Document of The World Bank FOR OFFICIAL USE ONLY Report No: 82543-ZR INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF SDR 50.20 MILLION (US$77 MILLION EQUIVALENT) TO THE DEMOCRATIC REPUBLIC OF CONGO FOR A PUBLIC SERVICE REFORM AND REJUVENATION PROJECT November 8, 2013 Poverty Reduction and Economic Management Unit Country Department AFCC2 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective as of November 5, 2013) Currency Unit = US$ CDF 1.00 = US$0.0010781 US$ 1.00 = 927.57 CDF FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank ARRSP Agriculture Rehabilitation and Recovery Support Project BCECO Central Coordination Office (Bureau Central de Coordination) CAS Country Assistance Strategy CEM Country Economic Memorandum CFAA Country Financial Accountability Assessment CDF Congolese Franc (Franc Congolais) CMRAP Public Administration Reform Implementation Unit (Cellule de Mise en ceuvre de la R6forme de I'Administration Publique) COREF Orientation Committee for Public Finance Reform (Comit6 d'Orientation de la R6forme des Finances Publics) CPAR Country Procurement Assessment Review CPMAP Public Administration Modernization Steering Committee (Comit6 de Pilotage et de Coordination de la Modernisation de I'Administration Publique) CQ Consultant's Qualifications CSO Civil Society Organizations DA Designated Account DFID Department for International Development DGDA Direction G6n6rale des Douanes et Accises DGI Direction G6n6rale des Imp6ts DGRAD Direction G6n6rale des Resources Domaniales Administratives et de Participation DIME Development Impact Evaluation Initiative DPL Development Policy Loan DRC Democratic Republic of Congo ENA National School of Administration, Ecole Nationale de l'Administration. EPSP Primary, Secondary and Professional Education (Enseignement primaire, secondaire et professionnel) FARDC Congolese National Army (Forces Arm6es de la R6publique D6mocratique du Congo) FM Financial Management GDP Gross Domestic Product GDRM Grievance and Dispute Resolution Mechanism (Commision Nationale de R&glement des Diff6rends) ii HDI Human Development Index HIPC Heavily Indebted Poor Countries HR Human Resources ICB International Competitive Bidding ICT Information and Communications Technology ID Identity Card IDA International Development Association IE Impact Evaluation IFAC International Federation of Accountants IFC International Finance Corporation IFR Interim Un-Audited Financial Reports INS Statistics National Institute (Institut National de la Statistique) IPF Investment Project Financing IRS Internationally Recruited Staff LCS Least Cost Selection LIB Limited International Bidding M&E Monitoring and Evaluation MENCT Ministry of Environment, Nature Conservation and Tourism MONUSCO Mission of the United Nations in Congo MPS Ministry of Public Services NCB National Competition Bidding NGO Non-Governmental Organization OECD Organization for Economic Co-operation and Development OHADA Organization for the Harmonization of Business Law in Africa (Organisation pour l'Harmonisation en Afrique du Droit des Affaires) ORAF Operational Risk Assessment Framework PA Public Administration PAD Project Appraisal Document PDO Project Development Objective PEFA Public Expenditures and Financial Accountability PER Public Expenditure Review PFM Public Financial Management PIM Project Implementation Manual PIU Project Implementation Unit POM Project Operational Manual PPA Project Preparation Advance PRCG Governance Capacity Enhancement Project (Projet de Renforcement des CapacitWs en Gouvernance) PRONAREC National Capacity Building Program (Programme National de Renforcement des CapacitWs) PRSP Poverty Reduction Strategy Paper PSM Public Sector Management QBS Quality Based Selection QCBS Quality and Cost-Based Selection SBD Standard Bidding Document SENAREC National Secretariat for Capacity Building (Secrdtariat National de iii Renforcement des CapacitWs) SG Secretary General SOE State Owned Enterprises SSS Single Source Selection SW Staff Week TA Technical Assistance ToR Terms of Reference TTL Task Team Leader UCS Use of Country System UNDB United Nations Data Base UNDP United Nations Development Program US United States US$ United States Dollar WDR World Development Report YP Young Professionals YR Year Vice President: Makhtar Diop Country Director: Eustache Ouayoro Sector Director: Marcelo Giugale Sector Manager: Albert Zeufack Task Team Leader Chiara Bronchi Co-Task Team Leader: Marco Larizza 1v CONGO, DEMOCRATIC REPUBLIC OF Public Service Reform and Rejuvenation Project TABLE OF CONTENTS 1. STRATEGIC CONTEXT .................................................................................................................................... 1 A. COUNTRY CONTEXT ..........................................................................................1 B. SECTORAL AND INSTITUTIONAL CONTEXT............................................... ..........................2 C. HIGHER LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES ............................. .......................4 D. RATIONALE FOR BANK/IDA ENGAGEMENT................................................ ........................4 I1. PROJECT DEVELOPMENT OBJECTIVES ........................................................................................................... 6 A. PDO. ................................................................................6 B. PROJECT BENEFICIARIES .......................................................................................6 C. PDO LEVEL RESULTS INDICATORS ...............................................................................6 D. KEY INTERMEDIATE RESULTS AND INDICATORS ....................................................................7 III. PROJECT DESCRIPTION ................................................................................................................................. 7 A. PROJECT COMPONENTS .......................................................................................8 B. PROJECT FINANCING .........................................................................................15 C. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN ........................................................16 IV. IMPLEMENTATION...................................................................................................................................... 18 A. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS...........................................................18 B. RESULTS MONITORING AND EVALUATION ............................................................... ........19 C. SUSTAINABILITY.............................................................................................19 V. KEY RISKS AND MITIGATION MEASURES..................................................................................................... 20 A. RISK RATINGS SUMMARY TABLE...............................................................................20 B. OVERALL IMPLEMENTATION RISK RATING EXPLANATION ................................................. .........20 VI. APPRAISAL SUMMARY ................................................................................................................................ 23 A. ECONOMIC AND FINANCIAL ANALYSES..........................................................................23 B. TECHNICAL.................................................................................................24 C. FINANCIAL MANAGEMENT.....................................................................................25 D. PROCUREMENT.............................................................................................26 E. SOCIAL (INCLUDING SAFEGUARDS).............................................................................26 F. ENVIRONMENTAL (INCLUDING SAFEGUARDS)....................................................................27 G. OTHER SAFEGUARDS POLICIES TRIGGERED....................................................................... 27 V LIST OF ANNEXES ANNEX 1: RESULTS FRAMEWORK AND MONITORING .................................... ..........28 ANNEX 2: DETAILED PROJECT DESCRIPTION .....................................................31 ANNEX 3: IMPLEMENTATION ARRANGEMENTS ...................................................48 ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) .............. ..........................69 ANNEX 5: IMPLEMENTATION SUPPORT PLAN ............................. .......................75 ANNEX 6: PROJECT PREPARATION SCHEDULE AND TEAM COMPOSITION .........................78 ANNEX 7: ECONOMIC AND FINANCIAL ANALYSIS ......................................... ........79 ANNEX 8: GOVERNANCE ISSUES..............................................................104 MAP .......... .....................................................................................114 LIST OF FIGURES FIGURE 1 TOTAL CIVIL SERVANTS ELIGIBLE TO RETIREMENT, BY AGE GROUP (ALL MINISTRIES) .................................23 FIGURE A.3.1 PROJECT IMPLEMENTATION ARRANGEMENTS ................................................................49 FIGURE A.7.1 AGENTS ELIGIBLE FOR RETIREMENT AS% OF TOTAL WORKFORCE, BY GRADE (ALL MINISTRIES) ... .....................97 FIGURE A.7.2 MINISTRY OF BUDGET - AGENTS ELIGIBLE FOR RETIREMENT AS% OF TOTAL WORKFORCE BY GRADE ....................98 FIGURE A.7.3 MINISTRY OF FINANCE - AGENTS ELIGIBLE FOR RETIREMENT AS% OF TOTAL WORKFORCE BY GRADE......... .........99 FIGURE A.7.4 MINISTRY OF PUBLIC SERVICES - AGENTS ELIGIBLE FOR RETIREMENT AS% OF TOTAL WORKFORCE BY GRADE ................100 FIGURE A.7.5 MINISTRY OF PLANNING - AGENTS ELIGIBLE FOR RETIREMENT AS% OF TOTAL WORKFORCE BY GRADE ................101 FIGURE A.7.6 MINISTRY OF PORTFOLIO - AGENTS ELIGIBLE FOR RETIREMENT AS% OF TOTAL WORKFORCE BY GRADE ......................102 FIGURE A.7.7 TOTAL CIVIL SERVANTS ELIGIBLE FOR RETIREMENT, BY AGE GROUP ..............................................103 FIGURE A.8.1 THE QUALITY OF GOVERNANCE IN DRC RELATIVE TO OTHER LOW INCOME COUNTRIES, 2012.....................105 FIGURE A.8.2 THE QUALITY OF GOVERNANCE IN DRC RELATIVE TO THE REGIONAL AVERAGE, 2012 ............... .......105 LIST OF TABLES TABLE 1 PROJECT COST AND FINANCING .................................................................................16 TABLE A.2.1 GOVERNMENT ACTION PLAN FOR THE IMPLEMENTATION OF THE PUBLIC SERVICE REFORM .... .................32 TABLE A.2.2 DEVELOPMENT PARTNERS' SUPPORT TO THE PUBLIC SERVICES REFORM ................... ........................34 TABLE A.3.2 THRESHOLDS FOR PROCUREMENT METHODS AND PRIOR REVIEW .................................................61 TABLE A.7.1 COST BENEFIT ANALYSIS OF RETIREMENT BENEFITS, OVER A 10 YEAR PERIOD ...................................82 TABLE A.7.2 COST BENEFIT ANALYSIS OF THE YOUNG PROFESSIONAL PROGRAM, OVER 10 YEAR PERIOD ...........................82 TABLE A.7.3 FINANCIAL SAVINGS OF THE MANDATORY RETIREMENT .........................................................83 TABLE A.7.4 RETIREMENT COMPENSATION IN THE MINISTRY OF BUDGET .............................. .......................84 TABLE A.7.5 RETIREMENT COMPENSATION IN MINISTRY OF PLANNING .......................................................85 TABLE A.7.6 RETIREMENT COMPENSATION IN MINISTRY OF FINANCE (INCLUDING DGI, DGRAD AND DGDA) ....... ..........86 TABLE A.7.7 RETIREMENT COMPENSATION IN MINISTRY OF PUBLIC SERVICES ..................................................87 TABLE A.7.8 RETIREMENT COMPENSATION IN MINISTRY OF PORTFOLIO ......................................................88 TABLE A.7.9 RETIREMENT COMPENSATION IN THE NATIONAL INSTITUTE OF STATISTICS (INS) ......................89 TABLE A.7.10 SYNTHESIS OF THE COSTS FOR THE RETIREMENT COMPENSATION OF ALL THE MINISTRIES COVERED UNDER THE PROJECT ....90 TABLE A.7.11 RETIREMENT COMPENSATION IN THE MINISTRY OF BUDGET ............................... .....................91 TABLE A.7.12 RETIREMENT COMPENSATION IN MINISTRY OF PLANNING ......................................................92 TABLE A.7.13 RETIREMENT COMPENSATION IN MINISTRY OF FINANCE (INCLUDING DGI, DGRAD AND DGDA) . ................93 TABLE A.7.14 RETIREMENT COMPENSATION IN MINISTRY OF PUBLIC SERVICES ................................................94 TABLE A.7.15 RETIREMENT COMPENSATION IN THE MINISTRY OF PORTFOLIO .................................................95 TABLE A.7.16 SYNTHESIS OF THE COSTS FOR RETIREMENT COMPENSATION OF ALL THE MINISTRIES COVERED UNDER THE PROJECT..........96 TABLE A.7.17 TOTAL CIVIL SERVANTS ELIGIBLE FOR RETIREMENT, BY AGE GROUP AND GRADE ...................................103 LIST OF BOXES Box 1: CHALLENGES OF PUBLICSERVICE IN DRC....... ...................................................3 Box 2 WHAT WENT WRONG IN 2005, AND HOW THE NEW PROJECT WILL PREVENT FAILURE. ...........................42 vi PAD DATA SHEET Democratic Republic of Congo Public Service Reform Rejuvenation Project (P122229) PROJECT APPRAISAL DOCUMENT Africa Region AFTP5 Basic Information Date: November 18, 2013 Sectors: Central Government Administration (70 percent); Sub-national Government Administration (30 percent) Country Director: Eustache Ouayoro Themes: Administrative and Civil Service Reform (100 percent) Sector Manager/Director: Albert Zeufack EA Category: C /Marcelo Giugale Project ID: P122229 Lending Instrument: Investment Project Financing Team Leader(s): Chiara Bronchi, Marco Larizza Joint IFC: Borrower: Ministry of Finance Responsible Agency: Ministry of Public Services Contact: H.E. Jean-Claude Title: Minister of Public Services Kibala Telephone No.: (+243) 995643128 Email: ministrefp@fonctionpublique.gouv.cd Project Implementation Period: Start Date: May 1, 2014 End Date: April 30, 2019 Expected Effectiveness Date: May 1, 2014 Expected Closing Date: April 30, 2019 Project Financing Data(US$M) Loan [X ] Grant [Other Credit [ ] Guarantee For Loans/Credits/Others vii Total Project Cost: US$ 77M Total Bank US$ 77M Financing: Total Co-financing: 0 Financing 0 Gap: Financing Source Amount (US$ Millions) BORROWER/RECIPIENT 0.00 IBRD 0.00 IDA: New 77.00 IDA: Recommitted 0.00 Others 0.00 Financing Gap 0.00 Total 77.00 Expected Disbursements (in US$ Million) Fiscal Year 14 15 16 17 18 19 Annual 6 12 32 20 7 0 Cumulative 6 18 50 70 77 77 Project Development Objective(s) The development objective is to: improve the human resource management capacity of selected ministries and rejuvenate their workforce. Components Component Name Cost (US$ Millions) 1. Supporting the implementation of the public service reform program 39.7 2. Supporting the retirement process 30.3 3. Contingencies 7.0 Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [X ] respects? Does the project require any waivers of Bank policies? Yes [ ] No [X ] Have these been approved by Bank management? Yes [ ] No [ Is approval for any policy waiver sought from the Board? Yes [ ] No [X ] Vi1 Does the project meet the Regional criteria for readiness for Yes [X] No[ implementation? Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Name Recurrent Due Date Frequency Description of Covenant lx  I. STRATEGIC CONTEXT A. Country Context 1. In recent years, DRC has made significant progress in stabilizing its economy and restoring security in most of its territory. Implementation of sound macroeconomic policies has allowed DRC to weather the global economic crisis with economic growth stabilizing at around seven percent since 2010. During this period, GDP growth has exceeded the average for Sub-Saharan Africa by two percentage points and is projected to reach over eight percent in 2013, maintaining a positive trend in the medium-term. 2. With an estimated population of 71 million, vast natural resources, and massive agricultural potential, DRC could be a major player in Africa's future. DRC borders nine countries in Central and Southern Africa, and has complex economic, migratory, and political relations with each one of them. Given its strategic location, DRC's development trajectory could have a significant impact on the economic growth and political stability of the sub-region. Moreover, DRC has the second largest mineral deposit of copper in the world, about 60 percent of the world's forest endowment, 15 percent of the world's hydropower potential, and 52 percent of all African water resources. With 80 million hectares of arable land, DRC also has the potential to feed one billion people. 3. Despite the huge potential and abundance of natural resources, economic growth has so far not translated into lower poverty or unemployment rates. Poverty remains pervasive and poverty indicators are high even by regional standards. In 2012, annual GNI per capita was about US $220, less than half of the regional average for low-income countries (US $584). About 71.3 percent of the population lives on less than a dollar a day (2006 estimates), and the 2012 UN Human Development Index (HDI) ranks DRC last among the 186 countries it surveys. Infrastructure collapsed during the long conflict, and today only four provincial capital cities can be reached by road from the nation capital city, Kinshasa. The country's ranking on the Doing Business Index remains low at 181 out of 185 countries. The private sector offers formal employment to only 1.2 percent of the labor force and young people are the most greatly affected by unemployment, particularly in urban areas. The marginalization of a large section of the population contributed to generating patterns of distrust toward the state authorities, fostering political instability and perpetuating armed conflict, the most recent being the rebel activity in Eastern provinces. 4. Sustainable economic growth and shared prosperity will heavily depend on improvements in state effectiveness. Following the progress made in stabilizing the country and the achievement of the HIPC completion point in 2010, the country is now able to focus on delivering its ambitious development agenda as outlined in the second PRSP (adopted at the end of 2011) and in the recent Government Development Program (2012). This program defines a road map of the targets outlined in PRSP II and aims to: (i) improve governance in the management of natural resources and public enterprises; (ii) strength public finance management; (iii) promote a modern public administration better able to deliver services; (iv) enhance the business climate for private-sector-led growth; (v) improve human development; (vi) close the infrastructure gap; and (vii) improve security in general, and especially in Eastern DRC. Delivering on this ambitious agenda requires an effective public service that can show commitment, leadership, capacity to implement, and integrity. 1 B. Sectoral and Institutional Context 5. For years the public service system has been neglected and its rules and procedures disregarded to a point where it has become dysfunctional. A number of deficiencies are hindering the ability of the public administration to perform including (i) an outdated and fragmented legal framework; (ii) the lack of an HR management system for civil servants; (iii) an over-aged public service (Annex 7); and (iv) an opaque and inequitable wage system that creates opportunities for patronage and rent-seeking (CEM 2010). Taken together, these problems act as systemic constraints to institutional organization and capacity, hampering service delivery and economic activity. Thus, the establishment of basic processes for a well-functioning public service is important not only in fiscal terms (the wage bill represents around 45 percent of total expenses) but also to ensure better delivery of basic services to citizens. 6. Improving the public service management and capacity has become a key government priority, as reflected in the 2013 Strategy for the Public Sector Reform. Despite the complexity of public sector reform in a challenging and fragile environment, there are encouraging signs. In January 2013 a revised strategy for the implementation of the Public Service Reform ("Stratigie Rivisle de la mise en Oeuvre de Rforme de l'Administration Publique") was adopted by the Public Administration Modernization Steering Committee ("ComitW de Pilotage et de Coordination de la Modernisation de l'Administration Publique"- CPMAP") chaired by the Prime Minister The Strategy is being implemented by the Ministry of Public Services, which has prepared an action plan approved by the CPMAP in May 2013. The action plan, or Note de Cadrage, is a realistic set of objectives and actions that aim to re- establish order, transparency and accountability in the management of the Public Service. The action plan is centered around five key pillars (Grand Axes) that include: (i) the revision of the regulatory framework; (ii) clarification and modernization of ministerial mandates and organizational structures; (iii) improved HR data management; (iv) rejuvenation of the civil service; and (v) establishment of an adequate pension system (see Table A2.1 in Annex 2 for details). Established by Prime Minister's Decree on 3 August, 2012, the CPMAP is a small inter-ministerial coordination structure chaired by the Prime Minister and consisting of five ministers. The Minister of Public Services, who is also the deputy chair of the CPMAP, will report regularly on the reform progress as well as the project implementation to the CPMAP, which is expected to meet on a quarterly basis or more frequently if needed. 