gradual military withdrawal of international forces, and it is expected to fall even further in the coming years, to about 25 percent of GDP by 2018. Afghanistan Systematic Country Diagnostic (SCD), World Bank, 2015. Page 33 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) faced significant implementation challenges and by 2016, had disbursed only US$46 million and recruited only 128 civil servants; 82 of whom were rolled over from the predecessor MCP. The factors affecting performance included unclear recruitment processes, a temporary freeze on hiring, weak ministry commitment to reform plans, and limited IARCSC capacity to oversee mass recruitment. To address these challenges, the project was restructured in 2016. The Project Steering Committee was reestablished, reporting directly to the President and the Cabinet of the GoIRA. The number of participating LMAs was reduced, LMAs were given more responsibility in recruitment, and training was linked to reform plans. The overall budget was reduced to US$100 million. Following this restructuring, performance improved significantly, and the pace of staff recruitment accelerated. The project was extended to the end of 2018, with the projected disbursement by the project closing at US$77 million and a total of 1,053 appointees currently in place. 12. Within this context, TAGHIR provides an opportunity to put in place a more systematic and sustainable approach to building state capacity through investments in improved personnel and payroll management . The scope of project- supported human resource capacity injection will be narrowly focused on a limited number of LMAs that are implementing policy priorities. Appointments will be strictly time limited, providing a transitionary bridge towards the establishment of new professional cadres which are intended to absorb ‘high caliber’ capacity within the core civil service and on core government budget going forward. Cadre development which TAGHIR will support through directed technical assistance, is expected to provide a strong incentive for the adoption of other concurrent reform interventions supported under the project. Within the available fiscal envelope, wage increases (associated with entry into cadre groups) would only be applied based on examinations (skills-testing), biometric enrollment in HRMIS, and elimination of NTA positions within groups receiving pay increases. Many current NTAs are expected to be eligible for entry into relevant cadre groups. This is tied together through the Presidential directive on functional reviews which the project will also support; recommendations of which are expected to enhance sustainability through improvements to the efficiency of LMAs’ structure. Page 34 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) ANNEX 2: Detailed Project Description COUNTRY: Afghanistan Tackling Afghanistan’s Government HRM and Institutional Reforms 1. TAGHIR includes the following three mutually reinforcing components: (a) Component 1: Human Resource Capacity Injection (US$54 million). Human resource capacity injection will be concentrated within 16 priority LMAs (See Table 1 below). Priority LMAs are divided into three categories: (i) Category I: 11 LMAs that will recruit new and retain ‘legacy’ appointees; (ii) Category II: 3 LMAs that will only retain ‘legacy’ appointees; and (iii) Category III: 2 LMAs that will retain ‘legacy’ appointees but may reallocate these positions and potentially recruit new positions in line with the recommendations of functional reviews, once completed. 10 percent (150 positions) of the overall recruitment ceiling (1,500) will be reserved to meet (small) emerging and ad hoc needs outside of priority LMAs. This pool is likely to be utilized towards retaining ‘legacy’ and availing new appointees within key common function positions across government. It can also be used to address high priority staffing needs across non-priority LMAs including potentially within the: the National Statistics and Information Authority (NSIA); the Afghanistan Railway Authority (ARA); and the SAO. Table 1: Priority TAGHIR LMAs Priority TAGHIR LMAs Contribution towards: Ministry of Finance (MoF) Revenue Generation Ministry of Transport (MoT) Revenue Generation Ministry of Communications and Information Revenue Generation Technology (MoCIT) Afghanistan Civil Aviation Authority (CAA) Revenue Generation Ministry of Mines and Petroleum (MoMP) Revenue Generation Category Ministry of Agriculture, Irrigation and Livestock Facilitation of Private Sector led Growth (MAIL) I Ministry of Public Works (MoPW) Facilitation of Private Sector led Growth Ministry of Urban Development and Housing Facilitation of Private Sector led Growth (MUDH) Ministry of Energy and Water (MEW) Facilitation of Private Sector led Growth Independent Administrative Reform and Civil Key Cross-cutting (Governance) Reforms Service Commission (IARCSC) Attorney General’s Office (AGO) Key Cross-cutting (Governance) Reforms Ministry of Commerce and Industry (MoCI) Facilitation of Private Sector led Growth Category Ministry of Economy (MoEc) Key Cross-cutting (Governance) Reforms II Independent Directorate of Local Governance Key Cross-cutting (Governance) Reforms (IDLG) Ministry of Education (MoE) Delivery of Basic Education Services Category Ministry of Public Health (MoPH) Delivery of Primary Health Services III Page 35 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) New appointments within priority LMAs will focus only on civil servant positions in the Senior Management Group (SMG) (Grades 1 and 2) and mid-level management (Grade 3). Within the group of ‘legacy’ appointments, selected technical level positions (Grade 4) may also be retained if determined by IARCSC criteria as strategic to policy implementation. IARCSC will carry out an upfront review of the strategic relevance of existing CBR positions across all LMAs. The CBR Position Review is intended to inform the list of ‘legacy’ positions to be carried over into TAGHIR with the findings of the review due by December 31, 2018 (the closing date of CBR). While project financing of the vast majority of ‘legacy’ CBR positions is expected to be discontinued upfront through the IARCSC review, some of these positions may be eligible for carry-over into TAGHIR as part of the 10 percent pool (as indicated above). These include all positions held by women. The upfront review will also recommend discontinuation of financing of CBR positions within priority LMAs that fall outside of the ‘key agent of change’ cohort targeted by TAGHIR, such as Chief of Staff (positions held by women would not be