47036 Paving the Road for Better Capacity June 2007 Professor Ken Gwilliams, Institute for Transport Studies, University of Leeds (Former World Bank Transport Economic Adviser) Paving the Road for Better Capacity June 2007 This case study was made possible by a grant from the World Bank's OPCRX/HRSLB Results Knowledge and Learning Small Grants Program. The case-study was commissioned and overseen by William Rex, Lead Country Officer, World Bank Office Vientiane, and Richard Tobin, Manager, World Bank Institute Evaluation Group. ACRONYMS AND ABBREVIATIONS AccPac Computer accounting package ADB Asian Development Bank APL Adjustable program loan CAS Country Assistance Strategy CRC Community Road Committee CRTF Community Road Trust Fund DCTPC Department of Communication, Transport, Post, and Construction DOR Department of Roads GOL Government of the Lao People's Democratic Republic JICA Japan International Cooperation Agency Lao PDR Lao People's Democratic Republic LSRSP Lao-Swedish Road Sector Project LTDP Lao Transport Development Partnership MPWT Ministry of Public Works and Transportation MMDD Management-Manpower Development Division NDF Nordic Development Fund NGPES National Growth and Poverty Eradication Strategy NSEDP National Socio-Economic Development Plan OCTPC Office of Communication, Transport, Post, and Construction PHRD Japan Policy and Human Resources Development Fund PIU Project Implementation Unit PMD Project Management Division PRoMMS Provincial Road Maintenance Management System PRF Poverty Reduction Fund RMF Road Maintenance Fund RMP Road Maintenance Program RMS Road Management System SED Social and Environment Division, Department of Roads SIDA Swedish International Development Cooperation Agency THIP Third Highway Improvement Project 2 Paving the Road for Better Capacity CONTENTS Introduction ...................................................................................................................................... 4 National Strategy of the Lao PDR ................................................................................. 5 The History of Road Sector Policy ................................................................................... 9 The Road Sector's Capacity Development Strategy ...................................... 14 Capacity Development and Aid Effectiveness ................................................... 20 Conclusions ...................................................................................................................................... 24 Persons Consulted ....................................................................................................................... 27 References ......................................................................................................................................... 28 Paving the Road for Better Capacity 3 INTRODUCTION Development in the Lao People's Democratic Republic (Lao PDR) cannot be achieved solely by the best-intentioned development assistance or foreign investment. In addition to physical capital, development depends critically on institutional and human capacity to deliver desired policy outcomes. The core responsibility for creating that capacity rests with government, and many capacity-development activities can be implemented by governments using their own resources. The function of development assistance is to assist that locally generated activity by the provision of additional financial and technical resources. The transport sector, and particularly the roads sector, appears, prima facie, to be a good model of what can be achieved through strong government ownership, donor alignment and harmonization with government policies, integration of project implementation arrangements, and sensible medium term investments in capacity development. This report examines the way in which the roads sector can contribute to national development objectives. To do so this report describes the nature of the achievements so far, identifies the forces that have motivated those achievements, and suggests lessons that may be applicable in other sectors and/or in other countries with similar development. Special attention is paid to the critical role of government leadership; the internal institutional arrangements that have facilitated progress; the nature and extent of harmonization of approaches by donors; and an assessment of the sustainability of the approach within the Ministry of Public Works and Transportation (MPWT). 4 Paving the Road for Better Capacity NATIONAL STRATEGY OF THE LAO PDR The national development strategy create favorable conditions for development. The A national development strategy for Lao PDR was future performance of the roads sector is thus critical enunciated in the National Growth and Poverty to achievement of the NSEDP's objectives. Eradication Strategy (NGPES) in 2004. It identified capacity building as a key challenge and expressed Transport infrastructure needs the desire to develop an inventory of capacity- Achievement of the desired contribution of the building initiatives; to identify and prioritize transport sector to Lao PDR's national development capacity-building requirements at all levels; to create objective is inherently difficult. The country is poor a comprehensive capacity-building strategy based on and has a low average population density of 23 these assessments; and to implement the strategy persons per square km. Some 80 percent of the through an approach that ensures coordination population lives in rural areas and agriculture among the various levels of the Government of the presently is responsible for over 50 percent of the Lao PDR (GOL) and its development partners. The Gross National Product and 80 percent of transport sector has an important role to play both employment. Road length per 1,000 people is 6.04 as a major sector supporting development and km, which is more than twice that in Cambodia and potentially as a means to test strategies for Vietnam. Vehicle ownership is low (7 vehicles per accelerating development. 1,000 people) and traffic volumes on the road network are similarly low. Only 11.7 percent of roads The GOL's strategy is operationalized in the National carry more than 1,000 vehicles per day. Socio-Economic Development Plan for 2006-10 Nevertheless, Lao PDR is heavily dependent on road (NSEDP). The plan, which was developed in a transport to support its development. The fact that participatory and consultative manner, has four main 3,500 villages, nearly 40 percent of the total of 9,262 pillars, namely (i) to move from underdevelopment rural villages, still have no proper road access is a to fast and stable development; (ii) to increase significant impediment to development. competitiveness and utilize comparative advantages to implement effectively international economic This situation leads to at least four problems. commitments in the frameworks of the Association of Southeast Asian Nations and other commitments The primary road network of 7,000 km of including the World Trade Organization; (iii) to roads and associated bridges will need strengthen links between economic and social extended capacity as incomes and activity development and protect natural resources and the increase. The MPWT's plan for the five-year environment; and, (iv) to accelerate the building of a period 2005-06 to 2009-10 implies an annual comprehensive socioeconomic infrastructure and investment of about $200 million compared finalize the establishment of a market-oriented with the current annual level of about $60 economy with a socialist orientation to form the basis million. for industrialization and modernization. The rural road network must be developed to The plan specifically refers to the need to maintain, access the primary network. The MPWT's improve, and develop Lao PDR's infrastructure to draft White Paper on Rural Transport Paving the Road for Better Capacity 5 Deteriorated road in Nakai, Khammouane Province Infrastructure (Lao PDR 2007b) estimates itself. As the Asian Development Bank (ADB) that $165 million will be required to complete (2006) has observed, in countries with small the network considered necessary for economic economies, such as Lao PDR, "maintenance accessibility. In addition, the White Paper of the road system funded by general estimates that a further $50 million will be revenue will likely eat into the funding required to upgrade the 9,200 km of existing needed for other basic social requirements rural road ­ 81 percent of the total ­ to make like education or health. Trying to maintain them accessible throughout the year. and develop a road system without the necessary economic base from which to The entire network must be properly maintained support that system is doomed to failure. The to ensure that the existing assets are not lost. roads will inevitably deteriorate and ultimately Between $30 and $46 million will be reconstruction will be needed, but no funds required for the maintenance of the network, will be available for that reconstruction." compared with the $17.5 million that is presently committed to it.1 Addressing these problems remains a major challenge in Lao PDR and yet also a major opportunity to Finally, there is the challenge of development reduce poverty. According to the MPWT's analysis, 1Thirty million dollars, the lower limit estimated, represents about 2.1 percent of the estimated asset value of $1,417 million (ADB 2006), while the $46 million estimated by Bray (2006) is 3.2 percent. This range is not out of line with the standard of about 2.5 percent, which the ADB and European Union recommend (ADB 2006). However, the "economic burden" of the road network for the economy may be seen in terms of the ratio of the Asset Replacement Value of the road network to the country's gross domestic product. For Lao PDR, this ratio is 51 percent, which is more than double the typical ratio of 20 to 25 percent. 