2 Boxl: Challenges of Public Service in DRC The DRC public service system consists of three parallel structures: i) a general administration that is aging and has been effectively sidelined from the mainstream policy design and implementation process, to the detriment of its effectiveness; ii) a system of ministerial cabinets with political appointees that vary with changes of various ministers, but in effect have taken over much of the policy decision functions in Government, leading to fragmentation, duplication and inconsistency in policy decisions, and; iii) a series of parallel committees and institutions such as the COREF that are tasked with monitoring the implementation of key reform programs such as PFM and decentralization. The multiplication of functions within the Public Sector is the solution that past governments devised to overcome the ineffectiveness of the general administration. While the present system has been able to deliver in some areas like making progress on designing key reforms, the present government is fully aware that its sole reliance on transitory ministerial cabinets and ad hoc committees is not sustainable in the long run, as it contributes to undermining the effectiveness of public institutions in the following ways: (i) Fragmented Legal Framework and Management Structure Initially integrated into a single legal framework, the public service has become fragmented with a multitude of special groups and cadres, without a coherent management structure or salary system. In particular, there has been a proliferation of 'nouvelles unitis', staff who have no legal status, but who still serve as office holders and obtain benefits from their de-facto employment (World Bank, 2010). In addition, the multiple amendments of legislation, and in particular the multiple 'status spcifiques,' have effectively destroyed the idea of a unified administration and created a system in which most ministers manage staff as they see fit. This in turn exacerbates the collective action problem in a government that is characterized by weak coordination and poor information sharing. To address this problem, the design of a new legal framework was launched in early 2005, with the assistance of the Belgian Cooperation and the UNDP. Suspended prior to the 2006 elections, the process resumed after the change of government and continued until December 2012 when the new government submitted a draft proposal on the new Organic Law on the Public Service to Parliament. (ii) Poor HR Management System At present the HR management system involves two institutions that are not well coordinated. The Ministry of Public Services (MPS) is responsible for the overall management of civil service, while the payroll department in the Ministry of Budget is responsible for the wage bill. The lack of integration between these institutions creates substantial inconsistencies between databases and increases the scope for abuses, including improper hiring and remunerations, which open the door to double-dippers and ghost workers. In addition, the lack of coordination contributes to illegal hiring, an inflated wage bill, and an opaque and unequal pay system. (iii) Incoherent Payroll System For many years the government has failed to introduce a transparent and equitable payroll structure, which has undermined team spirit and cohesion within the civil service and has adversely affected the professional cooperation both within and between ministries and departments. The virtual absence of work motivation, combined with the lack of any type of performance assessment, has created a culture in which poor performance is tolerated and good performance is not encouraged. Currently, there are no coherent policies that govern the payroll system and address the problem of low remuneration. Wages constitute over 45 percent of public expenditures (CEM 2011). The salary system is characterized by low wages and high concentration (i.e. limited differentiation of salaries based on seniority and level of responsibility). However, a variety of bonuses and allowances (primes) are being awarded and constitute up to 90 percent of the compensation package in addition to the base salary set by law. The proliferation 3 of these benefits and ad-hoc salary top-ups reflect 'copying' arrangements to circumvent the low public pay scale. Over time, however, these practices have increased the opportunities for patronage-based appointments. These practices also tend to benefit civil servants based in Kinshasa, discriminating against equivalent positions in the provinces that do not receive premia. A first step in rationalizing the wage system was introduced in 2007, bringing the base pay proportion of total pay from 5 percent to approximately 40-55 percent (depending on grade and other bonuses received). Presently, the government has revived the reform process, with a focus on wage system rationalization. This requires addressing the problem of 'primes spdcifiques,' or discretionary bonuses, that are not included in the wage bill budget and are paid by ministries to senior officials, and assessing the fiscal sustainability of upward revisions to the payroll system. (iv) Aging Civil Service The public service continues to suffer from the progressive depletion of skilled manpower and a constantly aging work-force. Today, 55-60 percent of all Congolese civil servants have passed the mandatory retirement age, which currently is 55 years old or 30 years of service, with many officials continuing to work until 70 or 75 years of age.' The lack of resources to pay end of career benefits, together with the low credibility of the State in terms of meeting its obligations to pay pensions, constitute the main explanation for this situation. As such, this situation creates incentives for officials to remain in their positions well beyond the legally established retirement age, but also effectively hinders young professionals from pursuing a public administration career. Managing the retirement process is therefore a key precondition for effective public service reform. An upward revision of the retirement age to 62 years (or 30 years of service) is currently being planned and enshrined in the draft Organic Law on the Public Service and related laws on the central, provincial and local public service systems. The package of legislation is expected to be adopted before the end of 2013. However, even with an age limit of 62 or 30 years of service, there is still a significant number of employed civil servants who have reached the mandatory retirement age. C. Higher Level Objectives to which the Project Contributes 7. The proposed project is consistent with the government's PRSP II and is an integral part of the new Country Assistance Strategy (FY13-FY16), contributing to its higher-level objectives of increasing state effectiveness and improving good governance. The project also responds to the conclusions of the CAS FY08-11 Mid-Term Review, which emphasized the need to invest more in State building and to strengthen work on aid effectiveness, as these are two key preconditions to deliver essential investment for sustainable and equitable development. 8. After having made substantial progress in stabilizing the economy and achieving the HIPC completion point in 2010, building a functioning public administration is one of the key development challenges for the Democratic Republic of Congo (DRC). Without a functioning administration, the peace dividends may not be sustainable and the efforts made by the Government, its citizens, and its partners, will not deliver the expected development results. Therefore, by supporting government efforts to create an effective public administration, the project is also expected to help DRC's progress in bolstering economic growth, creating jobs, and reducing poverty. D. Rationale for Bank/IDA Engagement 9. Enhancing the quality of public sector governance and strengthening state effectiveness is an essential condition for DRC's exceptional resource endowment to be translated into long- term, sustainable growth and poverty reduction. Success across the Bank's portfolio and impact 4 on long term economic and social development depends critically on improving the quality of the public service. The experience of several Bank projects implemented in DRC has pointed to the "capacity" problem as a key constraint, and these programs have relied on a variety of ad-hoc measures to address gaps at the sector level. Addressing the capacity and performance issues across the public sector is therefore critical to ensure successful achievement of the Bank priorities as outlined in the CAS FY13-16. This is also aligned with the new Africa Regional Strategy, where governance and public sector capacity appear as the foundation of the Bank's engagement in the region. 10. The Bank is at the center of the policy dialogue on PSM and is viewed as one of the lead development partners by the Government. Accordingly, the design of the project is based on the 2 findings of two pieces of analytical work on public service salaries and retirement systems , as well as the CEM (2011), which identifies the challenges of public sector reform and provides strategic recommendations that informed the design of the revised reform strategy in 2013. 11. The technical capacity and convening power of the Bank are further reasons for the institution to play a central role in supporting the government. This intervention offers the opportunity for the Bank to strengthen and sustain a policy dialogue on critical public service reform issues that could significantly improve the capability and performance of the government. Meanwhile, the scope of Bank interventions will be limited, given the complexities of the undertaking, the large stock of social debts, overstaffing, deep political economy issues, and the advanced state of degradation of DRC's public sector. Hence, this operation should not be seen in isolation but as a firm commitment of the Bank to support the reform in a gradual manner by ensuring results at a pilot-level that might be scaled up in the future. 12. In terms of cross-cutting priorities, Bank leadership has been specifically requested in three areas, both by the Government and other development partners: fiscal and administrative decentralization, public financial management reform, and public service reform. Through two ongoing projects (Governance Capacity Enhancement Project and Establishing Capacity for Core Public Management Project), the Bank is supporting the development of public sector and financial management systems, including payroll management at both the central and provincial levels coupled with the training of senior- and middle-management civil servants in order to increase their capacity to manage resources and adapt to the evolving needs of the country. Moreover, the Bank is supporting institutional reforms in other sectors. Parallel efforts are also underway to reform and rejuvenate the Ministry of Environment and Nature Conservation under the Forestry Project and the Ministry of Agriculture under the ongoing Agriculture Rehabilitation Project. The Ministry of Social Services is also asking for the Bank's assistance to modernize its mandate and organizational structure. A Framework Law on Public Financial Management was approved in July 2011 (Loi relative aux Finances Publiques 3) that regulates the management of public finances across the country. The new Public Procurement Code became effective in October 2010.4 Engagement on this project will therefore offer the opportunity for the Government of DRC to have a more comprehensive engagement with the Bank on building government effectiveness, which will add value as the various aspects of the public sector management reform agenda are intrinsically linked to each other. 2 The 2008 Policy Notes on Public Sector Wage Reform and the 2011 Analytical Note on Public Service Retirement 3 Law No 11/011 of July 13, 2011. 4 Promulgated by Decree on April 27, 2010; effective since October 27, 2010. 5 13. In addition to the value of comprehensive engagement, the comparative advantage of the Bank, in terms of technical expertise in sustainably guiding and supporting the course and process of reforms, is fundamental to mitigate the risks inherent in a project of this nature. While the risks associated with this project remain high, the potential rewards are also high. Moreover, the risks of not taking action are also significant: on the one hand, the absence of a policy dialogue might further encourage arbitrariness; while on the other hand, failure to influence the public service reform agenda in the country might have larger implications across the Bank's portfolio and undermine the effectiveness of other sectoral interventions. II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 14. The project development objective is to: improve the human resource management capacity of selected ministries and rejuvenate their workforce. 15. The project is expected to work with the Ministries of Finance, Budget, Planning, Public Services, and Portfolio; and will address selected priorities in areas that are essential to help the Public Service of DRC move away from a dysfunctional and aging public administration toward a better performing and rejuvenated system. The pronounced fragility of the country, and the fluid national and regional situation, require a focus on basics with maximum design flexibility and adaptability during implementation of project activities. B. Project Beneficiaries 16. Direct project beneficiaries will include civil servants eligible for retirement, young graduates seeking to make a career in the public service, and existing civil servants who will acquire access to improved pension benefits and better career prospects in the five target ministries. Indirect beneficiaries will include the population at central and provincial levels, who can expect to see improved performance in public service delivery as the reform progresses. C. PDO Level Results Indicators 17. The PDO Level Results Indicators are: (a) PDO Indicator 1: Recruitment of civil servants in the targeted ministries is based on the new organizational norms and procedures (percent of total new recruitments in target ministries); As the WDR 2011 notes: "Rates of success in assistance programs should be lower in fragile situations than in stable development situations, since the contextual risk is by definition higher". This is justified because returns are also far greater when programs work-in peace and security terms, but also in development terms because these countries start from such a low baseline on the Millennium Development Goals (MDGs)" (emphasis added). 6 (b) PDO Indicator 2: Young professionals employed in the public administration after completing their training program to rejuvenate the targeted ministries, of which at least 25 % are women (number/percent); (c) PDO Indicator 3: Civil servants eligible for retirement in the targeted ministries have received their retirement benefits/packages and retired from active service (percent of total staff eligible for retirement in the targeted ministries). D. Key Intermediate Results and Indicators Intermediate Result (component 1): Targeted Ministries are restructured according to their revised organizational framework: (i) Ministries meeting annual restructuring plan targets based on the new organizational norms and procedures; (ii) Regular6 Government employees identified and validated through the biometric identification process; (iii) Cases of irregular civil servants resolved; (iv) Ministries with transparent mechanisms to manage human resources, including recruitment and promotion of qualified staff; (v) A cohort of talented Young Professionals is trained according to a well-defined yearly program, of which at least 25 % should be women. Intermediate Result (component 2): A sustainable retirement system for civil servants is established: i. An external and independent agency to facilitate payment of retirement benefits is recruited; ii. Civil servants of targeted ministries receiving full retirement benefits; iii. Grievances/Disputes on retirement benefits solved during the retirement process; iv. The civil service pension fund is established. III. PROJECT DESCRIPTION 18. The proposed project will be financed by a US $ 77 million Investment Project Financing (TPF), in the form of an IDA grant, aimed at supporting key aspects of DRC public service reform, starting with a pilot of five strategic ministries. 19. In the context of the broader government strategy for public administration reform, the project will have two major areas of focus: (i) supporting the public administration reform program in terms of the implementation of key aspects of the reform monitoring and coordination, while reviewing and reforming the organization of the targeted ministries and agencies; (ii) rejuvenating the public administration through management of the retirement process (including payment of benefits to the retiring civil servants) combined with legal and technical support for the creation of a sustainable public service pension system and support to 6 "Regular" civil servants are defined as civil servants whose ID number (matricule) has been validated and is compliant with the Status of Civil Servants (status des Fonctionnaires). 7 the recruitment of young professionals and their integration into the public administration. These areas of focus are expected to set the foundation for future interventions on other aspects of the civil service reform, including a new pay policy and an effective performance appraisal system, as laid out in the Government Strategy. 20. Under the proposed operation, five strategic ministries have been identified and selected by the Ministry of Public Services (No CAB/MIN/FP/USKD/DC/01/FMM/249/GMK/007/2011) and confirmed during the pre-appraisal mission: the Ministries of Finance (including the three revenue agencies: DGI, DGRAD and DGDA), Budget, Planning (including Statistics National Institute), Public Services, and Portfolio7. The list was confirmed by a letter from the Prime Minister on November 9, 2012. The decision on sector ministries was based on two criteria: (i) level of preparedness (extent to which preparatory work has advanced) and (ii) core functions of the government (financial management and HR). A. Project Components 21. Specifically, the project will cover the following components: Component 1: Supporting the implementation of the Public Service Reform Program (US$ 39.7 million) 22. This component aims to support the public administration reform program in terms of coordination, implementation, and monitoring progress and impact of key aspects of the reform. It will also assist with a strong communication strategy to build broad consensus around the reform. It will finance technical assistance and diagnostics as they emerge during the reform implementation process and the project implementation arrangements. Sub-component 1.1: Strengthening capacity to plan, coordinate, and build consensus on the implementation of the Government's Public Administration Reform Program (US$ 3.6 million). 23. Specifically, sub-component 1.1 aims to provide strategic and legal support to the CPMAP and the MPS to implement the key pillars of the Revised Strategy on Public Administration Reform (see Annex 2 for details on the Revised Strategy). It will also provide technical assistance to build a strong communication strategy to address different audiences including (i) the general public; (ii) civil servants and trade unions, to build understanding and broad consensus on the objectives of the reform and its beneficiaries; (iii) internal dialogue between management, and (iv) civil servants who will be affected directly by this project to address their concerns. A monitoring mechanism will also be put in place through periodic surveys to assess the public perception of the reform progress. This should serve to identify communication gaps and also assess the direct and indirect impact 7 The Ministries of Finance, Budget, Planning and Public Administration meet the two criteria specified above. The Ministry of Portfolio has been included in the reform due to its strategic role in providing oversight for all state- owned enterprises that are active in almost all productive sectors of the country's economy. Moreover, all the ministries identified (with the exception of Portfolio) have de-concentrated units with representation at the provincial level of government, thereby providing services to the entire country. 8 of the reform. 24. This sub-component will finance the following activities: (i) Technical assistance to the CPMAP and the MPS to steer the reform, monitor progress, anticipate problems and solutions in order to advance the reform process efficiently (US$ 1.2 million); (ii) The preparation of a legal framework for the public administration by putting in place implementation regulations and procedures for a swift enactment of the new Organic Law on Public Services that is expected to be discussed by Parliament before the end of 2013 (US$ 0.5 million); (iii) The Government Communications strategy on the Reform, including regular surveys to assess the public perception of the reform by the political leadership, the civil servants and citizens, possibly with the use of ICT tools (US$ 1 million);and (iv) Workshop activities to raise awareness and build consensus among civil servants and trade unions on the key strategic objectives and implementation strategy of the reform program (US$ 0.9 million). Sub-component 1.2: Supporting the restructuring of the organization and functions of targeted ministries and institutions (US$ 4 million). 