targeted). Overall, the IARCSC review is foreseen to reduce a minimum of 420 of the 1,053 positions currently contracted CBR positions. This will help to facilitate more focused and higher magnitude capacity ‘surge’ within priority LMAs. Performance evaluation of retained appointees will also be carried out on an annual basis by IARCSC, the results of which will determine renewal for up to a non-extendable second year of project financing. This will help to ensure that individual key performance indicators are well-linked to LMA-level results. Before being able to recruit new positions, each priority LMA will be required to develop a strategic staffing plan for targeted capacity ‘surge’. This plan would identify targeted ‘pockets of effectiveness’ and corresponding list of positions that TAGHIR capacity ‘surge’ is to prioritize. These could include those ‘legacy’ positions that LMAs wish to retain for TAGHIR financing beyond 2019. Those ‘legacy’ positions that are not justified as part of ‘pockets of effectiveness’ would be discontinued by December 31, 2019. Initiation of new recruitment and renewal of conforming ‘legacy’ positions (for a second year) within each priority LMA will be conditioned against approval (by the High Council for Rule of Law and Anti-Corruption) of its staffing plan. Approved staffing plans will form the basis for Bank No Objection of positions to be announced. TAGHIR will apply performance benchmarks (See Box 1 below) to hold priority LMAs accountable for realizing their commitments to reforms. Through these benchmarks, IARCSC will bi-annually assess priority LMAs’ contribution towards broader public administration reforms, as well as to LMA-specific reforms. Failure to meet these will result in a loss in percentage of an LMAs’ new staffing allocation and/or discontinuation of project financing of a percentage of its existing positions. Similarly, if an LMA does not complete development (and approval) of its strategic staffing plan for targeted capacity ‘surge’ by agreed dates, it will begin to lose a percentage of its initially allocated positions to the 10 percent pool. IARCSC will develop a mechanism for this purpose ahead of project effectiveness. Page 36 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Box 1: TAGHIR Performance Benchmarks IARCSC will lay out two sets of benchmarks for each priority LMA supported with human resource capacity injection within TAGHIR. The first set would include three general benchmarks necessary for effective human resources management in the civil service. These benchmarks are:  Decrease in NTA (for instance: 25% annual decrease bringing the final number to only 25% of the baseline as of January 2019) by the end of 3rd year (December 2021).  Implementation of HRMIS in the respective entity (for instance: registering 33% of total LMA staff in the HRMIS annually and completing registration by December 2021).  A Tashkeel recruitment plan that has reliable and verifiable information on vacant positions (grade and department wise) both at central and provincial levels, recruitment timelines, gender specific targets and renewal. The second set would include LMA-specific benchmarks relevant to the criteria based on which the respective LMA is being assigned to the priority list. The set of benchmarks to be assigned to priority LMAs (as relevant) will include:  Revenue improvement benchmark for the five largest revenue generating LMAs.  Development budget execution benchmark in the entities with the largest development budget allocations.  Processes simplification and services standards related benchmarks in the service delivery entities.  Benchmarks related to the enabling environment for private sector led growth such as business licenses, property registration and indicators related to doing business.  Benchmarks related to the completion of functional reviews for MoE and MoPH. Compliance with recruitment procedures, timelines, and targets around the recruitment of women will also be measured. On the latter, TAGHIR will implement creative solutions (enabled by the amended Civil Servants Law), including a hard quota of 10 percent of all new recruitments for each priority LMA. This is intended to help TAGHIR ensure that at least 10 percent or aggregate 150 positions of all newly recruited and retained positions under the project are held by women. This target accounts for current labor market availability of the senior and middle-level management positions targeted by TAGHIR. Achievement of this target would constitute an overall improvement of around 97 percent over the current CBR achievement of 76 positions (7.2 percent). Failure to meet this 10 percent quota will result in loss of these reserved positions from the LMAs’ overall TAGHIR staffing allocation. Before applying this sanction, female-only positions, additional 5 percent scoring, and relaxing of qualification criteria will be considered as options should LMA achievement be lagging within the first 6 months of the 18-month TAGHIR recruitment window. To further support achievement of the 10 percent target, the project will conduct awareness raising campaigns targeted to female professionals – more broadly and within LMAs – to encourage them to apply by informing them about the quota and building upon their confidence on the transparency of the process. In this regard, it has been agreed with IARCSC that TAGHIR positions for which any female candidate is long-listed, will include at least one women within the presiding selection panel. To help retain women, IARCSC will advocate with LMAs to improve the enabling environment including infrastructure Page 37 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) (gender segregated washrooms, prayer rooms, upgrading day care, etc.) and to fully operationalize anti- harassment guidelines. CBR ‘legacy’ positions held by women will also not be cut as part of the CBR Position Review. Exit interviews will be conducted by IARCSC with those women who leave senior positions. This will help government to better understand the challenges women within senior public sector positions face. To strengthen the drive towards sustainability of Bank intervention support ahead of project exit, a financing strategy and partnership has been agreed with government for all positions to be supported by TAGHIR, in line with fiscal space considerations. As a starting point, base P&G pay for all new and retained (as well as non- retained) positions has been factored into the budget for FY1398 (2019) and will continue to be factored into subsequent budget cycles. TAGHIR will provide financing of the salary top-up from