6 Paving the Road for Better Capacity based on the Lao Expenditure and Consumption the establishment of the Road Maintenance Survey, 2002-03, households with all-year road Fund (RMF) is referred to as an achievement access have 50 percent more spending power than of the previous five-year period. A review of those without road access, and even those with strategy on tolls has been undertaken and is access only during the dry season have 33 percent now being considered by government. more spending power than those with no road access. Warr's (2005) analysis of data from the Technology and Human Resource Develop- consumption surveys in 1997-98 and 2002-03 ment. The strategy is intended to promote concluded that about one-sixth of the reduction in the use of advanced technology to manage rural poverty between the two surveys can be the sector and to develop staff capabilities. attributed to wet season road access. Furthermore, The organization of the sector is to be im- he estimates that providing all-weather road access proved at the national and local levels. A new to all rural households would reduce the incidence emphasis is to be given to road safety through of rural poverty by about 7 percent, which is the the establishment of a Council and Commit- equivalent of about 5.6 percent of Lao PDR's total tee for Road Safety to be supported by a population. newly developed Road Traffic Safety Fund. In the context of emphasizing professional staff However desirable an improved rural road network development, specific reference is made to may be for Lao PDR, "significant road improvement the need to upgrade the Transport Research is generally not a form of investment that rural people Institute to service the MCPTC's needs. can make for themselves. Public sector involvement is required" (Warr 2005). The following sections Delegated implementation describe the nature and effect of this involvement. Road administration in Lao PDR depends heavily on a system of delegated, decentralized implementation The transport sector's development developed over a period of years by MPWT working strategy together with key development partners. Maintenance The MCPTC's strategy (Pholsena 2007) for the of the national road system as well as management of transport sector concentrates its attention on road the implementation of investments in provincial and infrastructure and has three main thrusts. lower order roads is delegated to the provincial Departments of Communication, Transport, Post, Investment mobilization. Mobilizing the and Construction (DCTPCs). Similarly, the DCTPCs necessary resources for investment is a delegate tasks to the district Offices of Communication, primary concern. The strategy identifies 36 Transport, Post, and Construction (OCTPCs), which projects in the national, provincial and rural are headed by DCTPC staff. The World Bank's first networks, together with new bridges. Likely Road Maintenance Project (RMP-1) supported that sources of funding are identified, including delegation in eight provinces, and the lessons grants and loans, as well as the possibilities of learned from that experience are being applied mobilizing private finance through build-own- nationwide in the project's second phase. While operate-transfer and turnkey arrangements. some functions are still retained centrally, the MPWT is now delegating further tasks to the provinces, Revenue enhancement. The strategy is including financial management and responsibility intended to improve and strengthen the for signing contracts for civil works. Such delegation, organization of the sector to increase revenues, which requires training, stimulates capacity development. mainly through more efficient user charges. Delegation creates an awareness of the need for The increased emphasis on maintenance and training and provides incentives for officers and Paving the Road for Better Capacity 7 Government and donor training in anti-corruption in the roads sector operatives to improve their skills even at the lowest identified as the class of community roads, from levels of the ministerial organization. general access. The institutional arrangements proposed are relatively simple. Community road Community participation responsibilities would be delegated to Community The most ambitious delegation, proposed in the Road Committees (CRC). Community roads would recent draft White Paper (Lao PDR 2007b), concerns include all rural roads and unclassified paths and community participation.2 Several varieties of a tracks linking a village to the main network and might community road model have been developed, with also include district roads if the CRC desired. support from the ADB, Agence Française de Consistent with the MCPTC's approach to capacity Devéloppement, Japan International Cooperation development, delegation of responsibility to the Agency (JICA), the Japan Social Development Fund, communities would be unconditional. They would, the International Labor Organization, and the however, be given incentives to create formal Swedish International Development Cooperation arrangements to participate in the scheme in the Agency (SIDA). These models have involved village form of technical and financial support in performing committees or units in responsibility for maintenance their tasks. A new Community Road Trust Fund (and sometimes construction) of basic access routes, (CRTF) would be established to assist the communities which may be simple paths or full-fledged roads. This with finance on a cost-sharing basis. The CRTF might approach is consistent with the "kum ban" concept receive its funds from the Poverty Reduction Fund developed under the NGPES as the local center for (PRF), from the Road Maintenance Fund, and directly infrastructure and markets. from donors. A preliminary phase in introduction of the system would concentrate on 47 priority districts, The draft White Paper proposes an extension of this in compliance with the requirements of the NGPES. approach, formally separating basic access, to be 2The White Paper, completed in March 2007, remains a draft and has not yet received formal government approval. 8 Paving the Road for Better Capacity THE HISTORY OF ROAD SECTOR POLICY The history of road transport sector in Lao PDR is one investments have been made by development of a progressive shift from the creation of physical agencies from China, France, Germany, Japan, and infrastructure to the creation of the physical and the Netherlands. By the end of the twentieth century human resource capacity to sustain that only 38 percent of the national road network was infrastructure. considered to be in good or fair condition and most provincial and district roads were impassable in the Rehabilitating the primary network rainy season. Moreover, many of the roads that had At the end of the 1980s, as Nogales (2004) explains, been rehabilitated or reconstructed were much of the country's road network was in poor deteriorating faster than expected. condition, and little attention was devoted to maintenance or rehabilitation. This situation changed There were several reasons for this situation. The in the first half of the 1990s, when the GOL directed major donor efforts were directed at rehabilitation about half of all public investment to the and extension of the national road network and not rehabilitation and improvement of roads. During the at maintenance. Construction and maintenance 1990s a series of investment projects rehabilitated work was undertaken inefficiently by personnel about 3,000 km - about 45 percent - of the arterial employed by the MPWT (often referred to as force road network. Many donors were involved. The ADB account). Responsibilities for maintenance were has completed 10 transport projects, mostly unclear and largely unfunded. Periodic maintenance concerned with strategic roads in the Greater was poorly programmed and the bulk of the activity Mekong System or for access roads in poorer consisted of spot improvements and emergency regions. SIDA is in its third project, and significant works were undertaken by state-owned enterprises. A deteriorated local road goes through Baan Done in Khammouane Province Paving the Road for Better Capacity 9 Shifting the focus: improving Fund (NDF) cofunded training, construction maintenance supervision, and technical assistance. The GOL decided in 1997: (i) to place greater emphasis on systematic maintenance of the core Six important lessons emerged from this early maintainable network in lieu of the continued experience: (i) good project design is fundamental to