25. This component will support all targeted Ministries and the National Institute of Statistics through financing technical assistance to carry out organizational and functional reviews to implement the reorganization of these entities. These reviews will be based on a governance- auditing approach, which aims at reviewing organizational structures, institutional arrangements, and processes and capacity against the institutional mandates. The findings of the audits should be used to re-organize the ministries, help them to elaborate an action plan to improve senior management leadership as well as assessment of staff competences for better delivery of their mission. The overall process will also be supported by the National Secretariat for Capacity Building (SENAREC) -- presently supported by the Bank's project on Establishing Capacity for Core Public Management -- that coordinates a network of national and provincial institutions that provide training in rapid results initiatives and result based management to help public institutions improve their performance. 26. This sub-component will finance the following activities: (i) Technical assistance to undertake organizational/functional reviews and governance auditing for the targeted ministries and agencies (US$ 1.5 million); (ii) Technical assistance to elaborate and implement an action plan based on the recommendations of the organizational audits, including assessment of staff competencies and re-assignment according to newly identified needs and functions (US$ 2 million);and (iii)Technical assistance to update the National Program to Strengthen Capacity of the Public Service (PRONAREC) according to staff needs and objectives, in coordination with SENAREC and other government training centers and national schools (US$ 0.5 million). 9 Sub-component 1.3 Building capacity for HR Data Management and Control (US$ 4 million) 27. The effective management of the public service workforce remains one of the most critical constraints for the establishment of a functioning public administration. Overall, the DRC government currently has no effective control over the exact number of civil servants, the quality of its workforce, or personnel movement. The number of registered civil servants and security agents receiving salaries through the regular payroll system is estimated at 236,000 (excluding teachers) and 334,000 (including teachers). However, there are a number of employees who have been hired outside of the regular Civil Service system and irregularly registered with the Ministry of Public Services and who claim a regular pay. 28. The lack of a reliable database and poor documentation and archiving systems implies that neither the Ministry of Public Services nor the hiring ministries know the exact number of civil servants, thus impeding their ability to manage careers and retirement and ensure the veracity of the data. In order to remedy this long-standing situation, as well as to set the basis for mastering HR data and to set some controls on the management of civil servants, including managing their retirement, the Ministry of Public Services started a biometric identification process of civil servants at the central and provincial levels in 2005. While the identification is expected to be completed by November 2013, the post-collection data verification and treatment has not started due to poor planning and lack of adequate IT equipment and set up. The MPS is already rehabilitating the IT server rooms and planning to acquire an IT security system to control and prevent fraud and irregularities in the system as well as to protect and secure maintenance of the updated/verified HR database. Once the database is cleaned and protected, constant monitoring by the relevant department will be critical to preserve its integrity and to avoid repeating the costly identification exercise. 29. This sub-component will support the MPS to put in place internal rules, procedures, management and control functions that are the pre-conditions for a well-functioning HR management system and will finance the following activities: (i) Technical assistance for data treatment generated by the biometric census to ensure the reliability of the data (US$ 1.5 million); (ii) Independent audit of the data treatment process to ensure the management and integrity of the process (US$ 0.5 million); (iii)Technical Assistance to build the capacity of the Department of Inspection in the Ministry of Public Services to detect and resolve irregularities. This will include providing IT equipment to facilitate the task, if needed (US$ 0.6 million);and (iv) Capacity building for the HR department of the Ministry of Public Services for HR data management as well as the HR departments of the targeted ministries and agencies (US$ 1.4 million). 30. In parallel, the PRCG will assist the MPS and the Ministry of Budget to introduce an integrated system that will enable the electronic interfacing of the HR database in the MPS and the payroll in the Ministry of Budget. 10 Sub-component 1.4: Building Capacity to Establish an HR Management System (US$ 1.6 million) 31. A coherent and uniform approach to inform new recruitment procedures and to manage the career development process within the system of public administration has to be defined. Currently, the government has not yet adopted a harmonized approach, leading to a number of ad-hoc initiatives being taken in isolation by the various ministries . Moreover, the failure to establish a transparent and consistent approach increases the risk of using savings generated by the retirement process (component 2) for other purposes, and hence, undermining the sustainability of the retirement program. 32. This sub-component will finance: (i) Technical Assistance for the design and implementation of human resources management systems, including recruitment, planning, employment and career management of the HR department of the MPS as well as the HR department of the targeted ministries (US$ 1.1 million); and (ii) Technical Assistance to support the review and rationalization of the payroll system (US$ 0.5 million). 33. While the project will provide technical assistance for HR management, it will also support ongoing efforts made by the government towards the rationalization of the payroll system. At present, the MPS and Ministry of Budget are running simulations to assess the fiscal implications of reversing the ratio between salaries and the premia in order to make the payroll system more transparent and equitable, and to limit discretionary interventions. Sub-component 1.5: Supporting a pilot "Young Professionals Program" to rejuvenate the civil service (US$ 20.8 million) 34. The recruitment of younger and better qualified civil servants and agents can significantly contribute to the revitalization and modernization of the civil service. The government has already started to successfully hire young professionals in Ministerial Cabinets (about 1000 across the prime minister's office, the Ministry of Finance, the Ministry of Budget, and the Ministry of Agriculture) and would like to have a more structured approach that provides for young professionals to be integrated into the public service. For this goal to be reached, the cost savings generated by the retirement program (component 2) must be used effectively to recruit new staff and invest in the next generation of civil servants. 35. Recognizing the critical role that the YP program can play in modernizing the system, the project will provide technical assistance to guide the government in clarifying the vision and the objectives of the YP program, and to ensure it is designed in a way that being a YP is an attractive perspective for young graduates. In light of the ambitious target for female young professionals (25 %), this component will also develop a system that targets female graduates for inclusion in the recruitment and training efforts supported under the YP Program. The Ministry of Agriculture, for example, is currently recruiting 3,200 new staff at the rate of 750 a year over a four-year period, thanks to financial support from the Belgian Technical Cooperation (BTC). In contrast, the Ministry of Health, which has a much larger staff, has opted to replace retirees by upgrading existing employees rather than recruiting new ones. 11 36. Moreover, some of the most exceptional YPs will be expected to attend the newly established Ecole Nationale de l'Administration. Finally, the program will also include provisions for the geographic appointments of YPs, to support ongoing efforts to strengthen state presence and effectiveness at the provincial level. Over time, the program is expected to develop a well-recognized 'brand' that can help build an 'esprit de corps' among the new generation of civil servants, creating a sense of pride and raising the profile of the public administration among young graduates. 37. This sub-component will finance the following activities: (i) Technical Assistance to establish an effective program for young professionals that includes training modules, new working tools and methods to ensure enhanced career prospects and successful integration of the young professionals into the public service Project Operations Manual (US$ 4.3 million); (ii) The recruitment and remuneration of approximately 500 talented young professionals under the pilot young professionals program, based on a rigorous needs assessment and budgetary implications, and approved by the Council of Ministers as well as clear rules defined in the Project Operation Manual (US$ 13 million); and (iii) Recruitment and remuneration of 50 senior professionals for coaching and mentoring of young professionals, based on well-identified coaching needs (US$ 3.5 million). Sub-component 1.6: Implementation Support and Impact Evaluation (US$ 5.7 million). 38. The project will be managed by a small implementation unit under the CMRAP (Cellule de mise en oeuvre de la Riforme de l'Administration Publique), which has been created by a ministerial order (Arr&t6 No CAB .MIN/FP/J-CK/GELB/FMD/GMK/082/2012) in order to ensure effective oversight over all actions related to the public administration reform process. The CMRAP will report to the MPS and will serve as secretariat to the inter-ministerial coordination structure chaired by the Prime Minister (CPMAP), and is meant to be a permanent structure within the Ministry of Public Services. Staff will be added to the CMRAP to manage the implementation of the project, including a Project Manager, an accountant, a procurement specialist, an M&E specialist, a treasurer, and a financial and administration specialist. The team will be supervised by the Project Manager, and their costs will be financed by the project. 39. A rigorous impact evaluation (IE) exercise is also proposed as a means of testing alternative approaches to reform and rejuvenate the public service in the targeted ministries, with a view to adopt and scale up those proven to be most effective. Furthermore, given the risks inherent in a project of this nature, the IE will be used as a risk mitigation measure to closely examine the outcomes of select project sub-components and activities to assess whether the project's benefits outweigh any intended or unintended costs. 40. This sub-component will finance the following activities: (i) Provision of expert and technical staff for the CMRAP, including the operating costs of the Project Implementation Unit (US$ 4 million); (ii) Minor works to refurbish the office space and provide adequate IT and logistics equipment for the CMRAP (US$ 0.2 million);and (iii)Technical Assistance for the design and implementation of the Development 12 Impact and Evaluation Initiative to test the effectiveness of alternative approaches to support public service reform and rejuvenation (US$ 1.5 million). Component 2: Supporting the retirement process (US$ 30.3 Million) 41. While capacity for HR management of active civil servants is being built, it is also very important to support the government in managing the "stock" of civil servants who have reached retirement age and that, according to the law, should have already retired. Recognizing these challenges, and in the effort to promote greater accountability in the retirement process, this component is aimed at supporting the government's efforts through (a) the preparation and management of the biometric identification process; (b) the payment of benefits for eligible staff of targeted ministries and agencies through an external and independent agency; and (c) the establishment of a civil service pension fund. 42. Identifying the precise number and identity of civil servants eligible for the mandatory retirement is critical to ensure the transparency and the accuracy of the payment of benefits. While the civil servants census is being completed, a verification of the workforce that is eligible for retirement ministry-by-ministry will start in order to minimize the risk of irregularities which may prevent or delay the reform process. This exercise will also be an important element in building trust in the retirement system among civil servants, will provide up-to-date information, and will allow for corrections of irregularities. 43. Another critical aspect of the retirement process refers to the criteria and methods to be used for calculating benefits and pension benefits. Staff regulations for career civil servants stipulate that pension benefits consist of: (i) severance payment; (ii) repatriation allowance; and (iii) a pension. The first two are known as retirement benefits and are normally a one-off payment. Over the past few years, the criteria for calculating retirement benefits have changed, generating different practices that need to be reconciled into a coherent and unique formula. 44. Moreover, the credibility of any retirement scheme rests on the reliability of the pension payments. Currently, pension payments are paid out of the national budget in the DRC and they are calculated using the base salary. While pensions are being paid, the budget for the retirement benefits, which constitute the bulk of the payment, has not been made available. As a result, many civil servants have lost faith in the system, and tend to reject retirement plans. To restore confidence in the system, the present government has decided to establish a pension fund with contribution defined benefits. In the 2013 Budget Law they have already set aside funds to enable the creation of the pension fund for civil servants. 45. Recognizing the efforts to promote greater accountability in the retirement process, this component aims to support the government of DRC to: (a) prepare and manage the biometric identification process for retirees; (b) pay retirement benefits (severance plus repatriation) for eligible staff of targeted ministries and agencies, through an external and independent agency; and (c) support to establish a civil service pension fund. Sub-component 2.1: Payment of retirement benefits (US$ 27.5 million) 46. This component will support the retirement of civil servants who have reached the retirement age. Currently, the legal age of retirement in force is 55 or 30 years of service. However, the new legal framework expected to be discussed in Parliament before the end of 13 2013 will raise the retirement age of civil servants to 62. The MPS has proposed to start retiring civil servants from the age of 62 (or older) or with 30 years (or more) of service onwards9. According to the data provided by the MPS, it is estimated that 5,979 civil servants will be retired during the period of the project in the targeted ministries for an estimated cost of US$ 18 million for the retirement benefits (See Annex 7 for a detailed breakdown of numbers and costs by ministry). This approach has two advantages: (i) by covering only those civil servants that are eligible for retirement under both the current and the proposed legislation, it limits grievances and appeals arising from possible changes in the eligibility status; and (ii) by selecting the oldest among the civil servants, it reduces the risks of depleting the civil service and also minimizes the social impact on retirees' welfare. 47. Orientation training on management of finances and on how to open small businesses will be made available to those retirees who would like to start a small business or desire to invest part of their benefits. The orientation training will be on a voluntary basis. 48. This sub-component will finance the recruitment of an external and independent agency that will provide the following services: (i) Independent verification of the formula underpinning the calculation of benefits, to ensure its correct application (US$ 0.5 million); (ii) Recruitment of an independent agency responsible to verify and finalize the list of eligible civil servants and the management of the payment process after the biometric census of the eligible civil servants (US$ 23.4 million); (iii)An audit a posteriori will be carried out to verify the integrity of the operation of payment of benefits for every group paid; this audit will also be submitted to the General Inspections of Finance and to the Court of Audit "Cour des Comptes" (US$ 0.6 million); and (iv) The design and delivery of orientation training courses for retirees (US$ 3 million). Sub-component 2.2: Establishing a grievance and dispute resolution mechanism (US$ 1.5 million) 49. This sub-component will support the recruitment of an independent agency to manage the Grievances and Dispute Resolution Mechanisms (GDRM) linked to the retirement process supported by the project. The agency will play a pivotal role by providing help in prevention, management, resolution, and monitoring of potential conflicts related to retirement program implementation. In particular, it will help secure persons or groups of persons affected by retirement programs and ensure that due process will be followed when processing such programs. Learning from past experiences, providing such independent mechanisms is essential to ensure the transparent retirement process and to protect the rights of retiring staff. 50. This sub-component will finance the following activity: 9 The schedule for adoption and promulgation of the new legal framework on status of personnel of public service, with related changes in retirement age, is expected in the first half of 2014. Should the new legal framework be adopted at an early stage of the project implementation, the project will seek to comply with the new laws in force. 14 (i) Recruitment of an independent agency to manage a grievance and dispute resolution mechanism linked to the retirement process supported by the project (US$ 1.5 million). Sub-component 2.3: Technical Assistance to establish a public service pension fund (US$ 1.3 million) 51. This sub-component will assist the Government in creating a pension fund by conducting a study to determine how the fund should be established, governed, financed, and managed to ensure pension payments and their sustainability. The legal advice will be based on options outlined in earlier feasibility studies financed by UNDP in 2005 that are currently being updated by the PRCG. The advice will be provided once Government authorities decide on the type of pension fund they want to establish. In the meantime, the Government will remain responsible for pension payments under the applicable legislation. 52. This sub-component will finance the following activities: (i) Legal advisory services for the preparation of the legal texts, rules and procedures needed to establish the public service pension fund, including a workshop for validation of the proposed legal framework (US$ 0.3 million); and (ii) Technical Assistance to implement systems and procedures for the management of the public service pension fund (US$ 1 million). B. Project Financing a. Lending Instrument 53. The project will be financed by an IDA grant of US$ 77 million under the Investment Project Financing guidelines (OP/BP: 10.00). As stated earlier, it is built on a sector-by-sector approach with the overall objective to arrive at the rejuvenation of the administration in all sectors and the development of a modem recruitment and retirement management system. This instrument has the advantage of providing an adequate framework for the Technical Assistance elements of the project. In addition, it builds in safeguards to prevent funds from being used for 10 other purposes , and responds to the prevailing weaknesses in the PFM system. b. Project Cost and Financing 54. The allocation of funds to project components and activities was agreed with the government during project preparation. 