P&G to the NTA Scale. Financing for top-ups will be limited to a maximum of two years for each appointment. As a result, some two- year appointments will come to end before completion of the three-year project. Within these two-year contracts, annual renewal will be subject to performance appraisal by IARCSC (in line with the regular performance cycle). As financing for positions ends, it is expected that appointees will transition into regular payroll as either LMA-based staff (on P&G) or permanent professional cadre groups (where eligible) for which cadre-specific rates of pay would apply. These rates of pay (distinct allowances on top of P&G) are being determined as part of ongoing development of a new Civil Service Wages, Salaries, and Allowances Policy. The TAGHIR approach to human resource capacity injection has been socialized through clear upfront communications by IARCSC to all the stakeholders, including the Cabinet ministers, as well as those civil servants who would be affected by the transition from CBR to TAGHIR, including those whose ‘legacy’ positions would no longer be tied to salary top-ups with Bank financing. Current Bank financing of ‘legacy’ appointees’ salary top- ups is linked to CBR issued contracts that expire at project close (December 31, 2018) and that do not include extension clauses. (b) Component 2: Personnel and Payroll Management (US$15 million) . The IARCSC has already begun work on the development of an HRMIS. A previous project developed an HRMIS in 42 LMAs in Kabul and in eight provinces with records for over 70,000 personnel and retirees. However, this deployment faced numerous challenges, including: a lack of capabilities to centralize and upgrade to a nationwide system; manual data transfer from LMAs to the main server at IARCSC through non-secured media such as external USB devices; system integrity and security vulnerabilities; and lack of integration with payroll. To address these issues, the IARCSC engaged MoCIT to develop a bespoke web-based HRMIS solution. The web-based system development began in early 2017 with two modules developed thus far: Organizational Structure and the Personnel Information. For the modules already developed, there is a need to ensure adopted technology is up-to-date; security features are strengthened; user requirements are properly defined; system design and business process review are documented; and testing/quality assurance to ascertain suitability and readiness for deployment and integration with payroll, AFMIS, and e-Payment Systems, including consideration of inputs from the MoF Treasury Department – a key business user of the system upon roll-out. IARCSC plans to carry out these tasks by December 31, 2018. The starting point for support planned under this component is therefore an adequacy testing of the overall ‘fit for purpose’ (readiness, functionality, and integrate-ability) of the bespoke web-based HRMIS solution. Investments in the current system and its roll-out by the project or deciding to shift to alternatives such as an off-the-shelf solution will be predicated on the findings of this testing process. On this basis, TAGHIR will provide financing towards: Page 38 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) (i) Development of further required functionalities: This involves establishing and enabling priority functionalities through which enforcement of reforms can be monitored and ensuring any changes to rates of pay and the Tashkeel are tracked in practice. These functionalities are to be directly adopted during the project life-time through the introduction of modules related to: Civil Service Workforce Management; Payroll Management; and Position and Establishment Management. A foundational platform will also be established for further expanding HRMIS functionalities to better support overall Civil Service Management through future modules related to: Salary Planning; Civil Service Reform; Capacity Management; and Payments and Benefits Management as well as any customized modules to meet particular needs of individual LMAs. The project will assist the design of the overall HRMIS to include provisions for the introduction of these additional modules which are not expected to be fully enabled during the life of the project. The full range of features to be considered by the HRMIS include:  Civil Service Workforce Management: Manpower planning and budgeting, recruitment management, and employee grouping in line with government’s employee classifications, performance appraisal, dispute management and retention processes.  Payroll Management: All compensation elements of civil servants in line with established laws of the entity.  Position and Establishment Management: Civil service establishment register, civil service grading, civil service position management (generic and special positions in civil service), and pay steps and salary transitioning.  Salary Planning: Budgeting and forecasting for employee compensation, enforcement of budget control in employee pay processing, vacancies management and applicable deductions.  Civil Service Reform: Vendor management, civil service structural reviews and policy directives, and system flexibility to handle currently unforeseen civil service reforms.  Capacity Management: Civil service training, succession planning, retirements notifications, pay and performance review. This module would particularly help to improve the targeting of training activities towards female civil servants who have fewer opportunities outside the organization; helping to build their confidence.  Payments and Benefits Management: Pay cycle management, pay grouping management, civil service insurance management such as group insurance, self-insurance, bonuses, loan management, and gratuity management, expenditure management, pay vouchering and Check releases, and Electronic Funds Transfer (EFT). (ii) Integration of functionalities: The integration of HRMIS/Payroll with AFMIS is currently being assessed with the technical support of the Bank. At present, each LMA calculates its payroll and sends a payment request to MoF. MoF’s payroll verification module captures the consolidated salary payment without recording the details of each individual salary payment. Lump sum amounts are allocated to LMAs for salary payments through AFMIS. Integration of these functions would allow for centralized recording of all salary payments for civil servants, linked with AFMIS and banking systems for automation and verification of salary payments. IARCSC also plans for the biometric registration of civil servants in the HRMIS. Biometric kits have