expansion of the network and (ii) to introduce success; (ii) knowledge transfer begins at competitive bidding of periodic and routine preparation; (iii) strong and committed leadership is maintenance works progressively. Attention was thus essential to achieving outcomes; (iv) project shifted to the preservation of roads, with priority for implementation is best mainstreamed in the MPWT's preserving the national roads rehabilitated during the core structure; (v) technical audits are an effective previous decade. instrument for enhancing quality; and (vi) gradual introduction of competitive bidding can be highly Donors have strongly supported that decision. For successful. The MPWT documented this new example the World Bank's Third Highway approach in Strategic Directions for the Development Improvement Project (THIP), which became effective of the Road Sector in June 2000. in September, 1997, established a dialogue between the World Bank and the government on maintenance Reforming project implementation and provided the basis for the creation of a sustainable As dialogue between donors and government framework for road maintenance. In addition to continued and understanding of the issues upgrading 200 km of national road and constructing deepened, the GOL took an important decision. In a new link to bypass Savannakhet, THIP established 2000 it recognized that traditional project-specific a Road Maintenance Program including periodic project implementation units (PIUs) created parallel maintenance of 600 km of high priority roads with a systems that distorted incentives because of the counterpart program of routine maintenance of better facilities and working environment, were 13,700 km of roads to be financed entirely by the wasteful of scarce skills, and, by limiting spillover government. All maintenance contracts were procured effects, undermined capacity development, on the basis of cost-effective, competitive bidding coordination, harmonization, ownership and procedures. transparency. The government therefore replaced all PIUs with a single Project Management Division THIP also contained an institutional component to (PMD) within the Department of Roads to strengthen the MCPTC's capacity to prepare coordinate and monitor all donor-funded projects, medium-term investment plans, and to better while line functions were distributed to the divisions implement, account, and audit the roads program in concerned. This step was critical in establishing a the more competitive framework. An instructional basis for effective use of technical assistance to program of English language was introduced, develop capacity in the transport sector. increasing the number of staff conversant with English from 15 people in 1997 to about 50 percent Reforming the financing of roads of the staff (70 people) by 2003. On-the-job training The program of physical works and capacity of local supervision staff took place from 1998 to development in THIP was accompanied by an 2002. Training was provided to the staff of the State institutional reform intended to put the new Enterprise for Survey and Construction Material maintenance culture on a sustainable footing. The Laboratory. The Telecom and Communications RMF was established in 2001, to be managed partly Training Institute, Vientiane University College and by representatives of major road users. The RMF's the University of Laos trained managerial and establishment thus introduced an element of engineering staffs. SIDA and the Nordic Development transparency into road financing and was instrumental 10 Paving the Road for Better Capacity in the introduction of longer term performance- the GOL's willingness to maintain or improve the based contracting for routine maintenance on parts country's road network. Bray (2006) has calculated of the national network. However, control over the that an average annual expenditure of $48 million program's composition and financial allocations will be required to sustain the road system after the remained with the minister or director of roads.3 backlog has been addressed, and that such a sum is likely to exceed available resources on current The RMF collected its first revenues in February policies. The RMP-2 Project Appraisal Document 2002, consisting of payment of fuel taxes collected estimated continuing needs at a lower figure of $30 by the provinces, revenue from road tolls, annual million but even this is not near to being funded by heavy vehicle fees, and fines for overloading. The domestic finance by 2009. Consequently, the likely target was for RMF to finance maintenance for all constrained program of maintenance, even if categories of road, throughout the country, by 2009 optimized in allocation, will result in deterioration of mainly through regular increases in the fuel tax. In the road network beyond that which is desirable. practice the increase in the tax rate has fallen behind the original schedule, and tax rate is low by Focusing on capacity development international standards in developing countries with Several donors have supported the government's such funds.4 Moreover, most of the Fund's revenues initiatives to maintain the country's roads. In mid- are committed as the government's counterpart 2001, as an illustration, the World Bank Road contribution to maintenance programs that SIDA and Maintenance Project was initiated in the form of an the World Bank finance (World Bank 2004). For the Adaptable Program Loan (APL).5 The project was RMF to operate as originally intended and to act as commenced in parallel with the second Lao-Swedish an effective instrument to ensure adequate Road Sector Project (LSRSP-2), which involved maintenance of the road network, it needs to secure Japan's Policy and Human Resources Development an increased revenue flow. The RMF may also Fund (PHRD) for preparatory work, the World Bank consider taking responsibility for quality control. (as the lead agency on policy development and financer of civil works on the national road network), The fundamental problem is that the improvement the NDF (as cofinancer of civil works on the national in the average state of the roads in recent years has road network), and SIDA (as financer of engineering resulted from large amounts of development and construction supervision services on local assistance for maintenance. Donors may not be roads). The Danish aid agency, Danida, joined SIDA willing to continue such assistance in the absence of in funding some international training. 3 For example, early in 2007 the Minister instructed the Fund to make 10 percent of its revenues available for road safety initiatives. 4 In April 2004, the fuel levy was 40 kip per liter (International Labor Organization 2004) and had increased to 100 kip per liter in January 2005. To meet the anticipated needs for road maintenance funds from the RMF, the fuel tax may need to be as high as 365 kip per liter (or about $0.037 per liter) (Nogales 2004; International Labor Organization 2004). 5Adaptable Program Loans provide phased support for long-term development programs. APLs involve agreement on (a) the phased long- term development program supported by the loan; (b) sector policies relevant to the phase being supported; and, (c) priorities for sector investment and recurrent expenditures. Progress in each phase of the program is reviewed and evaluated, and additional analysis undertaken as necessary, before the subsequent phase can be initiated. Paving the Road for Better Capacity 11 Capacity development was the heart of the effort. met: the creation of an association of road users; the Even in the road works component, financing of a development of a strategy for strengthening the program of maintenance on nearly 7,000 km of road performance of the local contracting and consulting was accompanied by technical assistance for industry; technical assistance on project management preparation, design, supervision, and monitoring of and monitoring; and the advice in development of works and the construction of 38 district offices. In a the road fund. In sum, it is clear that: heavy transport management component, the project financed seven permanent axle load weight the impact of RMP-1 on institutional stations and associated equipment together with development was substantial; assistance to develop and implement the related regulations and policy reforms. the staff of MCPTC were enthusiastic to improve their skills further; and, An institutional strengthening component was created in parallel with the works component. The the APL gave the World Bank and the GOL former included the establishment of a Road the structure within which to address the Management System (RMS) for the road network; observed deficiencies. implementation of the new Road Maintenance Fund (discussed previously); technical assistance to Despite this successful outcome, progress in improve project preparation, execution, and monitoring: improving the condition of the local road network support for a strategy to improve performance of the was slow. Only 15 percent of the provincial road local contracting and consulting industry; and network was in excellent or good condition by April measures to foster the involvement of villages in the 2007. Moreover, capacity development