0 In 2005 the Bank made a first attempt to finance retirement benefits through a budget support operation. The DRC government reallocated the resources to other unforeseen priorities and benefits eventually were not paid. 15 Table 1 Project Cost and Financing Component Project cost IDA Financing % Financing (US$ millions) 1. Supporting the implementation of 39.7 39.7 100 % the public administration reform program 2. Supporting retirement process 30.3 30.3 100% Total baseline Costs 70.00 70.00 100% Price and physical contingencies 7.00 7.00 100% Total Project Costs 77.00 77.00 100% Total financing required 77.00 100% C. Lessons Learned and Reflected in the Project Design Adapting to the complex political and institutional context when selecting PSM reforms 55. A growing consensus has emerged among researchers and development practitioners that in the past efforts to reform the civil service in developing countries have failed because they did not take into account the political economy of the environment and other constraints that are often binding. This is especially the case in the context of post-conflict and fragile states, which require "best fit" or "good enough" (Grindle 2004, 2007) approaches that - by explicitly recognizing the constraints imposed by the special characteristics of these settings - will, very likely, deviate significantly from "best practices". 56. Political economy work conducted for DRC during 2008-2010 has highlighted the challenges to the implementation of comprehensive reforms in various sectors. The underlying dynamics in the political system (inability of citizens to effectively articulate interests, inability of elites to make credible commitments to each other, including on issues that are clearly in the broader public interest), combined with new political fault lines (coalition politics, the interplay of central and provincial Governments) make implementing holistic reforms across a vast country particularly difficult. 57. The project design has taken full advantage of the lessons outlined above. Specifically, in terms of institutional reform, the project is realistic as it does not take a comprehensive approach to reforming the public services. Instead, it opts for supporting an incremental approach to civil service reform, focusing on three of the nine priority areas identified in the Revised Public Sector Reform Strategy (Table A2.1). In addition, the project adopts a selective approach that will support a small pilot of Ministries in order to build confidence in the reform that should eventually be extended to the entire public service. Awareness of the risks of unintended consequences given the enduring fragility 58. The critical requirement for external partners when working in Fragile and Post-conflict contexts is 'First, Do No Harm' (see 2011 WDR and the OECD Principles of Engagement with Fragile States). The social complexity of the environment, the fragility of institutions, and the security challenges strongly counsel extreme caution when advancing proposals for major 16 reforms and changes that may adversely affect significant population segments and thus risk weakening the credibility of the infant institutions and possibly rekindle violent conflict. 59. DRC is still in the process of a complex political transition where the change of government has created new expectations for a major shift in policy direction, with improvements in the prospects for reform but also growing frustrations with the government's inability to improve the delivery of basic services fast enough. In this context, this operation focuses on contributing to building the institutional foundation for improved government effectiveness and raising the low efficiency of the management of the public sector with a particular emphasis on revitalizing the civil service. Using an investment project modality reduces risks related to retirement benefits in weak fiduciary contexts 60. Payments of retirement benefits are a highly sensitive issue, both politically and socially. Thus, once commitments are made, payments need to be 100 percent ensured. The modality of a regular investment project allows hiring an independent payment agency that will ensure that payments will reach the legitimate retiree. The recent experience of the ARRSP Project that has successfully paid retirement benefits to over 1700 civil servants shows that an investment project finance modality has the advantage of providing greater assurance that benefits payments will be made. Sustained Government commitment and multi-stakeholder engagement is essential to ensure successful cross-cutting reforms 61. Experience also shows the design of reforms by the Government itself contributes to a high degree of ownership and helps to accelerate implementation of these reforms. This is the case of the Public Sector Reform agenda approved by the Government in 2012, which has been designed to enable direct involvement at the highest level of the Government through its reporting line to the inter-ministerial Committee (CPMAP), chaired by the Prime Minister. 62. Moreover, lessons from the 2011 WDR on fragile states show that reforms have more probability of success when space for understanding and acceptance is created. For this reason, the project preparation has included consultation with trade unions and CSOs. Similar initiatives will be undertaken during implementation, in an effort to create support for state building and public sector reforms. Involving other Development Partners while ensuring responsibilities are clear from the onset to avoid duplication of activities 63. Previous experience from fragile states has also shown that close donor coordination and alignment to government development objectives is extremely important for the success of reforms, as cohesion among donors helps to maintain focus and resources on reforms. The Project has been designed and prepared in close coordination with the African Development Bank and the French Cooperation. Other key development partners involved in the public administration reform include the South African Republic providing financial and technical assistance for civil servants biometric census, UNDP supporting the establishment of civil servants database and funding studies related to the creation of a public service pension fund, and the UN mission (MONUSCO) ensuring dissemination of public service laws (Annex 2). 17 Impact Evaluation embedded into project design can act as a powerful tool to understand what works and how/why for public sector governance 64. A large body of evidence suggests that rigorous impact evaluation (IE)" can make a difference and enable policymakers to test alternative policies in areas with significant uncertainty. Through close examination of the causal impact of these policies on pre-defined target outcomes, the IE will contribute to the development of improved approaches to achieving civil service reform and rejuvenate the public service. At the same time, through identifying unintended negative impacts and informing mid-course corrections, the IE will also act as a risk mitigation strategy to identify and correct unsuccessfully and potentially harmful project activities. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 65. The Ministry of Public Services will have the overall technical responsibility for the project via the Public Administration Reform Implementation Unit (Cellule de mise en oeuvre de la R6forme de 1'Administration Publique - CMRAP) created by ministerial decree in December 2012 (Arr&t6 No CAB.MIN/FP/J-CK/GELB/FMD/GMK/082/2012). The CMRAP is responsible for coordinating the Public Administration Reform process and projects that support reforms in public administration. The CMRAP reports directly to the Minister of Public Services and is also responsible for the implementation of this IDA-financed operation through technical and administrative teams. This structure is presented in Annex 3. 66. A program coordinator (head of the CMRAP) who is a senior expert in public sector reforms and public service management will be responsible for the overall CMRAP work program including providing secretariat services to CPMAP. A project manager, a finance and administrative specialist, a procurement specialist, an accountant and a treasurer will be hired to work full-time on the Bank project. The government will provide for office space and cover the cost of utilities, while the Bank will provide for telecommunication costs of the CMRAP including installation of IT and logistics equipment, office furniture, and minor office space rehabilitation. 67. The CMRAP will be the Bank's main counterpart and focal point for implementation of the Project. In the implementation of the retirement process, the CMRAP will be supported by the standing Retirement Working Group and the Census Unit (Cellule de Recensement), which hold the technical expertise on this issue. The CMRAP will also include an M&E Specialist I Impact evaluations (IEs) use rigorous experimental and quasi-experimental designs to identify the actual impact of a program against a scientifically valid counterfactual. This counterfactual represents what would have happened to intended beneficiaries had the program not taken place, or had a different program design been chosen. Thus, IE complements traditional performance monitoring and tracking of outcomes by directly attributing specific changes in outcomes to specific interventions. When undertaken prospectively and integrated into the operational planning and implementation of a program or policy, lEs are a powerful research and development tool to identify the most effective and cost-effective design options. For this reason, lEs are a management tool for results-based policy planning. At the same time, they are a key instrument for improving aid effectiveness and increasing fiscal accountability. 18 responsible for monitoring and reporting on project results as defined in the accompanying results framework including the method, data source, and frequency of reporting for each project indicator. B. Results Monitoring and Evaluation 68. The overall responsibility for monitoring and reporting on Project results as defined in the accompanying results framework will be carried out by the CMRAP. In doing so, the CMRAP will include an M&E Specialist responsible for implementing the results monitoring plan which includes the methodology, data sources, and frequency of reporting for each project indicator. The project monitoring system will use administrative data from the responsible ministries to be provided with support from the focal points identified within each of the targeted ministries. In this way the project will help reinforce monitoring capacity within each of the targeted ministries. 69. To ensure a strong M&E system, it is necessary to develop a detailed project activity framework/architecture that is aligned with the results framework. This architecture should link key activities to expected project outcomes by aligning the activity with each relevant PDO level result, as well as the intermediate result indicators which it supports. Another important deliverable will be the development of a detailed M&E plan to show how each of the results indicators will be tracked with an emphasis on their definitions, unit of measure, method of analysis, and calculation of target achievements. Accordingly, it may be necessary to conduct an in-depth beneficiary assessment to determine the project's effectiveness in qualitative and quantitative terms. 70. For accountability purposes, the CMRAP is committed to providing regular reports to the Government of DRC as well as the World Bank. For its part, the World Bank will undertake periodic implementation support missions and ensure that key findings resulting from such visits are fully implemented to improve the overall project performance. A mid-term evaluation will be carried out and the findings and recommendations will be used to improve project performance, effectiveness, and efficiency. The M&E expert will also produce semi-annual reports with the latest data for each indicator, which will be available to the Minister of Public Services, the CPMAP, and the partners, and posted on the project website to be created. 71. Project monitoring will be complemented by an impact evaluation component with support from the Bank's Development Impact Evaluation Initiative (DIME). The impact evaluation will focus on testing different schemes for motivating employees to effectively retire at the mandatory retirement age. Options that will be discussed with the Government include schemes under which end of career allowance and repatriation fees are provided at the time of mandatory retirement age, provision of non-monetary recognition awards for people who decide to retire at the mandatory age, and the implementation of a pension scheme. At the same time, the impact of a young professional program will be assessed while it is being implemented. The evaluations will be initiated early in project implementation (within one year) in order to identify the most successful schemed to be applied through the remainder of the Project. C. Sustainability 72. Sustainability is a key concern for this operation, as it is essential to avoid repeating the current situation, in which approximately 60 percent of all staff have passed the mandatory 19 retirement age. Accordingly, three factors that can enhance sustainability have been reflected in project design: a) First, the project is fully aligned with the reform program that has been developed and is being implemented by the DRC government with very limited support from development partners. Furthermore, subject to the results of this project, follow-up interventions might be considered to continue the dialogue with the government and expand the scope of the reform to other targeted ministries. b) Second, the project foresees support for the establishment of a permanent pension fund, which will end the current practice wherein both benefits and pensions for civil servants must be paid by the State budget. Establishing a permanent pension fund, managed autonomously, and initially under a management contract, is considered to be the best safeguard to prevent the recurrence of the current situation. c) Third, it is expected that the decentralization process, supported by the PRCG, will enhance control over personnel management, as provincial Governments will manage 12 staff with greater proximity and greater incentives to improve staff performance V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Table Risk Category Rating Stakeholder Risk Substantial Implementing Agency Risk High - Capacity Substantial - Governance High Project Risk Moderate - Design Substantial - Social and Environmental Moderate - Program and Donor Low - Delivery Monitoring and Sustainability High Overall Implementation Risk High B. Overall Implementation Risk Rating Explanation Risks 73. Stakeholder Risk: There is a substantial level of stakeholder risk associated with the implementation of this operation. While the new government has taken important steps proceed with the reform of the public administration, resistance is expected from those who may be 12 With the support of the PRC-GAP and WBI, a number of provincial governments have started to adopt action plans and to organize staff and activities based on results they want to achieve. This has been particularly successful in the province of Katanga. 20 negatively affected by the reform initiatives supported by the project. In particular, if jobs and remuneration levels in the public service remain a vehicle for patronage, this can create strong resistance to reform efforts that aim to change the incentive structure governing core government institutions and the process whereby new recruitments are made. Moreover, even assuming top- level political and technical commitment to reform at the level of key 'principals' (Ministry of Public Services and Prime's Minister office's, among others), implementation can still be at risk given the poor level of information flows across departments, as well as within implementing agencies. Unless information flows regularly to civil servants, organizational commitment may be weak. The role of influential groups might further complicate this problem, as they might take advantage of their position to boycott the reform process. In particular, the decision on the benefits rate by the Government might incur objections from labor unions. 74. Implementing Agency Risk: While alignment with the government program and the use of existing institutional structures is expected to enhance ownership and sustainability of the public service reform process, the use of country systems might have costs in terms of effectiveness and may compromise the capacity to sustain reform efforts by delivering quick results. Also, with regard to component 2 of the project (retirement), the identification of civil servant is challenging. With respect to proper HR data management, there is a risk of a failure to adapt the ICT systems (payroll managed by the MoF and civil service registry managed by the MPS) through a functioning interface. Moreover, while the MPS is working very closely with the target ministries and agencies, the current lack of an HR data management system implies a certain margin of error. Such activities could also raise privacy issues related to the use of confidential information gathered during the biometric identification process. Furthermore, significant governance and corruptions risks remain when dealing with the payment of retirement benefits. Finally, the development of a permanent public service pension fund, poses risks in the context of the DRC related to the depletion of the funds due to political intervention and non- payment of contributions. 75. Project Risk: Without the removal of opaque and outdated provisions and the adoption of a new legal framework for public service management, the sustainability of the rejuvenation process might be undermined. A new Framework Law on the Public Service has been prepared by the Ministry of Public Service, including a new 'Statut G6n6ral' for the public service that will streamline some procedures and clarify rules and accountability chains. The new law is also expected to raise retirement age from 55 to 62 years. Both pieces of legislation have already been submitted for approval by the Council of Ministers to the Parliament. On October 31, 2013 the MPS presented the new legal framework to the upper house and it is expected to be presented to the lower house soon. The risk of non-adoption remains and the project has allocated sufficient funds to Component 2 to deal with this uncertainty. 76. Given decades of politicized and nepotistic hiring practices in the civil service, the new recruitment process supported under component 1 (young professionals and senior professionals, respectively) may bear the risk of such practices being repeated. Politically motivated replacement of staff would bring little (if any) qualitative difference to the public service. Moreover, retiring about 6,000 senior civil servants might deplete institutional capacity in the targeted ministries, and have serious social implications for the retirees' welfare. 77. From a donor perspective, potential fragmentation of development partner support might threaten the success of the project. Although project preparation was a highly consultative process, it is necessary to maintain dialogue with other donors throughout project 21 implementation. Finally, given the high uncertainty in such a fragile political and institutional environment, it is important to maintain flexibility in project design and complementarity with other projects' interventions. However, depending on other projects' interventions gives rise to risks which could affect the sustainability of project outcomes. Mitigation Measures 78. To mitigate the risks of fraud, corruption, waste, and mismanagement, implementation arrangements will be geared to achieve a high level of transparency across all of the project's components. In particular, with regard to the retirement process, a biometric identification will be carefully designed to ensure an accurate count of civil servants eligible for retirement, drawing on the successful experience of biometric identification in the Ministry of Defense (FARDC) and the Ministry of Environment. As the data identification and verification process progresses, it will be possible to improve the identification of all civil servants and those who have reached retirement status. To mitigate governance and corruption risks associated with the payment of benefits, an independent payment agency will be contracted to manage and execute the actual payments. Also, maximum effort will be made to protect the pension fund from inappropriate use, through the design of a legal framework based on international best practices (see Annex 8 for further details). 79. Close engagement with the government will ensure signing and official promulgation of legal acts required to authorize staff retirement ('Ordonnance prdsidentielle' for senior management positions and 'Arr&td ministerielle' for the other categories). At the same time, the project will encourage support to and ownership of the reform program across various stakeholders. To this end, the project includes an allocation for a communications strategy which will support 'internal' dialogue between management and the civil servants who will be affected directly by this project to address their concerns, as well as 'external' dialogue with other ministries to explore opportunities to scale-up the reform program beyond the pilot phase. In addition, the communication strategy will address different audiences including the general public, civil servants, political leaders and trade unions to build understanding and broad consensus on the objectives of the reform and its beneficiaries. A monitoring mechanism will also be put in place through periodic surveys to assess the public perception of the reform process, and a grievance and dispute resolution mechanism (GDRM) will be established to help persons or groups affected by retirement plans and will ensure that due process will be followed when designing and implementing such programs (see Annex 8 for further details). 