been procured and enrollment is planned to begin in late 2018 or early 2019. Biometric enrollment is also a key starting point for piloting digital payments to civil servants planned under the upcoming Payment Page 39 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Automation and Integration of Salaries in Afghanistan (PAISA) Project (P168266). A working group composed of all key stakeholders – IARCSC, MoF, MoE (responsible for around 66% of the civil service workforce), Afghanistan Central Civil Registration Authority (ACCRA) and others – has been established to enable set-up of an integrated platform with high level political support, and to help lead towards a realistic action plan/roadmap for the whole government (with specific projects, activities, required inputs, and expected results, together with cost and duration estimates). (iii) Implementation and Roll-out Support: This would involve implementation support to roll out the system to the provinces outside of Kabul, as well as technical facilities to support the system roll-out across government e.g. servers, computers, printers, scanners, and internet connection. It will also involve technical support to maintain the system, including training of requisite staff. (c) Component 3: Support to Administrative Reforms (US$6 million). ‘Just-in-time’ technical assistance activities under this component are planned in complement to and reinforcing of the ongoing World Bank PASA. These are expected to include: (i) Functional Reviews: At the request of the President of the GoIRA, the IARCSC is supporting priority LMAs to carry out functional reviews to clarify ministry mandates, core functions, lines of accountability, organizational structures and staffing. The reviews are intended to address vertical sector issues and horizontal institutional strengthening issues such as human resource management, procurement and financial management, and to enhance LMA alignment with policy priorities in sectors, especially in education and health. These will also serve as plans to rationalize duplicative parallel structures that substitute for core functions. The PASA is currently supporting carry-out of such reviews within the IARCSC, Ministry of Public Health (MoPH), and the Afghanistan Independent Land Authority (ARAZI). In consideration of the time-sensitivity of these reviews and the work-load and comparative advantages involved, this component will support functional reviews in LMAs not covered by PASA, primarily those supported with ‘surge’ capacity in Component 1, building synergy within the project. (ii) Establishment Control and Personnel Management: This component will support the development of a clearer regulatory framework for establishment control and the allocation of civil servant positions across the government. Currently, annual ceilings for all budgetary entities are set by the budgeting committee led by MoF (with IARCSC and the MoEc as members) based on the historical trends and budget limitations. However, this exercise is not grounded in any government policy, strategic directives, or multi-year projections guiding fair allocation among the center and provinces, among different provinces, and among districts within provinces. The component is also expected to support strengthening of processes and systems for recruitment and recruitment appeals, and performance management. (iii) Pay Structure and Policy: A new Civil Service Wages, Salaries, and Allowances Policy is required to reinforce civil service professionalization reforms, balancing the need to attract competent professions to the civil service while ensuring fiscal sustainability. The pay policy is expected to set specific rates of pay for specialist cadre groups and to include interim measures to improve the affordability of NTA salary scales, as well as to rationalize and/or harmonize multiple civil service pay scales, and ad hoc special allowances. At the instruction of the President of GoIRA, a draft policy is currently under development by a technical committee led by the IARCSC and MoF. This component will facilitate external technical assistance to progressively move forward (roll-out) implementation of emerging policy recommendations. In particular, it will avail expert Page 40 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) consultants to support the work of a Civil Service Pay Commission to oversee civilian compensation. This body would bring together key stakeholders e.g. MoF, IARCSC, the Ministry of Economy (MoEc), and MoLSAMD to regularly review and ensure standardization of civilian compensation periodically (as part of the budget process), based on the available fiscal space and informed by consultations across the public sector. (iv) Cadres’ Development: While the legal framework for cadres’ development is now in place, a policy on establishing harmonized and standardized structures for these groups is required. This would put in place a career framework for these groups, outlining mechanisms for on-boarding, training, rotation, and promotion. Specific regulations will also be required for each cadre group to be established. This component will support these cadres’ development efforts. (v) Strategic Management of National and International Technical Assistance: This key activity under the component will further assist government to more selectivity and strategically use technical assistance in the near term. It will help to develop a phase-out plan (sequenced with the cadres’ development timeline) to support institutional self-reliance. This process requires consolidation of information and data on existing parallel structures, as well as recording and monitoring on- and off-budget donor assistance. As a first step, technical assistance availed through this component will directly support this effort. Page 41 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) ANNEX 3: Implementation Arrangements and Support Plan COUNTRY: Afghanistan Tackling Afghanistan’s Government HRM and Institutional Reforms Implementation Arrangements 1. Strategic oversight of TAGHIR will be institutionalized within the High Council for Rule of Law and Anti-Corruption. This will help to ensure the sustainability, ownership and enhance the weight and broader relevance of project decision making. Specifically, in terms of TAGHIR, the High Council will: (a) ensure coordination across LMAs and linkage to broader public administration reform processes; (b) provide review and endorsement of key public administration outputs produced under the project; and (c) approve LMA civil servant staffing allocations and strategic staffing plans for targeted capacity ‘surge’. 