had not maintenance of local roads. gone deep enough to be considered effectively sustainable by the donors. While the necessary road The outcomes of the first phase of the program were maintenance management systems had been put in largely satisfactory. The targets for civil works for place the capability to exploit their potential has periodic and routine maintenance were exceeded been moderate. For example, DCTPCs are now due to the MPWT's high level of commitment and to capable of preparing an annual work plan- using the unexpected cost effectiveness of the competitive PROMMS as a planning tool, taking data collected bidding arrangements for periodic maintenance from the field, procuring maintenance contracts, contracts. Between 2001 and 2004 the network supervising road works, and managing financial grew by 4.2 percent per annum and the proportion account. However, the World Bank (2004) reported of the national and provincial road network in that there was little in-house capability at the excellent condition had risen to 35 percent from 25 Department of Roads (DOR), or by local experts, for percent while the share of the roads in poor preparation of future works programs. Similarly the condition had fallen to 2 percent from 5 percent. By quality of maintenance works was in some cases April, 2007, 67 percent of the national road network below the expected standard. was in excellent or good condition. The necessary works for the heavy transport management program The second phase of the Road Maintenance were also completed with the NDF's assistance. The Program (RMP-2) was expected to be the phase for Road Management System became operational in operation and expansion of road maintenance June 2004. The number of local contractors had management systems that had been initiated and increased, and a large amount of basic skills and developed in the first phase. The emphasis of the technical training of MCPTC staff was accomplished. works component of RMP-2 was therefore shifted Only in a few areas were the program's targets not towards local roads, with 24 percent of the funding to 12 Paving the Road for Better Capacity go to provincial roads and 44 percent to local roads. Given that the APL triggers had been met, Phase 2 became effective in September 2004. Moreover, the program of capacity development was to be further extended. The focus on poverty alleviation The most recent thrust in donor collaboration with government in transport in Lao PDR is an emphasis on poverty reduction, particularly in rural areas. The White Paper (Lao PDR 2007b) addresses the funding of community roads and their maintenance. By passing the formal responsibility of the designated roads to the communities, the White Paper implicitly passed the costs of these activities to subnational levels of government and their communities. The paper does indicate, however, that technical assistance and training might be obtained through the district offices and suggests the creation of a Community Roads Trust Fund, which might give some financial support on a matching basis. The White Paper is not explicit about where this trust fund will acquire its resources, though both the Road Maintenance Fund and the Poverty Reduction Fund (PRF) are mentioned. Neither are likely sources of funding. As noted earlier, the RMF is struggling to obtain funds to cover the routine maintenance of the classified network. The PRF make grants to villagers for individual projects, over a range of types of infrastructure. The PRF is unlikely to be able to make any general transfer to another centralized fund, even one created exclusively for infrastructure in rural villages. Nonetheless, there is a considerable commonality of interest here to suggest that the capacity-development efforts in the transport sector and those of the PRF and other funds enabling communities to develop their facilities should be coordinated by the donors to avoid wasteful duplication of effort. Paving the Road for Better Capacity 13 THE ROAD SECTOR'S CAPACITY DEVELOPMENT STRATEGY The World Bank's Country Assistance Strategy (CAS) the fundamental issue of public sector management, for Lao PDR argues that "achieving specific, measurable including human resource development. results requires attention not only to appropriate skills, but to incentive systems, organizational processes The experience of the road sector is a striking and institutions. This implies a broad country-led counterpoint to this general criticism. Capacity approach to capacity development going beyond the development in the MPWT has been approached in transfer of skills to an endogenous process of a systematic way, identifying three levels of capacity strengthening institutional and management development, namely: arrangements and systems"(World Bank 2005c). Having made that general observation, the CAS Institutional, which concerns the incentives, identifies the road sector as one that has made norms, laws, rules or policies that enable significant progress in the right direction. The organizations and individuals to achieve purpose of this section is to identify a number of development results. This has included elements that have contributed to the achievement clarification of the roles of agencies within of effective capacity in the road sector. the GOL as well as reforming the role of the private sector as maintenance contractors, A systematic approach to capacity technical consultants, and trainers. development Many donors have included technical assistance in Organizational, which concerns the process their projects as their contribution capacity development, and systems enabling task-oriented organizations but they have often expressed concern about the to manage resources, perform functions, and effectiveness of that effort. For example, the ADB achieve and sustain outcomes. This level has evaluated its capacity-development assistance over included activities to enhance the capabilities its entire portfolio in Lao PDR in 2004. The evaluation of contractors, consultants, and training concluded that "Capacity development objectives institutions as well as those of the various were not well articulated, and anticipated outcomes levels of administration in the MPWT. were not stated in terms that would allow focusing assistance and measuring outcomes. Implementation Individual, which concerns targeted skills and plans focused on project inputs, i.e. training and the knowledge necessary for individuals to consultants, rather than on organizational changes perform functions. This level has included not that could be sustained. Implementation suffered only the traditional skills in financial from (i) lack of staff and resources; (ii) a mechanistic management, project administration and adoption of new systems without an understanding technical implementation but also the of their purpose: and (iii) a common practice of development of new awareness of issues in capacity substitution, where resources [for capacity occupational health and environmental development] were used in place of local ones, in the sustainability at construction worksites as absence of which capacities cannot be developed or well as within the MPWT. sustained" (ADB 2004). The report further concluded that increased attention would need to be given to the framework for capacity development, looking at 14 Paving the Road for Better Capacity Creating an institutional basis for and assist the development of the PMD's functions, capacity development an international consultant was supported, but this A critical initial step was institutional change. In 2000 role is now the responsibility of a local consultant. To a Project Monitoring Division was established as a assist the mainstreaming of implementation, donors permanent unit in MPWT. This immediately replaced also financed other consultants, for example in the the traditional, project specific, PIUs in the Department Department of Transport and in the Planning and of Roads and took over the PIUs' functions of Technical Division and the DOR's Social and monitoring contracts and disbursements for all Environment Division (SED). donor-funded projects. Traditionally each project had its own PIU, served by an international consultant For this type of reform to succeed a number of working with assigned ministry staff. This institutional supporting conditions must be met. First, the PMD rearrangement eliminated the special conditions must be adequately staffed. In MPWT the initial attached to both expatriate and local PIU staff, which appointments in the PMD were good, but it is frequently acted as a barrier to transfer of knowledge equally important that the quality of this cadre be between those involved with donor-funded projects maintained over time.6 Second, the PMD must be and other local staff. The establishment of PMD was adequately funded. Given the pervasive shortage of also a spur to harmonization among donors of funds within the MPWT, some of the operating costs procedures for financial management, procurement, of the implementing units have been met by donor reporting, and monitoring. For example, there is a funding in the transitional period. To support unified accounting system and a single audit for the fundamental reforms, donors