80. The recruitment of YPs and senior professionals will be well designed to ensure transparency and identification of well qualified professionals. An independent recruitment agency with external experts will be hired. Technical assistance will be provided during the implementation of the Project Preparation Advance (PPA). Specifically, a consultant will be hired to design - in collaboration with government - a procedure manual specifying all the criteria for the selection and recruitment process of young professionals and senior professionals, while the CMRAP - in collaboration with the targeted ministries - will be in charge of monitoring compliance with the agreed criteria. The Manual or Procedures will clarify all the steps of the selection process of both young and senior professionals. 22 81. In order to plan for an orderly and Figure 1: Total Civil Servants eligible to retirement, by age sequenced retirement process and minimize group (all ministries) the risk of depleting the civil service, the 5000 60 team has collected data on the structure of 50 the civil service (i.e. age cohorts; civil 4000 servants eligible to retirement as % of total 3000 30 civil servants). The age cohort data 2000 indicates that - out of about 9,000 civil 1000 10 servants currently eligible for retirement in the five targeted ministries - about 36 % are 0 0 62 years old or older (including 12 % of staff older than 70 years). This age group Age Cohort will be covered under the project, retiring about 5,979 civil servants across the five - ministries (See Annex 7 for a breakdown of Source: Ministry of Public Services. numbers and costs by ministry). By covering only the civil servants who are eligible for retirement under both the current and the proposed legislation, this approach avoids reputational risks for the Bank. Moreover, by selecting the oldest cadres, it reduces the risk of depleting the 13 civil service . Finally, a voluntary training scheme, including on basic financing and economic literacy, will target the 62-70 age cohort to facilitate their integration into the labor market and thereby reduce the social impact of the retirement process. 82. Overall, this remains a difficult and high-risk intervention. The severe deficiencies in the governance of the public sector and the structural weaknesses of the state apparatus are largely exogenous and unlikely to change in the short-termn. Accordingly, this is an additional reason to limit the scope of the project to a small number of selected ministries and monitor progress through close engagement and supervision. VI. APPRAISAL SUMMARY A. Economic and Financial Analyses 83. The consequences of a non-functional civil service in DRC are widely recognized by the government and its development partners. It is also recognized that an aging and non-performing public service will become an even greater constraint to the country's modernization and economic development objectives, as DRC prepares to take greater responsibility for the management of its resources and translate them into poverty reduction and shared-prosperity. 84. The benefits of DRC Public Service Reform Program that the Project supports will follow from the improved management and rejuvenation of the civil service in strategic 13 The official data from the Ministry of Public Services (Table A7.4 to A7.16) indicate that most of the targeted ministries are over-staffed, in the sense that the number of active civil servants is often much larger than the number authorized under their respective organizational charts. While these charts are old and need to be updated (as indicated under project sub-component 1.2), this evidence suggests that the risk of depleting the administration is low. Figures A7.1 to A7.16 support this argument, showing that for the middle and lower level of civil servants on average less than 30 % of the staff will be retired. The percentage is higher for the highest echelons, providing an additional justification for targeting the oldest age cohorts (62+ and/or civil servants with 30 years or plus of service). 23 ministries that are in charge of economic and HR management of the entire public sector. By managing in an orderly fashion the civil service and making space for younger and better qualified civil servants, while revising the salary policy, DRC will have higher chances to attract and retain staff in key priority positions resulting in improvements in efficiency that will follow from improvements in the performance of civil servants. In view of the "upstream" nature of the interventions, identifying and quantifying the direct and indirect financial, economic and social benefits, and attributing outcomes to interventions are not straightforward, and it is difficult to carry out credible and rigorous cost-benefit and financial analyses for such an intervention. 85. However, the benefit of the proposed reform is expected to be large. The Bank's new approach to Public Service Management (World Bank 2012) notes the important link between reforms at the center of government - "upstream" interventions - and improved sector performance and service delivery outcomes - "downstream" results. This linkage between the intended "upstream" reforms and "downstream" results come from an appropriately remunerated, competent, and adequately staffed civil service, capable and motivated to execute the core responsibilities of the central government and the provinces. An impact evaluation proposed to be carried out for the Project in partnership with the Bank's DIME initiative will, in time, help in quantifying some of the benefits gains and lessons learned will inform implementation. 86. Adding this intervention to the rest of the IDA portfolio in DRC will allow the government and IDA to exploit the synergies and linkages across the different aspects of public sector management including public financial management and decentralization. As the reform process progresses it will be gradually expanded to other sectors, exploiting the complementarity with the ongoing sector projects. In addition to the value of an all-round engagement, the comparative advantage of the Bank, in terms of deploying expert resources for guiding and supporting the course and process of reforms, will contribute to the success of the reform efforts of DRC. The Bank team has already assisted DRC in sharpening the definition of its Program by identifying feasible reforms paths, milestones, and results, and will continue to do so during implementation. 87. Finally, the cost-benefit analysis of the implication of the payment of retirement benefits for eligible civil servants and the establishment of a young professional program financed by this project indicates that DRC could make substantial efficiency gains in a relatively short period of time by rejuvenating the public service (Annex 7). B. Technical 88. The design of this project was preceded by a long-term process of policy dialogue around key aspects of the rejuvenation process, in order to address as many challenges as possible with all the relevant stakeholders. 89. First, issues related to staff identification and the verification process were examined, as this is a particularly complex issue in the DRC (a 2005 attempt at a public service census was unsuccessful, despite an investment of more than US$10 million). In the context of the current operation, staff identification and verification will be conducted ministry-by-ministry, and will be based on a standard methodology that was tested successfully in the pilot retirement process in the MENCT. Identification and verification processes have started for all the strategic ministries and financing has been secured through sector projects. 24 90. Second, the legal framework governing the retirement process has a number of loopholes, lacks clarity, and is based on outdated legislation. Since adopting and implementing a new legal framework necessarily takes time, it was agreed to clarify several key issues through Government regulatory instruments, so that a clear and transparent retirement process could be initiated while a new legal framework is being adopted and the application texts prepared. 91. Third, to benefit from funds allocated under this financing instrument, it was made a necessary condition for ministries to rationalize their organizational structures. Such efforts will also enable the Government to create fiscal savings, as it is expected that the new organizational structure will require less and better qualified professionals, while pension payments to retirees will be lower than the present remuneration. (See economic and financial analysis, Annex 7). 92. Last, given the low capacity context of the DRC, the proposed phased approach will ensure that the complex process of organizational adjustment, retirement, and recruitment will remain manageable, while the financing instrument will serve to ensure continued reform performance. C. Financial management 93. In accordance with the Financial Management Manual that became effective on March 1, 2011, the financial management arrangements of the Public Service and Rejuvenation Project have been reviewed to determine whether they are acceptable to the Bank given the country's post conflict situation. To this end, the Financial Management System of the Public Service Rejuvenation Project must meet the following requirements: (i) assuring correctly and completely the recording of all transactions related to the project; (ii) facilitating the preparation of regular, timely, and reliable financial statements; (iii) safeguarding the project's assets; and (iv) facilitating the implementation of external auditing diligences as required by the Bank. The arrangement also aims to facilitate the disbursements of the project's resources and to ensure their effective use while, to the extent possible, using the country's own financial management systems. Overall, the residual financial management (FM) risk for the project is assessed as Substantial, both before and after mitigation. The proposed financial management arrangements including the mitigation measures for this project are considered adequate to meet the Bank's minimum fiduciary requirements under OP/BP1O.00. 94. The proposed mitigating measures consist of: (i) the recruitment of a Financial Management Expert, whose objectives will be to assist the financial management team dedicated to the project, (ii) the recruitment of an Accountant, (iii) the recruitment of a Treasurer; (iv) the development of a comprehensive project operations manual acceptable to IDA, (v) the establishment of a credible internal audit function, (vi) the recruitment of an independent external auditor in compliance with acceptable Terms of Reference, and (vii) the rolling out of a training plan which includes, inter-alia, training on IDA disbursement procedures, training on OHADA (Organisation pour l'Harmonisation en Afrique du Droit des Affaires) accounting principles and their implication for donor-financed operations, and training on IDA financial reporting arrangements. 95. The CMRAP will ensure the financial management and the disbursement functions. With support of the PPA, the CMRAP has already acquired the adequate accounting software, hired a financial management expert and a treasurer. The recruitment of an accountant is on-going. 25 D. Procurement 96. Procurement activities under this project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated January 2011; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated January 2011; and the provisions stipulated in the Legal Agreement. 97. Procurement will be handled by the Procurement Unit of CMRAP for all components of the project. The procurement unit of CMRAP is staffed with an experienced local Procurement Specialist recruited on a competitive basis during the project preparation under PPA financing so as to establish project procurement capacity. The local Procurement Specialist is already supporting the implementation of PPA procurement activities. In order to strengthen the procurement capacity of the CMRAP PIU, the CMRAP will benefit from the technical support of an International Procurement Expert whenever necessary. The International Procurement Expert will lead the procurement process, provide on-the-job training to other procurement staff (including any other staff assigned by the Ministry of Civil Service), and set up an acceptable procurement system within the project and subsequently the Procurement Unit of the Ministry (CGMP) so as to contribute to the deployment of the National Procurement Law. It will also: (i) reinforce the integrity and internal review of the procurement process; and (ii) develop and strengthen capacity within the Project Unit. A Project Operations Manual, satisfactory to the Bank, is being finalized and expected to be ready before negotiations. The Project Operation Manual will define and describe: (i) the procurement procedures and process; (ii) the roles and responsibilities of each actor/beneficiary in the management of the procurement cycle and the process to be followed; and (iii) the role of the Bank in the review process. E. Social (including safeguards) 98. Retirement benefits and pensions are defined by Law and the starting assumption under this project is that legal provisions will be strictly applied. The decrees and inter-ministerial regulations issued by the Government in May 2010 are based on the principles of social justice and sustainability, and repatriation benefits were set at a level that is both a reflection of current cost (as previously these were set in the now defunct currency of Zaire) and would allow for the Government to continue these payments once they will need to be made from the State budget. In addition, a grievance and dispute resolution mechanism (GDRM) will be established as a global mechanism which will help persons or groups affected by retirement plans and will ensure that due process will be followed when designing and implementing such programs. 99. The credibility of pension payments to retirees remains a risk due to low budget credibility. Accordingly, PFM reforms combined with the reduction of debt payment obligations arrived at as part of HIPC completion point should, in combination, improve the regularity of pension payments. Moreover, the linkage between pension payments and overall Government pay policy 414 will ensure that pension payments will rise mn line with future pay raises of active civil servants. 14In accordance with current legislation, pension payment should be 75 percent of the last earned base salary. 26 F. Environmental (including safeguards) 100. Since the project primarily serves to pay one-off separation payments to civil servants eligible for retirement, in addition to building capacity and providing advisory services, an environmental impact assessment is not required. Minor works include the refurbishment of office space for the CMRAP and the Ministry of Public Services to install equipment. Such repairs/refurbishment will be done according to national and local laws and regulations. G. Other Safeguards Policies triggered 101. Not applicable. 27 ANNEX 1: RESULTS FRAMEWORK AND MONITORING Project Development Objective (PDO) is to improve the human resource management capacity of selected ministries and rejuvenate their workforce. B Cumulative Target Values** Responsibili Description PDO Level Results Indicators* Unit of Measure Frequency(indicator definition YR YRi 4f YRaur Methdoloy ty for Data (idctrefnio e YR YR 2 YR3 YR4 YR5 Methodology Collection etc.) Indicator One: Recruitment of civil % Verify that new servants in the targeted ministries is (Percent of 0 0 50 80 100 100 Biannual Recruitment Each functional framework based on the new organizational total new records of targeted prepared for each norms and procedures recruitments in each of the ministry ministry and being the targeted targeted implemented via [] ministries). ministries reorganization, hiring, and retirement. Monitoring will verify progress achieved. Indicator two: Young professionals Number Appointment Indicator verifies that employed in the public 0 0 0 60 180 300 Biannual letter signed FP, in recruitment norms administration after completing their by the collaboration and procedures to training program to rejuvenate the (%) (25) (25) (25) Ministry of with each recruit Young targeted ministries, of which at least Public targeted Professional are 25 % are women. Services Ministry being applied, and accurate HR data are available. . Indicator three: Civil servants (percent of 0 0 20 50 80 100 eligible for retirement in the targeted total staff Quarterly The Ministry Each Indicator verifies that ministries have received their eligible for of Public targeted identification and retirement benefits/packages and retirement in Services to ministry, in verification are retired from active service. the targeted provide collaboration completed, that ministries as on quarterly with FP and complaints have been December 31, reports of Budget. dealt with, and that 2015) statistics on the retirement identification process is and operational. verification of the eligibility of civil servants for retirement. The statistics 28 include number of retired staff, benefits paid; complaints dealt with and retired cohorts. INTERMEDIATE RESULTS Intermediate Result (Component One): Targeted Ministries are restructured according to their revised organizational framework Intermediate Result indicator Number 0 2 3 5 5 5 Annual Questionnaire Each targeted Ministries achieving One: Ministries meeting annual completed by ministry, in >50% of annual resruturngpla trges ase Heach Ministry collaboration restructuring plan restructuringand verified by with Ministry targets on the new organizational norms Project Unit of Public and procedures Service C/ 0 20 40 60 80 100 Semi-Annual Ministry of Ministry of Indicators measures Intermediate Result indicator preto Ineredat Reutidctrpercent of Public Services Public Service total number of official two: Regular Government total staff) database of civil servants by employees identified and regular civil category, grade, validated through the biometric servants department and location identification process who are identified and __________validated. % 0 0 20 40 60 80 Semi-annual Ministry of Inspection Indicators measures Intermediate Result indicator percent of Public Services Division of number of irregular total identified cases Ministry of cases identified and three: Cases of irregular civil irregular of irregular Public Service resolved by the Ministry servants resolved cases civil servants of Public Service received) Intermediate Result indicator Annual imr: Ministries with transparent Number 0 1 2 3 5 5 Questionnaire Each targeted Ministries have adopted mechanisms to manage human completed by ministry, in mechanisms and HR resorces incldin recru n each Ministry collaboration management tools hreo urces iofin recrulaiel t i and verified by with Ministry compliant with new ant r o Project Unit. of Public institutional framework, Service to manage staff careers. 15, "Regular" civil servants are defined as civil servants whose ID number (inatricule) has been validated and is compliant with the Status of Civil Servants (Status des Fonctionnaires). 