2. The project will be implemented by the IARCSC under the overall oversight of its Board of Commissioners. The Board of Commissioners will: (a) review and approve the strategic direction and allocation of project resources; (b) oversee the development and implementation of relevant project guidelines and plans; (c) adopt required decisions for better and timely project implementation and de-bottlenecking; and (d) monitor and evaluate project implementation and expected results and provide regular progress reports to the High Council for Rule of Law and Anti-Corruption. A designated Project Director to be responsible for coordinating project implementation will be appointed from within the senior management of IARCSC and will report to the Board of Commissioners. 3. IARCSC will directly implement project interventions through its core functions – without the use of a PIU. IARCSC is well positioned to assume this responsibility given its built-up experience in managing CBR under which a transition plan to a ‘no-PIU’ arrangement is already in process. IARCSC is well structured and staffed 27 and has further strengthened and consolidated capacities in line with the key recommendations of a functional and organization review completed in December 2017. IARCSC’s key General Directorates (GD) are: the Civil Service Management Directorate (CMD), the Afghanistan Civil Service Institute (ACSI), and the Administrative Reform Secretariat (ARS). IARCSC also houses the independent Civil Service Appointments Board (CSAB) and Civil Service Complaints Board (CSCB). As part of the transition to a ‘no-PIU’ arrangement, CBR PIU HR specialists have been transferred to CSAB and now report directly to the CSAB Commissioners as opposed to the project. 4. Administration and fiduciary management of TAGHIR will be carried out by the relevant departments of ARS . ARS will be responsible for project financial management, procurement and contract management, human resources, M&E and communications. ARS directorates have previously been assessed by the Bank. Through its engagement in CBR, Management Capacity Program (MCP), Lateral Entry Program (LEP) and Afghan Expatriate Program (AEP), it has prior experience of handling World Bank funded/administered projects. CBR PIU Procurement and Administration staff are currently in the process of being moved into ARS core Tashkeel, as part of the transition to a ‘no-PIU’ arrangement, buttressing its capacity to directly manage shared services and fiduciary compliance for TAGHIR. 27IARCSC has a highly-educated workforce of approximately 724 active staff. This workforce includes 234 Grade 7 and 8 non-professional employees, 481 professionals in Grades 1 to 6, and 10 Out of Grade higher officials. The professional workforce is highly educated, with 84% holding a bachelor’s degree or above. Females are better represented in the professional and Out of Grade positions (21%) than in non-professional grades (6.4%). Page 42 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Financial Management 1. Afghanistan has a unitary government with a centralized public financial management architecture. The Public Finance and Expenditure Management Law 2005 (PFEML) sets out the responsibilities, authorities, and obligations related to the management of public finance in the country. The MoF has a dominant role in preparing and managing the annual government budget. It is also responsible for treasury functions, government financial reporting, and tax policy and administration. At the provincial level, Mustofiats (MoF representatives) perform treasury functions. The central line ministries have the mandate of countrywide public service delivery. Accordingly, they prepare and, after approval of the Parliament, execute their annual budgets. The central line ministries are also responsible for maintaining an internal audit function as required by the PFEML. The Supreme Audit Office Law 2013 requires the Auditor General to conduct the annual audit of the government accounts. 2. The recent Public Expenditure and Financial Accountability (PEFA) Assessment (July 2018) noted that the government maintained aggregate fiscal discipline by controlling expenditure within available resources . However, budget credibility remains poor and the overall control environment is weak. MoF uses the AFMIS to manage budget execution that includes budget control over spending. The expenditure authorities are centralized, which creates spending rigidities and hampers innovations in service delivery. The service delivery units have virtually no role in budget planning and execution. Over the last three fiscal years, approximately half of the development budget remained unspent. Although the prescribed internal control framework is reasonably detailed, compliance is varied. The control systems for payroll are insufficient and represent a major weakness for a significant proportion of expenditure. The asset and liability management and monitoring of fiscal risks displayed considerable gaps. 3. As part of TAGHIR preparation, a Financial Management assessment of the IARCSC has been carried out . The assessment identified some weaknesses and the overall Financial Management risk for the project is assessed as Substantial. A summary of the overall risk and the respective mitigating measures is provided below. (a) The existing Financial Management staffing at IARCSC is inadequate in terms of number and qualification of staff. The Financial Management team working under the ARS of IARCSC consists of eight civil servants, each handling a separate unit without any support staff. There is one administration and finance officer in each of the 34 provinces. The existing staff do not have professional accounting qualification and experience of working with donor funded projects. To augment the capacity, the Financial Management team working on the CBR project will merge with the IARCSC’s core Tashkeel and directly support implementation of the TAGHIR project. (b) The IARCSC has insufficient internal audit resources. The Internal Audit Department of ARS consists of only two audit staff; without relevant academic and professional qualification. The internal audit director position has remained vacant for the past six months. The vacant position is under recruitment and the candidate will be on board in the coming months. Due to lack of staff, the internal audit team is not able to conduct regular audits of the central and provincial offices of IARCSC. For example, audit of ARS has not been carried out for the last three years. The IARCSC has approved two additional