must view this type of agencies involved in road maintenance. This step has interim arrangement sympathetically. Third, it is given a new sense of government ownership of these critical not to lose sight of the underlying philosophy processes and obviated the employment of foreign of the reform ­ to mainstream implementation skills. consultants as project management became There is an understandable tendency for the PMD to mainstreamed into MPWT. attempt to extend its functions by taking over functions such as procurement and contracting on The expectation was that the PMD would be the donor-funded projects. This must be resisted to avoid entry point to the ministry for all sectorally related the creation of a "super-PIU," which would undermine donor projects and that it would serve as a liaison the mainstreaming and capacity-development effort. between the donors and the relevant implementing departments of the ministry. There would be no The PMD's creation was not the only element of specially formed PIUs and hence no need for project- institutional development. A Management- specific consultants. The relevant skills ­ in financial Manpower Development Division (MMDD) was management, procurement, contracting, etc ­ would also established in the Department of Personnel in be developed throughout the implementing the MPWT to be responsible for preparing, departments and would be applied to locally as well implementing, monitoring and evaluating its as to donor-financed projects. To facilitate the change capacity-building plan. 6 The PMD is the entry point to the MPWT for all donors, so it is inevitable that any of its failings could have wide-ranging impacts. Such risks may be mitigated by the fact that the structural arrangement provides for donors to remain in contact with the relevant implementing units. Paving the Road for Better Capacity 15 MMDD has prepared and delivered the training and discussions of the preliminary assessment in 2004 development activities for the staff of the MPWT and and 2005, there was general agreement about the DCTPCs and districts in road and transport in need for skills upgrading and training over a broad accordance with the Master Plan for Human canvas.7 Resource Development of the MPWT from 2006-10. A formal analysis has been completed of the The approach to skills development has been capacity-building efforts of the staff of the MPWT comprehensive, ranging from English training courses and DCTPC's implementation of the financial at different levels, through general management skill management system in the 17 provinces nationwide training, on-the-job training technical training, under LSRSP-3 and RMP-2 to end of the fiscal year workshops and seminars, and long-term training in 2005-06. In addition, the capacity building of the country, to study visits, short-term training and long Basic Access Component, under LSRSP-3 has been life education overseas. The program has been developed and assessed regularly through quarterly directed not only at central staff but also at provincial reports prepared by the DOR's Local Road Division. staff, with the proportions from different units depending on the perceived needs, as shown in table The capacity development plan 1. It is noteworthy that as planning is largely a central The World Bank Institute helped to design a process function the language and management training is to prioritize and monitor critical capacity issues, and focused (though not exclusively) on central staff. a consultant identified training needs and prepared a Higher level training, whether abroad or in-country three-year rolling plan to meet these needs. In has been primarily for central staff. Table 1. Training activities undertaken by the World Bank's Road Maintenance Program (2002-07) Training activity Total participants MPWT Provinces English language 151 108 43 General management 301 254 47 Technical courses 357 13 344 Technical workshops 651 34 617 Long-term higher level 13 11 2 Short-term higher level 12 12 0 Study tours abroad 21 18 3 7The consultants identified training needs in the following areas: General knowledge, including definitions and implications of a "market economy" in relation to the road transport sector (i.e. benefits of competitive transport services, managing roads as a business, business areas of the MPWT, MPWT and its service relationship with its customers (road users); English language; 16 Paving the Road for Better Capacity To test the appropriateness of the training program, (World Bank at MPWT and DCTPC level, SIDA at the MMDD conducted a survey of job descriptions more local levels, etc), though it is hoped to move to and skills from October 2006 to January 2007. The an agreed sectorwide support for capacity development survey concluded that, while the majority of the job in the future. The clearest distinguishing feature of positions matched their qualifications, the matching the MPWT experience is the high degree of was more successful at the central level. The commitment that it has shown, at the highest level, to assessment therefore suggested that more training, the implementation of a strategy. Strong ministerial including technical, managerial, and administrative, leadership has been particularly crucial. should be provided for districts and village staff because the majority of activities implemented need The significance of donor to be decentralized to the districts and village levels. harmonization In particular, provincial staff confirmed their need for Harmonization of donor projects is important for refresher courses, mainly on technical topics such as several reasons. First, it economizes on scarce staff routine maintenance, finance and accounting, skills and training. Second, it facilitates the procurement, village participation, and other general concentration of project management in a single courses like English, administration and management, division, using in-house staff rather than a series of and computers. A further comprehensive systematic "one-off" international consultancies. Third, assessment process was conducted during May and harmonization supports the ministry's philosophy of June 2007 using a form of capacity rating at individual allocating responsibilities and then supporting and and organizational levels. training staff "on-the-job." Finally, it makes it easier for local training and consulting institutions to be MPWT is not the only ministry to have designed a directly involved in the dissemination of process training strategy. It appears to be unique, however, skills. in having actually implemented an action plan thoroughly. It has been supported in this by several How quickly complete internalized harmonization of donors ­ most notably SIDA, JICA, and the World process can be expected is a matter of judgment. For Bank ­ who have helped develop an approach example, competency in financial management in customized to Lao PDR's needs and aspirations. So Lao PDR is weak. Good accountants are still mostly far, however, these have been parallel but separate foreign trained. There is a need to review if adequate exercises concentrating on different points of influence training skill in either the National Organization for Computer applications and information and communications technology; Administrative management (relating to upgraded systems and procedures, and including information and records management); Personnel management (including staff records, skills development, performance appraisals, career development, succession planning, motivational strategies); Planning (all aspects, including setting targets, quantifiable performance indicators); Contracts administration and management; Construction and maintenance management and supervision; Procurement of goods and services; Project management, monitoring, and evaluation; and Financial management and accounting. Transport management Environment practice in road maintenance and construction Paving the Road for Better Capacity 17 the Study of Politics and Administration or the more critical. The World Bank has financed technical National University of Lao in financial management, assistance that has enabled a complete RMS to be and it might take two or three years for the installed for planning and prioritizing maintenance establishment of a financial management system activities on the national road network. For local adequate to support a sectorwide approach. The roads, SIDA has similarly financed a simple provincial importance of the initial step by MPWT was road maintenance management system (PRoMMS). recognized and quoted as a "great example of best Even though the financial management system had practice" in the memorandum of understanding been introduced, implemented, and assessed in between the government, ADB, SIDA, and the World various DCTPCs, it was suggested that the computer Bank arising from the Joint Portfolio Effectiveness accounting package (AccPac) and RMS system Review (Lao PDR 2005a). needed to be upgraded to utilize their usefulness. In connection with this institutionalization of capacity Although experience with these developments has development, there is a shared desire to harmonize not been without problems, it is clear that the all training activities whatever