29 Intermediate Result indicator Number 100 300 500 0 0 0 Verify from Ministry FP in The project unit will five: A cohort of talented Young (%) Semi-Annual Ministry of collaboration work with focal points Professionals is trained (25) (25) (25) Public with each in each targeted according to a well-defined Services targeted ministries to monitor yearlyand line ministries and record young yealyprora Xministries professional recruited in of which at least 25% should records. all project supported women. aT es. The gender iniaor is a core WB iniaor. Intermediate Result (Component Two): A sustainable retirement system for civil servants is established. Intermediate Result indicator six: An external and Yes/No NO Yes Yes Yes Yes Yes Annual Verify Ministry of The indicator measures independent agency to facilitate from Public Service whether an independent payment of retirements benefits Ministry of agency has been Public established at least by is recruite Services the second year of records. project implementation. Intermediate Result indicator seven: Civil servants of targeted 0 0 20 40 80 10 Annual Verify from Ministry PS. Refers to annual ministries receiving full (percent of Ministry of In percentage of civil retirement benefits E total Public collaboration servants eligible to eligible Services with each retirement who received iil records. targeted full retirement benefits. servants) ministries Intermediate Result indicator eight: Grievances/Disputes on il0 0 10% 30% 60% 100% Annual Verify from Ministry PS Refers to annual retirement benefits solved Ministry of Independent percentage of irregular during the retirement process EH Public Agency cases that have been Services resolved over the records. assessed number of irregular cases. Intermediate Result indicator nine : The civil service pension Yes/No NO NO NO NO YES YES Annual Adoption of Ministry of The indicator monitors fund is established legal texts Public Service that all legislative acts and by-laws and by-laws needed to for the establish the pension establishme fund and make it nt of the operational have been pension adopted. Interediat Resut indcato 30 ANNEX 2: DETAILED PROJECT DESCRIPTION 1. Improving the management of the civil service remains a government priority, as reflected in the 2013 Strategy for Public Sector Reform. Despite the complexity of public sector reform in a challenging and fragile environment, there are encouraging signs. In January 2013 a revised strategy for the implementation of the Public Service Reform ("Stratigie Rivisle de la mise en Oeuvre de Riforme de l'Administration Publique") was adopted by the Public Administration Modernization Steering Committee ("ComitW de Pilotage et de Coordination de la Modernisation de l'Administration Publique"- CPMAP") chaired by the Prime Minister.16 Recognizing the need to set the foundation for a well-functioning public administration, the government strategy focuses on: (i) the revision and adoption of a legal framework for the public administration including the creation of the "young professionals" program as the first step in a professional career with the civil service; (ii) the creation of an ethics office that will have oversight of civil servant's conduct; (iii) the retirement of the aging workforce, while establishing a modem and sustainable pension system; (iv) the establishment of an integrated HR management system that eventually will be inter-faced with the payroll system in order to improve the transparency of HR management and eliminate abuses; (v) training modules to form public administration senior- and middle-management, as well as to provide the foundations for the professional growth of young professionals. The Strategy will be implemented by the Ministry of Public Services, who in turn will report to the CPMAP on the reform progress. 2. The CPMAP is finalizing an action plan that provides clarification on the sequencing of the reform efforts and the most immediate priorities. The revised road map (Note de Cadrage), that is expected to be approved by the government in November 2013, highlights the actions necessary to implement the revised Reform Strategy that has five pillars (Grand Axes): (i) support the management and direction of the public administration reform process; (ii) streamline the public administration's tasks and structures; (iii) control the size and payroll of the public administration; (iv) enhance the capacity and quality of the public administration; and (v) create a retirement/pension fund for the public administration. As indicated in Table A2.1, for each priority area the government has identified key actions in order to move forward with the reform process. While some of the actions have already been undertaken, others are ongoing and/or will be supported by the Bank's Project. 16 Established by Prime Minister's Decree on 3 August, 2012, the CPMAP is a small inter-ministerial coordination structure chaired by the Prime Minister and consisting of five ministers. The Minister of Public Services, who is also the deputy chair of the CPMAP, will report regularly on the reform progress as well as the project implementation to the CPMAP, which is expected to meet on a quarterly basis or more frequently if needed. 31 Table A.2.1: GOVERNMENT ACTION PLAN FOR THE IMPLEMENTATION OF THE PUBLIC SERVICE REFORM Priority Actions to be taken I: Energize and * By decree of the Prime Minister, the Steering Committee for the harmonize the Modernization of Public Administration (CPMAP) was created management of on August 3, 2012. the public administration reform II: Control the size * The government requests the Department of Public Services, and payroll of which manages all civilian employees of the state, to finalize the government biometric census and develop a tool for integrating HR management into employee payroll. * CPMAP requests that the employee payroll system becomes more transparent, where the minimum wage will constitute the majority (2/3) of a civil servant's remuneration. III: Rejuvenate * Since almost all of the Secretaries-General are past the age of public retirement, the MPS will prepare ordinances for the head of state administration to sign to support their pensions. * Each central administration will provide the MPS with 2 or 3 names for the posts of Secretary General, according to statutory conditions. * From 2013, the government budgeted for a similar rejuvenation of the army and the police, followed by the public administration department, finance, budget, planning, portfolio, and agricultural/rural development. * The future statute for public employment will ensure that new recruits will have high technical qualifications and will not be open to former public service employees. IV: Strengthen the * In April 2013, the Prime Minister issued a decree creating the capacity of the ENA (Ecole Nationale de l'Administration), a professional public school of public administration, to establish common standards administration of procedure and public policy management. * The Minister of Public Services plans to launch a first class in 2014 for 60 students, with a curriculum mainly focused on providing public administration training, reinforced by professional placement and case study analysis. * On a competitive basis, recruitment will be open to candidates under 35, including current officials and recent graduates. V: Streamline * The Council of Ministers adopted a law related to the legal / Organic organization and functioning of public services of the central frameworks in government, provinces, and decentralized territorial entities, as public well as the law on the status of civil employees. Although their 32 administration adoption in Parliament is expected to take place before the end of 2013, a transitional period of three years is scheduled for full implementation. * Each administrative department must redefine its mission and identify qualified candidates, as dictated by the budget and the vacancy. VI: Create a * In preparation for a new pension management program, the retirement/pension MPS has requested a preliminary study on the potential fund for the public organization and functioning of the proposed pension structure. administration The results of this study are expected in the last quarter of 2013. VII: Improve the 0 In case of non-compliance with statutory regulations and transparency and litigation in the public service, the case will be forwarded to governance of the administrative justice, now represented by the Supreme Court. public 0 The MPS will diffuse the code of conduct for public officials. administration . The MPS will streamline the exercise of union rights in the public sector. The bill is currently being drafted, and the organization of trade union elections for all civil services is expected in the second half of 2013. VIII: Improve the * The Government has awarded nearly a billion Francs for the material rehabilitation of the public administration building, which conditions and the houses the public administration service; the payroll/budget, functioning of scheduling, treasury, foreign trade departments; and EPSP and public ENA/CMRAP. administration * MPS has started preliminary studies with BCECO, and work is scheduled to begin in the last quarter of 2013. IX: Resolve issues * The UN: the biometric census data should be compared with the related to the declarative lists of Secretaries government's General administrations. political and social * In July 2013, the MPS submitted its findings to PM for action. reforms All appeals against orders on retirement are now inadmissible. The same applies to appeals against orders on revocation. For orders of promotion, it is necessary to correct the statutory position "n" agents. * MPS has decided to appeal to a national expertise to analyze and report individual cases concerned. The report is expected before the end of the first quarter of 2014. 33 3. Although the Bank is one of the main DRC development partners that support the public sector reform, other partners are supporting DRC (Table A2.2) and the MPS has created a donor coordinating unit to ensure donors' alignment to the strategy. Table A 2.2. : Development Partners' Support to the Public Services Reform KEY ACTIVITIES Development Partners Review of the legal framework for the World Bank, France UNDP, AfDB public services sector Biometric Census World Bank, Republic of South Africa, UNDP Social Security World Bank, UNDP, France, MONUSCO Promote professional ethics and values Republic of South Africa, UNDP, Strengthening capacities World Bank, Republic of South Africa, AfDB, UNDP, France Strengthening ITC capacities UNDP, Republic of South Africa 4. In the context of the broader government strategy for public administration reform, the project will have two areas of focus: (i) supporting the public administration reform program in terms of implementation, monitoring and coordination, while reviewing and reforming the organizational structure of the five targeted ministries and agencies, improving the HR management systems and supporting the recruitment of talented young professionals and their integration into the public administration; (ii) rejuvenating the public administration through management of the retirement process (including payment of benefits to the retiring civil servants) combined with legal and technical support for the creation of a sustainable pension system. These areas of focus are expected to serve as the basis to further develop the public service reform. 5. Under the proposed operation, five sector ministries have been identified and selected by the Ministry of Public Services: (i) the Ministry of Finance (including three financial agencies: DGI, DGRAD and DGDA); (ii) the Ministry of Budget; (iii) the Ministry of Public Services; (iv) the Ministry of Planning (including Statistics National Institute); and (v) the Ministry of Portfolio. The list was confirmed by a letter from the Minister of Public Services on November 9, 2012. The decision on sector ministries was based on two criteria: (i) level of preparedness (extent to which preparatory work has advanced) and (ii) cross-cutting nature of the sector. 6. The creation of a priority list and the targeting of specific ministries indicates the government's commitment to implement the public service reform program incrementally in order to secure results for the targeted ministries and generate 'demonstrated results' across the public administration and encourage other ministries to take leadership in the reform process. Project Components 7. Specifically, the project will cover the following components: Component 1: Supporting the implementation of the public service reform program (US$ 39.7 million) 34 8. This component aims to support the public administration reform program in terms of coordination, implementation, and monitoring, as well as building broad consensus around the proposed reforms. It will finance technical assistance and diagnostics as they emerge during the reform implementation process and the project implementation arrangements. Sub-component 1.1: Strengthening capacity to plan, coordinate, and build consensus on the implementation of the Government's Public Administration Reform Program (US$ 3.6 million). 9. Specifically, sub-component 1.1 aims to provide strategic and legal support to the CPMAP and the MPS to implement the key pillars of the Revised Strategy on Public Administration Reform. The resources will be available to carry out diagnostics, analytical work, and hire key experts to facilitate the Reform implementation. It will also provide technical assistance to build a strong communication strategy that will address different audiences: (1) ministerial cabinets; (2) civil servants and (3) citizens in order to build understanding and broad consensus on the advantages of the reform. The communication strategy will be carried out with a communication expert who will also advise on how to best use media in order to reach civil servants in the most remote areas and citizens across the country. Particular attention will be paid to the communication and dialogue with civil servants and trade unions on the objectives of the reform. A monitoring mechanism will also be put in place through periodic surveys to assess the public perception of the reform progress. This should serve to identify communication gaps and also assess the direct and indirect impact of the reform. 10. This sub-component will finance the following activities: (i) Technical assistance to the CPMAP and the MPS to steer the reform, monitor progress, anticipate problems and solutions in order to advance the reform efficiently (US$ 1.2 million); (ii) Technical assistance for the preparation of the legal framework including by-laws for the swift enactment of the new Organic Law on Public Services that is expected to be discussed by Parliament by the end of 2013 (US$ 0.5 million); (iii) Support the Government Communications strategy, including regular surveys to assess the public perception of the reform by the political leadership, the civil servants of the targeted Ministries, and citizens. The use of ITC tools will also be considered (US$ 1 million); (iv) Workshop activities to raise awareness and build consensus among civil servants and trade unions on the key strategic objectives and implementation strategy of the reform program (US$ 0.9 million). Sub-component 1.2: Supporting the restructuring of the organization and functions of targeted ministries and institutions (US$ 4 million). 11. This component will support all targeted Ministries and agencies through financing technical assistance to carry out functional and capacity reviews and to implement the reorganization of these entities. Organizational, functional, and capacity reviews will be based on a governance- auditing approach, which aims at reviewing organizational structures, institutional arrangements, processes, and capacity against institutional mandates. The findings of the audits should be used to re-organize the ministries, help them to elaborate an action plan to improve senior management leadership as well as to refine production processes of staff for better delivery of 35 their mission. 12. Assistance will also be provided to assess existing staff competencies against the new organizational structure of each ministry and to elaborate an action plan to re-train existing staff and to recruit new professionals to fill key positions. This will require careful planning and clear management communication to civil servants in order to ensure an orderly assessment and integration in the new organizational structures. The training plan will have to be developed in cooperation with the National Secretariat for Capacity Building (SENAREC) - in charge of the 17 national program for strengthening capacity of public service (PRONAREC) -- that coordinates a network of national and provincial institutions that provide training in rapid results initiatives and result based management to help public institutions improve their performance. They also provide training on basic functions of the general administration and public financial management and procurement. 13. This sub-component will finance the following activities: (i) Technical assistance to undertake organizational/functional reviews and governance auditing for the targeted ministries and agencies (US$ 1.5 million); (ii) Technical assistance to elaborate and implement an action plan based on the recommendations of the organizational audits, including assessment of staff competences and re-assignment according to newly identified needs and functions (US$ 2 million); (iii)Technical assistance to update the national program to strengthen capacity of the Public Service (PRONAREC) according to staff needs and objectives, in coordination with SENAREC and other government training centers(US$ 0.5 million). Sub-component 1.3 Building capacity for HR Data Management and Control (US$ 4 million) 14. The effective management of the public service workforce remains one of the most critical binding constraints for the establishment of a functioning public administration. Overall, the DRC government currently has no effective control over the exact number of civil servants, the quality of its workforce, or personnel movement. The number of registered civil servants and security agents receiving salaries through the regular payroll system is estimated at 236,000 (excluding teachers) and 334,000 (including teachers). However, there are a number of employees who have been hired outside of the regular Civil Service system and are hence not registered with the Ministry of Public Services, yet paid by the government budget through the payroll. 15. The lack of a reliable database and poor documentation and archiving systems implies that neither the Ministry of Public Services nor the hiring ministries know the exact number of civil servants, thus impeding their ability to manage careers and retirement or to ensure the veracity of the data. In order to remedy this long-standing situation, as well as to set the basis for mastering HR data and set some controls on the management of civil servants including managing their retirement, the Ministry of Public Services started a biometric identification of the civil servants at the central and provincial levels in 2005. While the identification is expected to be completed by June 2014, the post-collection data treatment and verification has not yet started. This was 17 The SENAREC is also supported by the Bank's project on Establishing Capacity for Core Public Management. 36 due to poor planning and lack of adequate IT equipment and set up. The MPS is already rehabilitating the IT rooms and planning to acquire the server in order to put in place a mechanism to control and prevent fraud and irregularities in the system as well as to protect and secure the updated/verified HR database. 16. Once the database is cleaned and protected, monitoring by the responsible authorities will be critical to preserve its integrity and to avoid repeating the costly identification exercise. Technical assistance will be provided to the inspection department of the MPS to enhance their capacity of controller to ensure that rules and procedures are applied, and to deal with irregular cases identified by the data verification process. In parallel, assistance will be provided to the HR department of the MPS as well as the HR departments of the other ministries and agencies to enhance capacity to manage HR databases and respect their integrity. Once the HR database is protected and deemed reliable, it will be important to keep it updated. Rules and procedures on the administration of the database will be clarified to ensure it is regularly updated. 17. This sub-component will support the MPS to put in place internal rules, procedures, management, and control functions for HR data management that are the pre-conditions for a well-functioning HR management system and will finance the following activities: (i) Technical assistance for data treatment generated by the biometric census to ensure the reliability of the data (US$ 1.5 million); (ii) Independent audit of the data treatment process to ensure the management and integrity of the process (US$ 0.5 million); (iii)Technical Assistance to build capacity of the department of inspection in the Ministry of Public Service to detect and resolve irregularities. This will include providing IT equipment to facilitate the task, if needed (US$ 0.6 million); (iv) Capacity building for the HR department of the Ministry of Public Services for HR data management as well as the HR departments of the targeted ministries and agencies (US$ 1.4 million). 18. In parallel, the PRCG will assist the MPS and Budget to introduce an integrated system that will enable the electronic interfacing of the HR database in the MPS and the payroll in the Ministry of Budget. Sub-component 1.4: Building Capacity to Establish an HR management system (US$ 1.6 million) 19. A coherent and uniform approach to HR management is essential in every ministry to ensure orderly application of recruitment procedures, as well as to manage civil servants career development and HR planning. Currently, the government has not yet adopted a harmonized approach, leading to a number of ad-hoc initiatives being taken in isolation by the various ministries's. Moreover, the failure to establish a transparent and consistent approach increases the risk of using savings generated by the retirement process (component 2) for other purposes, The Ministry of Agriculture, for example, is currently recruiting 3,200 new staff at the rate of 750 a year over a four-year period, thanks to financial support from the Belgian Technical Cooperation (BTC). In contrast, the Ministry of Health, which has a much larger staff, has opted to replace retirees by upgrading existing employees rather than recruiting new ones. 37 and hence, undermining the sustainability of the retirement program. 