internal audit positions for the next fiscal year to strengthen the internal audit team. (c) Records of fixed assets and inventory are not updated regularly, and no physical verification is carried out . Fixed assets and inventory registers are maintained but they are not updated regularly due to lack of staff. As per government regulations, all the fixed assets should be physically verified annually, but IARCSC has not carried out any physical verification of fixed assets worth AFN 75 million for the past two years. The SAO has reported Page 43 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) weak fixed assets’ management in the audit reports for the past three years. To mitigate this risk, it was agreed to move one of the finance officers working under the PIU of the CBR Project to the fixed asset department of IARCSC; to be made solely responsible for fixed assets’ management. (d) External audit recommendations are not implemented and followed up. IARCSC does not have a mechanism to implement and follow up on external audit recommendations, therefore the issues identified during audits have remained unresolved over the years. The issues identified by SAO during the past three years were mostly on non-deduction of liquidated damages and withholding taxes, weak fixed assets management, extra payments to suppliers in several cases, and weaknesses in internal audit. It was agreed that the IARCSC will develop an audit follow-up mechanism for timely action on the audit recommendations in future. The Bank has agreed on a time- bound action plan with IARCSC for this purpose. 4. Overall Financial Management responsibility for the project will rest with the ARS of IARCSC. The Administration and Finance Director of ARS will be the primary point of contact for all project financial management matters. 5. Budgeting: MoF guidelines for budget preparation will be followed. The project budget will be prepared based on the procurement plan and an annual work plan. The annual budget will be broken down into quarters to facilitate budget monitoring. Semi-annual IUFRs will compare actual expenditures against those budgeted and will explain any significant differences. 6. Accounting and Financial Reporting: Cash basis of accounting will be followed for the project. The MoF will process payments and maintain records at the central level using the AFMIS in accordance with the Government’s Treasury Accounting Manual. The IARCSC will also maintain detailed subsidiary records and will be responsible for submitting IUFRs to the Bank within 45 days of the close of each semester. The semi-annual IUFRs will compare actual expenditures to budgeted expenditures and explain significant variances. The following books of accounts and records will be maintained by the IARCSC: (a) Cash/ Bank Book – to record all cash/ bank receipts and payments. (b) General Ledger – to record all receipts and payments. (c) Asset Register – to maintain up-to-date record of assets procured. (d) Invoice Register – to track payments. (e) Contract Register – to record all contract payments. (f) M-16 register - to record all the expenditures/ payments. (g) Advance register - to record the advances made. (h) Taminat Register - to record the amounts retained from the payment made to vendors. 7. Internal Controls: At IARCSC, there is proper segregation of duties and payment requests (M16s) are processed in a timely manner. The World Bank has supported government in the development of a comprehensive Financial Management Manual that will be applicable to all IDA and ARTF projects in Afghanistan. The manual will be finalized by project effectiveness and will be used by the IARCSC. The manual includes details on the Financial Management arrangements, internal controls, disbursement procedures, staffing arrangements at various levels, reporting lines, allotment and payment processes, documents retention and control mechanism at various levels, service standards for document processing and documentation requirements for grants. The control mechanisms for the salary processing and payments of CBR/TAGHIR recruits were assessed and found acceptable, however, to improve timeliness of salary payments under TAGHIR, streamlining of the process has been recommended. At present, each Page 44 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) LMA submits the monthly time sheets of their respective project-financed appointees. The original time sheets are signed and approved by the relevant minister or deputy minister and forwarded to the Human Resources Department of the CBR PIU which compiles all the time sheets received from different LMAs and prepares a consolidated HR report. The Human Resources Department then submits the report to the Finance Department of the CBR PIU for further processing. The Finance Department prepares the salaries based on the HR data of each project-financed appointee available in their HR database and then forwards it for the verification and approval of each of the CBR Financial Management Unit Head and Project Director. The final list is then signed and approved by the Finance Director of ARS and forwarded to the control department of IARCSC and subsequently MoF for further verifications. The MoF forwards the final list of salaries and payment instructions to DAB. 8. Internal Audit: Internal audit for the project will be conducted semi-annually by the Internal Audit Department of ARS. The semi-annual internal audit reports will be submitted to the World Bank within two months of the close of the semester. The IARCSC has insufficient internal audit resources. Due to lack of staff, the internal audit team is not able to conduct the regular audits of center and provincial branches. IARCSC has approved two additional internal audit positions for the next fiscal year which will increase the scope of work and strength of the internal audit team. 9. External Audit: The SAO, with the support of consultants, carries out the annual audit of all ARTF/World Bank-funded projects. The same audit arrangements will be used for TAGHIR. The SAO will submit to the World Bank, annual audited project financial statements and Management Letters within six months of the close of the fiscal year. The financial statements of the project audit will be prepared by the MoF based on AFMIS records. There are common TORs for the audit of all projects that are reviewed by the World Bank annually. There are no overdue audited financial statements or unsettled ineligible expenditure in respect of the IARCSC. 10. Retroactive Financing: There is no intention to provide retroactive financing. 