their source of funding. provision of the tools has fostered a culture in which So far this has been applied only to training funded in staff appreciate the need to monitor road conditions association with World Bank and SIDA projects, to better allocate funds available for road including funding from the NDF and Japan's PHRD. maintenance and rehabilitation. And they have been The goal is to integrate training from other agencies developing the skills to implement that culture. such as the ADB in the future. MMDD manages all Swedish-financed consultants have been engaged general training topics (e.g., English, computer training, continuously over a long period and have administration and management, and other general undertaken substantial training in both procedures courses) while technical courses are managed by the and implementation of local road maintenance. This technical department concerned. MMDD and by the effort cascades down through provincial staff trained Personnel and Administration Division of the Department by the consultants giving training to district staff. of Roads provide oversight of the latter training. Providing the tools Capacity development has been seen not only as a matter of developing the institutional and human resource skills but also as a matter of providing the hardware and software tools with which trained personnel can work. For example, in the matter of hardware, RMP-2 has supported decentralization of responsibility for road maintenance by financing office buildings and equipment for DCTPCs and OCTPCs. Likewise, several donors have financed the computing equipment necessary to operate modern management systems. Local team rehabilitating a road, one of the implementing works of Road Maintenance Project Phase 2 (RMP2) Software development has been even 18 Paving the Road for Better Capacity H.E. Sommad Pholsena (right hand), Minister of Public Works and Transport, was key to implementing the reforms in the Ministry Supporting devolved responsibility appropriate to the new mechanism. SIDA is expected As mentioned earlier, the administration of the road to assist in the establishment of such arrangements. sector in Lao PDR is increasingly decentralized, with both provincial and district offices playing an Leadership and commitment important role in maintenance of the national and Most reforms succeed only when they have an provincial roads. This delegation of responsibility for influential champion. In Lao PDR's transport sector, implementation of the maintenance program to the the role played by the Minister Sommad Pholsena provincial level has been reflected in capacity- cannot be underestimated. He has been the one development activities. The technical training shown constant factor in the sector over a period of a in table 1 has focused primarily on provincial staff as decade, first as director of roads, then as vice minister, it is with the DCTPCs that that have primary and presently as minister. He was responsible for the responsibility for implementation. This has required RMF's creation and the decision to abolish PIUs and a cascading down of knowledge and skills. This channel all aid projects through a central line explains the emphasis on workshops, often held in department, consistently showing a challenging the provinces, which embody a "learning-by-doing" skepticism of the usefulness of international consultants approach. Based on decentralization of road in project preparation. He has been a strong maintenance in seven pilot provinces in the first advocate of decentralized administration of road phase of the Road Maintenance Project, the second maintenance, increasingly outsourcing maintenance phase is developing a comprehensive human to private sector contractors, and promoting local resource strategy to standardize skills and processes responsibility for community roads. for decentralization in all provinces. The counterpart to the government commitment has The proposal to move to increase community been a strong supporting commitment from the participation in rural road strategy also has substantial donors, in particular a consistent long-term implications for capacity development. The White commitment to the policies emerging from the Paper (Lao PDR 2007b) states that the MPWT will partnership dialogue on knowledge sharing and be obliged to identify personnel in its district offices human resource development. That has been to be responsible for managing and implementing a assisted by a considerable degree of stability in the support program at the village level, including various composition of donors' teams involved with the types of rolling courses, provided at the district level, MPWT. Paving the Road for Better Capacity 19 CAPACITY DEVELOPMENT AND AID EFFECTIVENESS Effective approaches to capacity development and to align their interventions with these strategies and increased aid effectiveness are mutually reinforcing: are thus more harmonized, transparent, and collectively increasing government capacity increases its ability to effective. Government and partners work together to manage aid productively, while increasing harmonization strengthen the government's capacity for results-based and alignment reduce the wasteful burden on scarce management. The Vientiane Declaration embodies government capacity. In practice, however, donors' some of the lessons of the transport sector already effectiveness in helping to develop capacity has often discussed, notably the mainlining of technical assistance been limited as a consequence of the failure to through the abolition of PIUs and the need for process mainstream capacity development within donor harmonization between donors and government. activities. Accompanying the Declaration is an Action Plan. The Vientiane Declaration on Aid Transport is identified as a sector in which there is Effectiveness already an articulated development strategy and in The formal locus of donor collaboration in Lao PDR which a capacity development framework is being is the Vientiane Declaration, which is a counterpart developed and will be finalized by the end of 2008. of the Paris Declaration on Aid Effectiveness of March As described above, many of the actions that are 2005. The declaration is based on the principle that deemed appropriate for the key sectors have already the government exercises effective leadership over been piloted in the transport sector, thus reinforcing development policies and strategies and coordinates the idea that Lao PDR's transport sector offers development actions. Similarly, partners are expected valuable lessons for other sectors. Vientiane Declaration was signed during the IX RoundTable meeting, held in November 2006 20 Paving the Road for Better Capacity Achievements in the transport sector from the Vientiane Declaration. The first concerns The transport sector has already made significant the alignment of donor activities in development and progress across several elements of the Vientiane support of the national transport strategy. That does Declaration. A Sector Working Group has been not necessarily imply that all donors would established to enhance coordination between contribute to all aspects of the national strategy. For MCTCP and the development partners working in example, within the LTDP, the ADB is the dominant the area. The outputs from this group have been slow contributor to the rehabilitation of primary road and of variable success. Prior to that, however, the network and extension; the World Bank is primarily strongest formal step was the creation of a Lao concerned with supporting the government's Transport Development Partnership (LTDP) to work maintenance initiatives; and SIDA is primarily for better collaboration in capacity building on a concerned with improvement and maintenance of sectorwide approach. The aide mémoire for the the local road network. Attempts are being made to RMP2 supervision mission (World Bank 2005d) exploit the synergies between SIDA's and the World included a note on donor collaboration on capacity Bank's current activities. The collaboration between development. The note distinguished between overall them and ADB (and more so the relationships with harmonization ­ or streamlining and coordination of the other donor and lending agencies, such as the interventions within the transport sector and a Japanese, Dutch, and Chinese, who are contributing specific and separate focus on building national to network rehabilitation or expansion) is still limited. capacity through a coordinated approach. A timetable But any extension of that alignment effort is almost of activities was suggested with responsibility for certainly dependent on the development of a clear actions assigned between the partners. A series of national transport strategy to which the donors can multidonor workshops organized by MPWT have subscribe. The recent efforts to articulate a policy addressed specific issues but do not appear to have for community participation in rural transport may concluded with any practical commitment to prove to be a strong catalyst for alignment of donor enhanced collaboration. support in this field. In May, 2006, MPWT, ADB, SIDA, and the World The second area of potential concerns the harmonization