20. This sub-component aims to provide management procedures and tools to ensure the daily HR management is carried out by the HR departments in the target ministries and agencies, in order to enable them to manage the "flows". It is very important that each ministry is able to manage staff careers, recruitment and retirements regularly. This will also facilitate personnel planning and training. 21. While the project will provide technical assistance in HR management, it will also support ongoing efforts made by the government towards the rationalization of the payroll system. At present, the MPS and Ministry of Budget are running simulations to assess the fiscal implications of reversing the ratio between the base salary and the premia in order to bring order into the payroll system and reduce discretionary interventions. This will also have implications on the levels of pensions. 22. As the experience of other countries has shown, the political feasibility of a comprehensive payroll reform "across-the-board" remains uncertain. At the same time, whether or not ministries can attract qualified staff will depend in large part on the broad incentive structure in place. Recognizing this challenge, the project will keep a narrow scope on this policy issue, and will discuss with the government the opportunity to undertake a rigorous analysis on the set of incentives (financial and non-financial) facing civil servants, with the aim of coming up with recommendations for payroll reform. 23. The following activities will be financed: (i) Technical Assistance for the design and implementation of human resources management systems, including recruitment, planning, employment and career management of the HR department of the MPS as well as the HR department of the targeted ministries (US$ 1.1 million); (ii) Technical Assistance to support the review and rationalization of the payroll system (US$ 0.5 million). Sub-component 1.5: Supporting a pilot "Young Professionals Program" to rejuvenate the civil service (US$ 20.8 million) 24. The recruitment of younger and better qualified civil servants and agents can significantly contribute to the revitalization and modernization of the civil service. For this goal to be reached, the cost savings generated by the retirement program (component 2) must be used effectively to recruit new staff and invest in the next generation of civil servants. 25. Recognizing the critical role that a YP program can play to modernize the system, the project will provide technical assistance to guide the government to establish a YP program. The assistance will help to clarify the vision and the objectives of the program, and ensure it is designed and implemented in a way that being a YP is an attractive perspective for young graduates. In light of the ambitious target for female young professionals (25 %), this component will also develop a system that targets female graduates for inclusion in the recruitment and training efforts supported under the YP program. Over time, this is expected to develop a well- recognized 'brand' that can help build an 'esprit de corps' among the new generation of civil servants, creating a sense of pride and raising the profile of the public administration. 38 26. Accordingly, the proposed program will support the Ministry of Public Services in the process of recruitment, training, and integration of 500 Young Professionals in the target ministries and agencies. These Young Professionals will be integrated into public services in accordance with specific provisions set out in the upcoming Organic Law on Public Services which is expected to be adopted by the Parliament before the end of 2013. The ultimate goal of the YP Program is to re-energize the public service and also create a pool of qualified civil servants who are expected to become the future managers of the administration. 27. The sub-component will complement monetary incentives to attract talented YPs with the development of a well-conceived training program to develop young professionals' core skills that are critical for the functioning of their respective ministries and agencies. After a thorough assessment of the training needs, a program will be devised together with SENAREC and COREF to ensure that young professionals understand the basis of public administration and public finance management. This activity will provide the YPs with a number of tools and modern working methods that can be applied across all ministries (planning function, procurement, financial management, work plan, reporting, monitoring and evaluation, etc.). The training could also extend beyond these aspects depending on the needs of each ministry. Training abroad for a selected group of YPs will also be considered on a need basis. Mechanisms to retain trained young professional for a certain period of time will have to be considered in order to maximize the impact of the training and create opportunity for knowledge transfers among civil servants. A small group of highly talented YPs will also be trained by the newly established ENA. 28. The project will also incorporate a geographic dimension in the design of the YP program and deploy some of the YPs to the sub-national level, within de-concentrated units of the targeted ministries. Starting young professionals' public service careers at the front line and giving them real responsibilities and support have several advantages, including (i) fast learning by doing, and (ii) leveraging the impact of other interventions under the World Bank Group portfolio. Given the importance to address fragility and conflict in DRC, the project will also include provisions to rejuvenate the state's presence in the east, to complement and support the CAS goals of "strengthening governance and consolidating peace" and "addressing fragility and conflict in Eastern DRC". The young professionals will likely be leading graduates from the top- performing universities and selected competitively. They will be trained and mentored by senior professionals, comprised of civil servants already employed by the ministries and also a small number (up to 50) of contract-based staff recruited competitively among the most experienced retirees. Opportunities will also be explored to hire some of the senior-professionals as teachers 19 and collaborators to deliver training modules at ENA, SENAREC and other training institutes 29. This sub-component will finance the following activities: (i) Technical Assistance to establish an effective program for young professionals that includes training modules, new working tools and methods to ensure enhanced career prospects and successful integration of the young professionals into the public service; 19The recruitment and remuneration of both YPs and Senior professionals will be made in line with bank procurement guidelines and based on a procedure manual acceptable to the Bank, to ensure that payments are made against valid contract. 39 project operations manual(US $ 4.3 million); (ii) Recruitment and remuneration of approximately 500 talented young professionals under the pilot young professionals program, based on a rigorous needs assessment and budgetary implications; and approved by the Council of Ministers as well as clear rules defined in the Project Operation Manual (US$ 13 million); (iii) Recruitment and remuneration of 50 senior professionals for coaching and mentoring of young professionals, based on well-identified coaching needs (US$ 3.5 million). Sub-component 1.6: Implementation Support and Impact Evaluation (US$ 5.7 million). 30. The project will be managed by the CMRAP in order to ensure effective oversight over all actions related to the public administration reform process. The CMRAP will report directly to the Ministry of Public Services and will serve as secretariat to the CPMAP. Staff will be added to the CMRAP to manage the implementation of the project including a Project Manager, an accountant, a procurement specialist, an M&E specialist, a treasurer, and a financial and administration specialist. The team will be supervised by the Program Coordinator. The costs for logistics, including three cars, telecommunication services and office equipment, will also be covered by the project. 31. A rigorous impact evaluation (IE) exercise is also proposed as a means of testing alternative approaches to reform and rejuvenate the public service in the targeted ministries, with a view to adopt and scale up those proven to be most effective. Furthermore, given the risks inherent in a project of this nature, the IE will be used as a risk mitigation measure to closely examine the outcomes of select project sub-components and activities, to assess whether the project's benefits outweigh any intended or unintended costs. 32. The precise nature of the IE, including research hypotheses and methods/design will be 20 developed in conjunction with the government and other stakeholders . However, based on preliminary consultations with the counterparts, a potential area of focus is the structure of retirement benefit payments. By randomly assigning - on a voluntary basis - different payment terms to different civil servants, and observing them over time, the IE would identify the relative effectiveness of the alternative approaches with respect to key outcomes, for example the number of retirees able to cover basic costs of living, including housing, water, and electricity. Successful approaches would be scaled up for subsequent retirees, while those showing any significant negative effects would be discontinued. An additional potential focus area of the IE is the effect of different recruitment and training approaches to attract the most qualified young professionals, to maximize the learning process from the pilot YP program, and to inform the government's plans to scale-up such activities. 2( Impact evaluations (IEs) use rigorous experimental and quasi-experimental designs to identify the actual impact of a program against a scientifically valid counterfactual. This counterfactual represents what would have happened to intended beneficiaries had the program not taken place, or had a different program design been chosen. Thus, IE complements traditional performance monitoring and tracking of outcomes by directly attributing specific changes in outcomes to specific interventions. When undertaken prospectively and integrated into the operational planning and implementation of a program or policy, lEs are a powerful research and development tool to identify the most effective and cost-effective design options. For this reason, lEs are a management tool for results-based policy planning. At the same time, they are a key instrument for improving aid effectiveness and increasing fiscal accountability. 40 33. This sub-component will finance the following activity: (i) Provision of expert and technical staff for the CMRAP including the operating costs of the Project Implementation Unit (US$ 4 million); (ii) Minor works to refurbish the office space, and provide adequate IT and logistics equipment for the CMRAP (US$ 0.2 million); (iii)Technical Assistance for the design and implementation of the Development Impact and Evaluation Initiative to test the effectiveness of alternative approaches to support public service reform and rejuvenation (US$ 1.5 million). Component 2: Supporting the retirement process (US$ 30.3 million) 34. While capacity for HR management of active civil servants is being built, it is also very important to support the government in managing the "stock" of civil servants who have reached retirement age and who, according to the law, should have already retired. 35. The DRC has adopted a Framework Law (Bill No. 81-003 issued on July 17, 1981 and amended by Decree No. 82-011 issued on March 19, 1982) that governs all aspects of the careers of civil servants and government officials. Articles 70 to 83 of the bill lay out the conditions required for an agent's separation from service and regulate the agent's right to receive retirement benefits. However, since the enactment of the bill on the status of civil servants in 1981, the pension system has undergone numerous reform attempts. In 2004, the Government of DRC announced a plan to downsize the number of civil servants by retiring a total of 100,000 civil servants. In 2005, 10,000 civil servants who had reached retirement age left without pension benefits, while a public service census was initiated to identify the remaining 90,000 employees. In support of this reform, the World Bank provided budget support of US$47.5 million in 2005. These early efforts failed to deliver results, as a consequence of unexpected changes in government priorities and subsequent re-allocation of available funds, and a lack of clarity on some key legal aspects of the process, notably the definition of benefit entitlements (World Bank, 2010). 36. In 2009, the retirement process was resumed following pressures from several ministries that expressed concerns over an aging workforce that was not able to adapt to the changing needs of the country. However, the pension system did not provide comfort to the potential retirees, nor did the low credibility of the government in honoring the commitment to pay one-off retirement benefits. This lack of confidence generated strong resistance from the civil servants and politicians felt that during the 18 months in the run up to the presidential elections (December 2011), political support would have been diminished had they enforced the retirement system. Therefore, only eligible Secretaries-General and Directors of the Ministries of Urbanization and Habitat, Land Affairs, Finance and Budget and 3 financial agencies (DGRAD, DGDA and DGI) were retired. In 2011 the Ministry of Environment, Nature Conservation and Tourism (MENCT) was able to carry out a census that identified approximately 2,700 workers eligible for retirement, 1,700 of whom received their retirement payments and retired in May 201121. 21 The remaining 1000 mostly of high-rank civil servants are waiting for a presidential instruction in order to retire. This is expected to be issued in the next few weeks. 41 37. The experience in 2005 with World Bank support for the retirement process through budget support has shown the risk of opacity in the way eligibility for retirement is defined, and how this can compromise the entire reform effort. Identifying the precise number and identity of civil servants eligible for mandatory retirement is therefore critical to ensure the transparency and the accuracy of the payment of benefits. It could be argued that it would have been advisable to wait for the completion of the civil service census that has been ongoing since 2005, before initiating the retirement process. However, the lengthiness of the data collection and the risk of data corruption if not properly treated, calls for a more limited, specific verification of the workforce that is eligible for retirement ministry-by-ministry in order not to delay the reform process any further and lose trust that it will ever happen. The small identification exercise will provide up- to-date information and will allow for corrections, where necessary, of the civil service data that was collected during the 2009 census. Box 2: What went wrong in 2005, and how the new project will prevent failure. The Bank's support for civil servants' retirement failed for the following reasons: 1) At the time, the country's fragility was more prevalent given the end of the war, and the government that emanated from the Congolese Dialogue was mainly formed by public servants who lacked management and technical skills needed to deal with the complexities of civil service reforms. 2) During the crisis years, the Government was only able to operate on the financial advances from the Central Bank of Congo. For this reason, resources intended by government to setting up a national retirement program were later used to reimburse the general Treasury and deal with other national priorities. 3) The reforms were supported through budget support to the government, and the scope of the support was much larger (100,000 civil servants). This new project offers several advantages that include (i) manifested government ownership of the reform program, (ii) different lending instrument coupled with ring-fenced mechanisms to process the payment of benefits (funding being managed according to Bank's guidelines and deposited into a local commercial Bank), (iii) rigorous risk mitigation strategy and fiduciary mechanisms (including internal and external audits for each critical steps) and (iv) a communication strategy for civil servants to ensure their understanding of the reform. 38. Another critical aspect of the retirement process refers to the criteria and methods to be used for calculating pension benefits. Staff regulations for career civil servants stipulate that pension benefits consist of: (i) severance pay; (ii) repatriation package; and (iii) a pension. The first two are known as separation payments and are normally a one-off payment. Over the past few years, the criteria for the calculation of separation payments have changed, generating different practices that need to be reconciled into a coherent formula. 39. In comparison, retirement is a perennial process, which requires that pension payments be regularly made. The credibility of any retirement scheme rests on the reliability of the pension payments. Currently, pension payments are paid out of the national budget in DRC. As many civil servants have lost faith in the system, however, they tend to mistrust state-funded retirement plans. To restore confidence in the system, the present government has resumed paying pensions and has allocated resources in the 2013 budget law to establish the legal basis for the pension fund. 42 40. Recognizing these challenges and, in an effort to promote greater accountability in the retirement process, this component is aimed at supporting the government's efforts through (a) the preparation and management of the biometric identification process; (b) the payment of benefits for eligible staff of five ministries, revenue agencies and the National Institute of Statistics, through an external and independent agency; and (c) the support to create a legal basis for the establishment of a civil service pension fund. Sub-component 2.1: Payment of retirement benefits (US$ 27.5 million) 41. The proposed operation will cover eligible staff from the following ministries and agencies (i) Ministries of Finance and three revenue agencies (DGDA, DGRAD, and DGI); (ii) Ministry of Budget; (iii) Ministry of Public Services; (iv) Ministry of Planning, including Statistics National Institute (INS); (v) Ministry of Portfolio. 42. This component will support the retirement of civil servants who have reached the retirement age. Currently, the legal age of retirement in force is 55 or 30 years of service. However, the new legal framework expected to be discussed in Parliament before the end of 2013 will raise the retirement age of civil servants to 62. The MPS has proposed to start retiring civil servants from 22 the age of 62 (or older) or with 30 years (or more) of service onwards . This approach has two advantages: (i) by covering only those civil servants that are eligible for retirement under both the current and the proposed legislation, it limits grievances and appeals arising from possible changes in the eligibility status; (ii) by selecting the oldest among the civil servants, it reduces the risks of depleting the civil service and also minimizes the social impact on retirees' welfare. 43. According to the data provided by the MPS, it is estimated that 5,979 civil servants will be retired during the period of the project in the targeted ministries for an estimated cost of US$ 18 million for the retirement benefits. (See Annex 7 for a detailed breakdown of numbers and costs by ministry). An additional contingency of US$ 3 million has been added to the estimated costs, in the event that the biometric identification process will uncover a higher number of staff eligible for retirement. The civil servants will be retired progressively, and the benefits will be paid after data verification and biometric identification of each civil servant eligible to retirement is completed. An independent audit of the process will be carried out "a posteriori". 44. This sub-component will finance the following activities: (i) Independent verification of the formula underpinning the calculation of benefits, to ensure its correct application (US$ 0.5million); 45. Specific technical assistance will be provided to ensure that retirement benefits will be paid based on a transparent and lawful formula. For project preparation purposes, and in line with the current legal provisions, retirement allowances have been calculated based on the retirement allowance as set in the Framework Law on Public Service, 1982, 082/011 and Prime Minister Decree no 10/20 of 21 May 2010. The one-off repatriation packages are set by inter-ministerial 22 The schedule for adoption and promulgation of the new legal framework on the status of personnel in public service, with related changes in retirement age, is expected in the first half of 2014. Should the new legal framework be adopted at an early stage of the project implementation, the project will seek to comply with the new laws in force. 