11. Funds Flow: The project funds will flow through one separate pooled designated account (DA) in United States Dollar (USD) for both IDA and ARTF to be set up in Da Afghanistan Bank (DAB, Central Bank) and controlled by MoF. Financing percentage for the project will be on pro rata basis, i.e. 33 percent by IDA and 67 percent by ARTF; disbursements from the grants will be made through advances and special commitments. Payments from the DA will be made by check or bank transfer. Requests for payments from the DA will be made by IARCSC to the Special Disbursement Unit in the MoF’s Treasury Department. Disbursements will be report based and the project will mainly use the advance method of disbursement where the funds will be front-loaded into the DA based on 6 months cash forecast. Initial advance into the DA will be provided by the Bank based on projections for the first 6 months. Subsequent advances will be based on actual expenditure incurred and forecast for the following semester as reported in the semi-annual IUFRs that will be submitted by the IARCSC to the Bank within 45 days of the close of each semester. The expenditure incurred during a semester against advance will also be documented in the Bank’s system based on IUFRs. Further details regarding disbursements are provided in the Disbursement Letter. Page 45 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Table 1: Project Financing IDA ARTF Percentage of Amount of the Category Amount of the Expenditures to be Grant Allocated Grant Allocated Financed (expressed in (expressed in USD) (inclusive of Taxes) USD) Goods, Consultants’ services, Non-consulting services, Salaries of CBR/TAGHIR recruits, Training 25,000,000 50,000,000 100% and Incremental Operating Costs TOTAL AMOUNT 25,000,0000 50,000,000 The below diagram shows the fund flow arrangements for the project. FUND FLOW DIAGRAM IDA / ARTF IUFR with supporting documentation, IDA/ARTF reconciliations, replenishes & requests replenishment Designated transfers to Designated Account Account. DA SDU (Treasury Dept. MoF) Payments Consultants/ Suppliers Invoices IARCSC Page 46 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Procurement 1. Procurement will be carried out in accordance with the Bank’s Procurement Regulations for Borrowers for Goods, Works, Non-Consulting and Consulting Services and applicable to IPF, hereinafter referred to as “Regulations” 01 July 2016, Revised November 2017 and August 2018. The Project will be subject to the Bank’s Anticorruption Guidelines, dated October 15, 2006, and revised in January 2011 and July 1, 2016. It has been agreed by both parties that in the event of a conflict/contradiction between the Bank’s procurement procedures and any national rules and regulations according to Article 4 (2) of the Procurement Law September 09, 2016 of the Islamic Republic of Afghanistan, the Bank’s Procurement/Consultant Guidelines shall prevail. The general description of various procurements under different expenditure categories are described in the procurement plan. 2. Procurement Capacity and Risk Assessment. The overall Procurement risk for the project is assessed as High. Under the implementation arrangements finalized for the project, the GoIRA has agreed that the IARCSC Procurement Directorate will be responsible for undertaking all procurements and contract management activities on behalf of the GoIRA. The IARCSC Procurement Directorate staff have expertise in procurement and contract management, and in conducting procurement in accordance with Bank policies and procedures. However, the IARCSC Procurement Directorate is not accredited by National Procurement Authority (NPA). IARCSC will therefore have to use NPA services for procurement facilitation. Based on the assessment and taking note of the role and responsibility of the Procurement Directorate of IARCSC, it is also recommended that some staff be dedicated to the project and work on the project on priority basis. The staff should have extensive experience in procurement with a high level of education. By applying these mitigation measures the Procurement Risk under the project will be Substantial. The Procurement Risk Assessment and Management System (PRAMS) has been finalized. 3. Standard Procurement Documents (SPDs): Pursuant to IDA’s new General Conditions for Credits and Grants (July 2016) and corresponding Legal Agreements, the World Bank’s Procurement Manual, SPDs, Requests for Proposals and Forms of Consultant Contract will be used. Goods, work, and non-consultancy services following Open National competition shall be procured using the agreed bidding documents for Afghanistan. This is further confirmed in Article 4 (2) of the Procurement Law of the Islamic Republic of Afghanistan dated 27/06/1395 (September 17, 2016) published in the Official Gazette No. 1223, which states that in case of conflict/contradiction between the World Bank’s procurement procedures and any national rules and regulations, the World Bank’s procurement procedures will take precedence. 4. Project Procurement Strategy for Development (PPSD): Based on the regulations of the Bank’s New Procurement Framework, the government has prepared and shared a PPSD which details the procurement methods and approaches. 5. Systematic Tracking of Exchanges in Procurement (STEP): The project will implement STEP, a World Bank planning and tracking system, which would provide data on procurement activities, and establish benchmarks. The details of the procurement activities, presently prepared in the procurement plan would be transferred in the STEP system. Initial training on the operation of the STEP system will be provided to the procurement officers of the Procurement Directorates of IARCSC. Procurement staff are also attending the necessary procurement training under CBR Project. 6. Record Keeping: All records pertaining to award of tenders, including bid notification, register pertaining to sale and receipt of bids, bid opening minutes, bid evaluation reports and all correspondence pertaining to bid evaluation, communication sent to/with the Bank in the process, bid securities, and approval of invitation/evaluation of bids by Page 47 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) IARCSC (as the Implementing Agency) would be retained by IARCSC for seven years and six months following closing of the project. 