Bank proposed a memorandum of understanding, of process, which the MPWT strongly encourages. "Donor Harmonization in the Transport Sector, This is where much of the effort of the harmonization Coordination Framework Agreement," and agreed workshops has so far focused. Significant progress has to coordinate their activities as the LTDP. The already been made in aligning financial management memorandum states that the Framework Agreement and procurement processes as well as reporting and shall contain at a minimum the following areas of monitoring. For example, DOR, ADB, and the World coordination: national road transport policy; rural Bank agreed to accept the recommendations proposed transport infrastructure policy; road safety; transport under LSRSP-1 to meet the long-term objective of regulatory framework; governance and anticorruption; establishing a uniform financial and accounting system HIV/AIDS prevention; capacity development in each that includes all sources of funding and consolidates area: and organizational effectiveness and business DCTPC accounts within MPWT. The ADB (1999) modernization, including planning process, financial assisted this development under its Rural Access management, auditing and accounting, procurement Roads Project and a technical assistance project to and bidding processes, environmental and social assist the GOL in strengthening accounting systems safeguards processes, and project management. in the Ministry of Finance and some line ministries. Alignment and harmonization MPWT attempted to establish a harmonized safeguard Two distinct aspects of collaborative activity arise procedure in line with country laws and acceptable Paving the Road for Better Capacity 21 to ADB, SIDA, and the World Bank requirements. action plan on road safety involving the NDF, ADB, During the implementation of RMP-2 key safeguard and SIDA. Nevertheless, the general model for policy frameworks and/or technical guidelines were collaboration clearly needs further elaboration to put in place at the beginning of the project. Training broaden the scope of joint discussions and hence on the safeguard screening and monitoring was attract the more active participation of all donors. provided at central and DCTPC levels during 2005- 06 with SIDA's technical assistance. Effective Government initiative is critical to such collaboration. implementation of safeguards is constrained by the So far it has tended to develop best where an individual government's limited budget and the weak technical director is trying to launch an activity requiring inputs and management capacity of staff at the local level, from several donors. A current example is the effort because implementation is taking place in a decentralized SED's director is making to harmonize donors' manner. The capacity of the Environment and Social approaches on social and environmental safeguards. Department to assist the subproject owners during SED has drafted a schedule for harmonization and is the preparation and implementation requires further preparing a work plan and defining roles and improvement. Similarly, the capacity of DCTPCs to responsibilities for implementation. The success of assess, supervise, and monitor safeguards on the this initiative in a difficult field is yet to be seen, but ground needs strengthening. Capacity, willingness, the effort highlights the needs for the development of and/or awareness of other divisions, units, agencies guidelines for the development of the activity and the on their responsibilities related to safeguards are establishment of effective secretariat arrangements. sometimes inadequate so that further clarification of roles and responsibilities of the concerned divisions, There is a strong willingness from the Ministry and units, and agencies with respect to safeguard Development Partners to move forward in the implementation appear necessary. harmonization agenda. This motivation was reflected in the last harmonization workshop in April 2007 by High-level government commitment is also crucial. the chairmanship of the Minister and attendance of The implementation of the five year Public Expenditure all key partners. SIDA has agreed to assist the MPWT Management Strengthening Program under the harmonization secretariat in the preparation of the Ministry of Finance and the Prime Minister's Office forthcoming harmonization workshop by translating has stimulated improved financial management the actions agreed in the Vientiane Declaration and throughout the central government, as has the Action Plan on Aid Effectiveness into the transport establishment of a new Government Financial context. Information System in all ministries and most provinces. Next steps While the effects of the partnership have so far been Although donors maintain extensive dialogue both limited, they have been significant. SIDA and the with the GOL and among themselves, and tend to World Bank have worked together effectively in identify areas of special interest to themselves (SIDA designing and implementing the road maintenance in community roads, the World Bank in road initiatives of RMP-2 and LSRSP-3. This has included maintenance, ADB in the Greater Mekong System synchronization of missions and acceptance of and road safety), there is need for a clearly defined common procurement rules. But even then there prioritization and balance within the overall program. have been limitations, with SIDA accepting the GOL's The harmonization workshops that the MPWT has procedures on economic and social safeguards while organized have shown important commitment but the World Bank does not. The path is not smooth tended to be weak in terms of operational even for such willing partners as SIDA and the World commitment. Additionally, the partnership that the Bank. There is a similar joint activity to develop an LTDP represents is still limited in membership and 22 Paving the Road for Better Capacity scope. What would seem to be required is a concerted Second, MCTCP must have the capability to effort to bring together all the major donors in a forum introduce and implement processes that it owns yet in which they can have meaningful discussions with which are capable of attracting donors' confidence. government on major strategic issues. Such a forum This includes strengthening and harmonization of would make sense only if it was driven and chaired processes for financial management, procurement, by MPWT. That does not preclude a secretariat project management, monitoring and evaluation, function being offered by one of the donors (as is the and social and environmental safeguards. Again, the case in SIDA's contribution to harmonization efforts government will need to take the initiative to achieve and that of the Japanese secretariat in the Transport that harmonization so donors can align to them. The Partnership Group in Vietnam) capacity-development efforts so far have gone a considerable way towards achieving that confidence. The ultimate objective of collaboration may be seen But there is still some way to go, and capacity- as a sectorwide approach in which the government development efforts might now be focused in terms formulates a strategy and operational plan for the of meeting the conditions for a sectorwide approach sector and in which all donors agree to support to funding to be put in place. financially, using harmonized procedures for prioritization, procurement, financial management, and environmental and social safeguards. The advantages of such an arrangement to government are clear as they increase the scope for strategic direction of the sector while reducing the costs of doing business. Graduating to such a situation, which appears to have been the long held aspiration of the present minister, imposes two main requirements, however. First, there must be a well-articulated government strategy, including a clearly prioritized program of supporting actions. While the sector strategies have so far fallen short of this, some of the tools for formulating a plan ­ for example, the RMS ­ are in place. In the transport sector it is now a matter of learning how to use the information the systems are capable of yielding in supporting strategic planning. The donors can help in this but it must be a government-owned strategy. Without government ownership, donors may simply see a sectorwide approach as a dilution of their ability to ensure their funds are being well used. With strong government commitment the countries and multilateral agencies that invest most heavily, notably China, Japan, and the ADB, can feel assured that projects which their funding is being used for are of the highest priority to the country and are going to receive the necessary support. Paving the Road for Better Capacity 23 CONCLUSIONS Successes achieved to date The road system in Lao PDR has improved Institutionally, the critical developments have been: dramatically over the last decade. In particular, Recognition of the need for adequate funding The road network has been expanded at of road maintenance and the establishment about 4 percent per annum. of a Road Maintenance Fund; The average condition of the road network Dramatic revision of the project management improved substantially with two-thirds of