7. Governance and Anti-Corruption: All the contract opportunities and contract awards will be widely published on the internet including: NPA website, IARCSC website and, when required, on the United Nations Development Business (UNDB) website. IARCSC will set up a system to ensure that the staff/consultants handling the procurement process/contract management/contract execution do not join the consultants/contractors. This will be reviewed during implementation support missions. Other actions are: (a) implementing agencies’ officials / staff to be alerted about any fraud and corruption issues; (b) bidders to be alerted against adopting fraud and corruption practices; (c) award contracts within the initial bid validity period, and closely monitor the timing; (d) take action against any corrupt bidder in accordance with laws of the GoIRA; (e) preserve records and all documents regarding public procurement, in accordance with the Procurement Law provisions; (g) publish contract award information in UNDB online, NPA’s website and agencies’ websites within two weeks of contract award; (h) ensure timely payments to the suppliers/contractors/consultants and impose liquidated damages for delayed completion and, (i) enforce a procurement filing system. 8. Grievance Redress Mechanisms (Complaints Handling): With regards to procurement complaints, IARCSC will be guided by provisions of Procurement Law dated October 7, 2015 and Bank Guidelines. IARCSC will inform the Bank as soon as any procurement complaint is received and subsequently of the final outcome of such complaints. IARCSC should have a system to register and monitor the receipt and resolution of procurement complaints. The progress of such action will be reviewed by the Bank during implementation support missions. 9. Oversight and Monitoring by the Bank: For the time being high risk prior review threshold will be applied. All contracts not covered under prior review by the Bank will be subject to post review during implementation support missions and/or special post review missions, including missions by consultants hired by the Bank. To avoid doubts, the Bank may conduct, at any time, Independent Procurement Reviews of all the contracts financed under the project. The Bank team will provide additional due diligence and independent review of contract performance. 10. Frequency of Procurement Implementation Support: Two missions a year, at an interval of six months, are envisaged for procurement implementation support of the project. Page 48 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Implementation Support Plan 1. The strategy for supporting the implementation of the project is tailored to the government’s desire to use country systems. Risks and challenges mentioned in the risk assessment have been considered. 2. Given the country capacity challenges, intensive support is required, particularly at project startup. The Bank team will support implementation through the following activities: (a) The Task Team Leaders (TTLs) based in Kabul and Dubai respectively will oversee the work program of, and work closely with IARCSC and other partners involved in the project. (b) Involvement of World Bank colleagues from across Global Practices (GPs) both from the country office and other Bank offices to leverage comparative skills and provide regular support to the project on technical matters. (c) Supervision missions monthly, and formal implementation support missions twice in a year throughout the project implementation period. (d) The implementation support team will be comprised of the Task Team Leaders; and Task Team Members comprising: core public sector including HRMIS/Payroll expertise, operational project management, legal, disbursement, safeguards, procurement, financial management; and extended cross-GP support including on macro-fiscal, corporate finance, pensions, health, and education. (e) GoIRA staff implementing the project will be provided with capacity support (as required) on World Bank operational processes and procedures, financial management, disbursement, and procurement guidelines, monitoring and evaluation (M&E), strategic communications, and project management. 3. To accelerate project implementation, an Implementation Action Plan has been agreed with the GoIRA as follows: Table 2: Implementation Action Plan Time Activities Skill Needed Resource Estimate Work-planning, prepare Annually operations manual, training Task Team Leaders 20 staff weeks (Years 0-3) materials and project roll out. Operations Support 6 staff weeks Review and clearance of documents Financial Management 6 Staff weeks Review Financial Management, Specialist 6 staff weeks procurement and disbursements Procurement Specialist 2 staff weeks Disbursement Specialists Task Team Leaders Review project specific 20 staff weeks Cross-GP Teams implementation aspects 6 staff weeks Task Team Leaders M&E support 6 Staff weeks Mid Term in Mid-Term Review Task team, Cross-GP Teams 8 staff weeks 2020 Completion Implementation Completion and External team with support 10 staff weeks in 2021 Results Report from task team Page 49 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) ANNEX 4: Key Tables COUNTRY: Afghanistan Tackling Afghanistan’s Government HRM and Institutional Reforms Table 1: Top Ten LMAs by Headcount 1396/ 2017 LMA Employees Ministry of Education 263,961 Ministry of Public Health 13,397 Ministry of Higher Education 12,073 Kabul Municipalities 8,183 Ministry of Haj and Religious Affairs 8,289 Ministry of Finance 7,599 Ministry of Agriculture 7,554 Ministry of Martyrs, Disabled and Social Affairs 7,246 Ministry of Interior 9,096 Independent Directorate of Local Governance 6,368 All Others 56,673 Grand Total 400,439 Data Source: NSIA Figure 2: Civil Service Headcount by Gender and Grade (Limited Data), 1396/ 2017 Data Source: NSIA Page 50 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Figure 3: 1396 Civil Service Headcount – Gender Breakdown by LMAs Data Source: NSIA Page 51 of 52 The World Bank Tackling Afghanistan’s Government HRM and Institutional Reforms (P166978) Table 4: Size and Distribution of the Afghan “Parallel Civil Service” LMA NTA Staff Ministry of Public Health 4,865 Ministry of Education 2,990 Ministry of Rural Rehabilitation and Development 2,838 Ministry of Urban Development 1,985 Ministry of Agriculture, Irrigation and Livestock 1,384 Ministry of Energy and Water 965 Ministry of Public Works 760 Ministry of Labor, Social Affairs, Martyrs & Disabled 685 Ministry of Finance 470 Ind. Administrative Reform and Civil Service Commission 135 Afghanistan Independent Land Authority 122 Administrative Office of the President 113 Ministry of Commerce and Industry 62 Others 2,767 TOTAL 20,141 Data Source: MoF 2018 Budget Statement. Figure 5: Civil Service and NTA Monthly Rates of Pay Data Source: World Bank Staff calculations based on P&G and NTA Pay Scales Page 52 of 52