the institutions to replace separate project-based national road network now in good or units by the Project Management Division; excellent condition. Delegation of responsibility for road Improved outcomes in the physical condition of the maintenance and management, which has road network have resulted partly from the injection revitalized local skills and commitment, and of funding into the sector, for new construction, for which is being progressively extended; rehabilitation and for periodic and routine maintenance. These good outcomes have also depended critically Concern for personnel development, which on the institutional, organizational, and individual has been institutionalized by the creation of capacity development that has occurred over the a specialized development function within decade. the MPWT; and, Renewed LanXang Avenue, Vientiane Capital 24 Paving the Road for Better Capacity Extensive use of local contractors and much improved during the last decade starting from consultants. a situation in which neither funding, skills, nor understanding were adequate for the task. Organizationally, capabilities have been improved in several ways: Challenges to be addressed Data are now systematically collected on the Lao PDR remains poor and highly dependent on state of the road network at all levels; foreign assistance, so there are many challenges in need of continued attention. Systems are in place to prioritize expenditures on roads at the national and subnational Maintenance finance. Despite the emphasis level; given to maintenance in recent years, including the mobilization of donor funding for periodic Considerable donor coordination has been maintenance and the establishment of a Road achieved, and project processes have been Maintenance Fund, the basis for maintaining simplified and harmonized; and, the asset is still weak. The ostensible aim of making the country able to maintain its road Capacity development is approached assets adequately by 2010 is unlikely to be systematically. met with current policies, at least in part because the relatively small increases necessary Human resource development, necessary to make in the fuel tax to achieve that are not proving the institutional and organizational development politically acceptable. Maintaining the assets work, has had many components: will require continued support from the donor community and a new resolve from Basic skills, for example in language and the GOL to increase self financing. computing, have been improved substantially at all levels in the MPWT; Donor collaboration is still limited. The Memorandum of Understanding on Management skills, particularly in financial collaboration effectively links the GOL only management, have been improved at central with ADB, SIDA, and the World Bank. and provincial levels; Furthermore, while the range of issues identified as part of the Comprehensive Technical skills have been improved by training Framework Agreement is extensive, much of programs directed particularly to the DCTPC that agenda needs reviewing. However, the staff; country-wide commitments around the Vientiane Declaration and the high level Skills have been cascaded down through the presence on the April 2007 transport processes of "learning by doing" and "training harmonization workshop are indicative of the trainers"; and, willingness of MPWT and DPs in moving forward on this issue. Training support has been extended to external contractors. Sector reform has been addressed only to a limited extent, mostly in the freight sector. Although there is much still to be done, it is clear that Overloading has been the subject of both the capacity of the road sector in Lao PDR has been physical and regulatory reform, with weigh Paving the Road for Better Capacity 25 stations funded through projects and maximum addressing needs at all levels and not only in weight regulation and obligations to subject central staff functions. Only in this way can a to weighing undertaken by government. culture of capacity development pervade the Entry to the market and regulation of the whole sector. passenger transport sector has not yet been addressed. Training programs should be based on thorough reviewing of personal, organizational, Lessons of the sector experience and institutional needs and subject to ex-post Some of the lessons learned in the transport sector appraisal of their effectiveness. over the last decade, which explain the improvements in human skill and organizational capacity in the Donor assistance in capacity development transport sector, are as follows: has the greatest leverage, and is likely to be most effective, when it is embodied as a For an effective capacity-development effort major component of a broader development to be launched, capacity development needs activity, rather than in a free-standing to be recognized as a major component at capacity development project. the sectoral level and a major priority of those responsible for the sector, particularly the A degree of stability in the composition of current minister. Leadership is essential. donor teams is important to the creation of confidence in government to work together Ownership of the capacity-development with donors on a longer term capacity effort needs to be internalized in the local development effort. institutions by appropriate recognition and incentives. This technical assistance is best Program-based assistance, because it has a directed through a single Project Management longer time scale, and can contain triggers Department rather than through project- related to capacity-development efforts, is a specific PIUs. more appropriate vehicle for capacity development than traditional project loans. Devolution of responsibilities to province and district levels creates an awareness of the Donor assistance is also likely to be more needs for training and stimulates staff to seek effective if it can be arranged as collaboration training even at the lowest levels of an between government and several donors. organization. While government must ultimately lead the effort, donors should be pro-active in The personnel function must be given high establishing and supporting the institutions of status and adequately staffed, and a formal collaboration. capacity-development strategy is required at the sector level. Careful attention needs to be paid to the arrangements for the "training of trainers," This strategy must be comprehensive, in which can effectively cascade down a terms of the human resource skills addressed, training effort. This may require assessment covering basic skills as well as management and support of the local education and and technical competencies. training institutions, but also requires a structure for transfer of skills internally within The training strategy must be inclusive, the government institutions. 26 Paving the Road for Better Capacity PERSONS CONSULTED ANDERSSON, Karin. Coordinator Transport Issues, SIDA. CASADO, Cayetano. Research Analyst, World Bank CHANTRA, Chinnakorn, Senior Procurement Officer, World Bank HJELM, Sture. Consultant to SIDA. KATTIGNASAK, Sengdarith, Director, Local Road Division, MPWT KUMAR, Arun. Professor of Infrastructure Management, Queensland University of Technology MEKTAKUL, Somnuk, Deputy Director, Local Road Division, MPWT NUGENT, James. Country Director, Asian Development Bank NUNEZ, Maria Margarita. Senior Highway Engineer, World Bank PHANVISUK, Chantaphone. Director, Road Maintenance Fund, MCPTC PHOLSENA, H.E. Sommad, Minister, MPWT RATTANAVONG, Souvanny. Deputy Director General, Department of Personnel, MPWT REX, William. Lead Country Officer, World Bank RIGOLINI, Jamele. Task Manager, Poverty Reduction Fund Credit, World Bank ROBITAILLE, Denis. Operations Manager, World Bank SIHARATH, Daochinda. Deputy Director, Project Monitoring Division, MCPTC SIRIBUDDHAMAS, Nipa. Financial Management Specialist, World Bank SOUVANNAVONG, Pho Ngeun. Director, Social and Environment Division, MPWT TOBIN, Richard. Manager, Evaluation Group, World Bank Institute TOMKINS, Richard. Advisor, Department of Roads, MPWT UNKULVASAPAUL, Manida. Senior Environmental Specialist, World Bank WOOD, Greg. Wood International Consultants ZHI, Liu. Lead Infrastructure Specialist, World Bank Paving the Road for Better Capacity 27 REFERENCES Alameddine, C., and M. Hart-Poliquin. 2005. Applying a ________. 2007b. MPWT. Draft White Paper: Policy on Capacity-results Framework in Lao PDR and Other Pilot Rural Transport Infrastructure Countries. World Bank Institute Capacity Development ________. 2007c. MPWT. Report on the Operation of Brief No. 14. the Road Maintenance Fund during the first quarter of ADB. 1999. TA 3309 Lao: Enhancing Government FY 2006/7 March. Accounting Regulations and Procedures. ________. 2007d Ministry of Foreign Affairs. The ________. 2000. 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The Road Sector. 28 Paving the Road for Better Capacity The World Bank Group The World Bank Lao PDR Country Office Patouxay Nehru Road P.O Box 345 Vientiane, Lao PDR Tel: (856-21) 414209, 450010 Fax: (856-21) 414210 Websites: www.worldbank.org/lao The World Bank 1818 H Street, NW Washington, D.C. 20433, USA Tel: (202) 4731000 Fax: (202) 4776391 Website: www.worldbank.org