43 Decree (CAB. MIN/FP/BUDGET/FIN/004/2010 of 12 May 2010) at US$ 2,000.23" Retirement benefits have therefore been calculated based on the following formula: * The retirement allowance (end of career allocation) that is equivalent to 2/4, 3/4 or 4/4 of the last annual salary according to the number of years of service, less than 25 years, 25 to 30 years and more than 30 years 24; plus * The repatriation package of US$ 2,000 is calculated as follows: Category Quantity Cost Total Trip 2 500 1,000 Baggage (kg) 300 3 900 Subsidy Lump sum Lump sum 100 TOTAL 2,000 b. Recruitment of an independent agency responsible to verify and finalize the list of eligible civil servants and the management of the payment process after biometric census of the eligible civil servants (US$ 23.4 million) 46. While the cost of biometric census is covered by the government, the project will finance the data verification for retirees and their biometric identification prior to in the payment of pension benefits. For the purposes of the present operation, only "regular' staff who are listed in the computerized payroll system and receive payments (m&anisis) will be paid pension benefits under the project. 47. To carry out this activity, lessons may be drawn from the operation that was carried out for the Army (Forces Armies de la Ripublique Dimocratique du Congo - FARDC), the Police and the Ministry of Forestry and Environment. They all carried out a successful biometric census aimed at achieving improved management of human resources and determining the exact number of civil servants eligible for retirement. 48. In the case of the army, a team of international experts (European Union Security - EUSEC), with the participation of FARDC commanders, was sent to provide technical support and was put in charge of supervising operations. The initiative was carried out using the equipment that had previously been used to create a database for the first presidential election, which took place in 2006. The process unfolded from 2007 to 2010 in three stages: (i) physical checks, (ii) initial verification, and (iii) final verification upon distribution of identity cards. The biometric census has already eliminated approximately 30 percent of "ghost workers" and should therefore allow for a significant increase in soldiers' wages within four years without having to increase the central budget that has already been allocated to this sector. 23 According to the Status of Civil Servants, 1982, benefits are composed of the retirement allowance and repatriation package. However, because this law has not been revised since its enactment, and since the repatriation package benefit is still identified with the Zaire currency, an inter-ministerial decree was issued to review the repatriation package in order to take current financial and social conditions into account. 24 For the purposes of project costing, retirement allowance have been calculated based on the last annual salary since the majority of eligible staff has already served more than 30 years. The exact amount of the allowance will be determined during the data verification process, to ensure full compliance with the law. 44 49. The Ministry of Environment has also successfully completed its biometric census. This census reviewed data that had not been updated since 2004 and offered a census model that may be applied to other ministries. The Ministry of Public Services conducted nationwide census operations from November 2009 to March 2010. The operation was divided into three stages: (i) awareness, (ii) deployment of teams fully trained in the methodology of census operations, and (iii) verification. A total of 15 teams, or 80 team members, were deployed in Kinshasa and various provinces. They were given technical equipment such as laptops, fingerprint capture material, web cameras, and other tools. Despite the logistical hardships and difficult access to landlocked areas, 5,191 agents in the "statutory civil servants" category were identified in April 2010. Of these, 2,702 were acknowledged to be eligible for retirement (806 in Kinshasa and 1,895 in the provinces), representing 52 percent of all agents. 50. For the success of the Project, it will be of pivotal importance that the Ministry of Public Services fulfills its coordination and data centralization role during the biometric identification process. This would ensure that reliable and consistent data pertaining to civil servants becomes available and are properly managed. Technical assistance will be provided to finalize and adopt a coherent methodology in the design and execution of the biometric identification of retirees. Capacity-building initiatives will also be undertaken at the level of MPS to strengthen its technical and coordination implementing capacity for the Census process and the biometric identification operations. 51. Experience in other countries shows that treatment of personal data may be subject to misuse. At present there is no confidentiality law in place, however the Ministerial decree that governs the establishment of the new National Statistics Institute has an article (#9) that provides protection of all statistical data and this will be used as the institutional basis to protect personal 25 data 52. Recruitment of an external and independent payment agency, in charge of managing the payment of benefits to eligible staff, will reduce fiduciary risks, while also ensuring the effectiveness of the payment process and its timely execution. The Government remains responsible for pension payments under applicable legislation. c. Audit 'a posteriori' to verify the integrity of the operation of the payment of benefits (US$ 0.6million); 53. As indicated above, the recruitment of an independent agency to manage the payment process significantly reduces the risks of embezzlement. Moreover, the government has made significant efforts to ensure all civil servants are paid on a bank account 'bancarization'. With the exception of some remote rural areas like in the Province of Equateur (where payments are made by cash with support from Caritas), the majority of civil servants now receive their salary through a bank account, hence direct deposit into their account (rather than cash payment) will be used as the payment method. An audit will be undertaken after each group of civil servants is 25 The project will only identify retirees to ensure there is no duplication and the HR database is cleaned up. In any event, the Government publishes the list of retirees on their national gazette in order to publicly inform them and also to give them time to prepare appeals. While not all the personal details will be of public domain, Name Surname and ID numbers will be published. This is standard practice in DRC and they have done the same during the implementation of the Forestry Project. 45 identified and paid to ensure the integrity of the payment process. The audit report will also be submitted to the General Inspection of Finances and to the Court of Audit "Cour des Comptes," a special chamber of Accounting. d. Support the design and delivery of orientation training courses for retirees (US$ 3 million); 54. The project will support training courses aiming to facilitate the process to the retirees who want to start small economic activities. The training modules will be managed in coordination with national training centers, and will provide basic financial and business literacy. Participation will be on a voluntary basis. Sub-component 2.2: Establishing a grievance and dispute resolution mechanism (US$ 1.5 million) 55. This sub-component will support the establishment of an independent agency to manage the grievance and dispute resolution mechanism (GDRM)). The agency will play a pivotal role by providing help in prevention, management, resolution, and monitoring of potential conflicts related to the retirement program's implementation. In particular, it will help secure persons or groups of persons affected by retirement programs and ensure that due process will be followed when processing such programs. Learning from past experiences, providing such an independent mechanism is essential to ensure the transparent retirement process and to protect the rights of retiring staff. 56. This sub-component will finance the following activity: (i) Recruitment of an independent agency to manage a grievances and dispute resolution mechanism linked to the retirement process supported by the project (US$ 1.5 million ) Sub-component 2.3: Technical Assistance to establish a public service pension fund (US$ 1.3 million) 57. This component will assist the Government in creating a pension fund by conducting a study to determine how the fund should be established, governed, financed, and managed to ensure pension payments and their sustainability. The legal advice will take advantage of the options outlined by earlier feasibility studies financed by UNDP in 2005 that are currently being updated by the PRCG. The advice will be provided once the Government authorities decide on the type of pension fund they want to establish. 58. It should be noted that creating a permanent public service pension fund can only be a medium to long term project considering the economic and governance context in the DRC. In the short term, in the absence of other instruments, the importance of ensuring that pensions of retirees are paid will need to become a central element of policy dialogue around public expenditure management. In this respect, the Minister of Budget has made a formal commitment to fully honor pension payment obligations and has allocated budget to enable the creation of the new pension fund. 59. Once established, the pension fund will be open to central, provincial and local civil servants 46 and should be managed by an autonomous body under a specific law. The pension fund is expected to be a common asset pool meant to generate stable growth over time. Consequently, it will be responsible for the payment of all benefits arising under relevant regulations and pension benefits to individuals who are entitled to receive benefits under the provisions of the law. Ideally, the primary objective of the public service pension fund will be to meet these benefits as and when they are due. 60. This sub-component will finance the following activities: (i) Legal advisory services for the preparation of the legal texts, rules and procedures needed to establish the public service pension fund, including workshops for the validation of the proposed legal framework (US$ 0.3 million); and (ii) Technical assistance to implement systems and procedures for the management of the public service pension fund. (US$ 1 million). 47 ANNEX 3: IMPLEMENTATION ARRANGEMENTS Project Institutional and Implementation Arrangements 1. This project will emphasize close monitoring and supervision, and the need for design flexibility and adaptable implementation arrangements around a solid core of specialists within the implementation unit that is an integral part of the Ministry of Public Services. 2. The MPS will have overall responsibility for the project via the Public Administration Reform Implementation Unit (Cellule de mise en oeuvre de la Riforme de l'Administration Publique - CMRAP), created by Ministerial Order in December 2012 (Arr&t6 No CAB.MIN/FP/J-CK/GELB/FMD/GMK/082/2012) in order to coordinate the Public Administration Reform process and all projects that support the public administration reform. The CMRAP reports directly to the Minister of Public Services and is also responsible for the implementation of this IDA-financed operation through a technical and an administrative team. 3. The CMRAP will ensure technical coordination and effective oversight over all actions related to the Public Administration reform process and will evaluate progress on the reform, retirement, and rejuvenation actions supported under this project. The CMRAP will be the main Bank counterpart. For the purposes of this IDA-financed operation, the CMRAP will be responsible for all aspects of project management. These include: (i) preparing and costing detailed annual implementation plans based on the Action Plans approved by the CPMAP (which will include input from the participating ministries; (ii) managing Project resources (including financial management and managing the contract with the Procurement Agent; (iii) recruiting external auditors; (iv) monitoring implementation progress and impacts, (v) compiling activity, monitoring, evaluation, financial, and audit reports, including following-up audit recommendations; (vi) coordinating with technical committees and departments of the involved ministries; and (vii) ensuring coordination of Project activities with those of other international and domestic partners. 4. The CMRAP will retain staffing resources which are appropriate for its level of operations, sufficient to maintain accounting records relating to project-financed transactions, and necessary to prepare the project's financial reports. Personnel will be recruited on a competitive basis and will include: (i) a national project manager (gestionnaire de projet); (ii) a national procurement specialist; (iii) a financial and administration manager; (iv) a treasurer; (v) an accountant and (vi) a monitoring and evaluation specialist. The project manager, the finance and administrative manager, the procurement specialist, the treasurer, and the accountant will work full-time on the Bank project. The government will provide office space and cover the cost of utilities, while the Bank will provide resources for other operational costs of the CMRAP including IT and communications and a small-scale rehabilitation of the office space. An international procurement specialist will be hired on a part-time basis to provide guidance and support. 5. In addition to the above mentioned staffing resources, the project will finance a "task force" composed of high-level national experts to support the CMRAP at the strategic level. The project will finance a national Reform Coordinator (Coordonnateur CMRAP), two national experts in technical aspects of the Public Administration reform, including knowledge on retirement and HR data management issues, and one national legal expert and a senior communication expert. International experts will be hired to support the national experts on a need-basis. 48 6. Procurement will be handled by the CMRAP for all components of the project. During project preparation (under PPA financing) procurement capacity has been established. The procurement specialist has been hired and is already implementing the PPA. However, in view of the high risks associated with project implementation (country environment and complexity of implementation requirements), it is envisaged to hire an international procurement expert on a part-time basis, who will provide overall guidance to the CMRAP procurement specialist. Figure A3 1: Project Implementation Arrangements MINISTER OF PUBLIC SERVICES CMRAP Public Administration Reform Implementation Unit CMRAP COORDINATOR 2 Public Administration Specialists 1 Senior Communication specialist, 1 Legal Expert PROJECT MANAGER Finance and Admin Procurement M&E Focal staff specialist Spec. Specialist Participating Ministries Treasurer Accountant Finance Budget Planning Portfolio MPS (DGI, DGRAD, DGDA) (with INS) Financial Management, Disbursements, and Procurement 1. Financial Management Overview of Project and Implementing Entity 7. The PDO is to improve the human resource management capacity of selected ministries and rejuvenate their workforce. The project will have two components namely, Component 1: Supporting the implementation of the public administration reform program (US$ 39.3 Million); Component 2: Supporting the retirement process (US$ 30.3 Million) and a contingency (US$ 7 Million). 49 8. The CMRAP will have the overall responsibility for project fiduciary management. Country PFM situation and Use of Country System (UCS) 9. The Country Financial Accountability Assessment (CFAA), the Public Expenditures Review (PER), and Public Expenditure and Financial Accountability (PEFA) have shown an unsatisfactory economic and financial control environment including weak budgeting preparation and control, financial reporting, external audit and human resources. In-depth structural reforms are consequently required in the areas of economic governance, public expenditure management, financial sector, and public enterprises to strengthen capacity in the public administration. To this end, with the support of the donor community, the Government of DRC has undertaken a series of PFM reforms in budget preparation and execution, adhesion to Treasury forecasts, preparation of regular budget execution reports, and simplification of the national budget classification system. The first critical step of these series of Public Financial Management (PFM) reforms was the adoption in July 2011 of a new PFM organic Law preceded by the adoption of a new Procurement code in December 2008. Additional decrees are being finalized to further clarify the Organic Law. Since it will take time for these reforms to yield substantial improvements in the management of public funds, the overall country fiduciary risk is still considered high. The 2012 repeated PEFA took stock of the areas of progress and revised the existing PFM strategy plan accordingly. This paved the way for a new PFM Technical Assistance operation currently under appraisal for implementation to begin in 2014. In that vein, an assessment of the use of the country national PFM systems (UCS) has been undertaken in April 2013 with the aim to identify areas in which these systems could be relied upon for the implementation of Bank-financed projects. The UCS assessment report is scheduled to be available before the end of December 2013. 10. Meanwhile, the proposed project will be entrusted to the CMRAP as the main implementing agency. Some activities, however, will be outsourced to other stakeholders such as private sector actors (training) and technical assistants to provide technical back-stopping to the project implementation with the view to compensating for the CMRAP's limited project implementation experience. Risk Assessment and Mitigation Measures 11. The Bank's principal concern is to ensure that project funds are used economically and efficiently for the intended purpose. Assessment of the risks that the project funds will not be used as such is an important part of the financial management assessment work. The risk features are determined over two elements: (i) the risk associated with the project as a whole (inherent risk), and (ii) the risk linked to a weak control environment in which the project is implemented (control risk). The content of these risks, as far as the CMRAP is concerned, is described below. Risk Risk Risk Mitigating Measures Risk after Remarks rating Incorporated into Project Design mitigation measures INHERENT RISK H S 50 Country level H Finalize the preparation of the TA H The Bank's last Delay in the (US$ 26 million) in support of the assessment (September implementation of PFM reforms. This operation is 2012) of the the different PFM currently under appraisal and is implementation of the reforms that might expected to follow-up the 2012 existing PFM strategy has hamper the overall repeated PEFA in order to address shown acceptable PFM environment. the key new challenges the country progress. This risk is is facing. increased with the closure of Bank - Rely on the existing coordination DFID Technical unit in charge the PFM reforms Assistance. which has benefited from Bank - DFID initial TA. Entity level H S Weak FM capacity - Follow-up the recruitment process of the Public of the financial management Financial This will broadly Administration consultant and the accountant Management strengthen the capacity of Reform scheduled by the ministerial order Specialist, the governance of the Implementation (Arr& No CAB.MIN/FP/J- Accountant and CMRAP. Unit (Cellule de CK/GELB/FMD/GMK/082/2012) in the Treasurer mise en ceuvre de la order to ensure that the recruited have been hired; R6forme de consultants have adequately high l'Administration experience in financial management. Publique - CMRAP) - Establish a project operations manual to clarify the roles and responsibilities of the various stakeholders. The Project The Manual of Implementation Manual (PIM) will Procedures has define implementation procedures in been finalized. line with adequate fiduciary requirements. Training sessions will also be provided. - Provide Technical Assistance to the CMRAP by rolling out the fiduciary training plan which aims at strengthening the capacity of this entity's fiduciary stafgn developing a comprehensive project operations manual, and establishing a credible internal audit unit reporting to the CPMAP. Project level H S The resources of the - Use of qualified and experienced Over project project may not FM team and establishment of implementation reach all robust FM arrangements; beneficiaries and used for the - Recruitment of an independent intended purposes. Payment Agency for payment of retirement benefits purposes; - Audit of retirement benefits payments and conduct beneficiary satisfaction survey. CONTROL RISK S S 51 Budgeting S S Delays and weak Annual work plan and budget Over project budgetary prepared each year. The project FM implementation preparation, Procedures Manual must define the execution and arrangements for budgetary control. control leading to an over-expensed budget and delay in the implementation of the project activities. Accounting S Purchase an appropriate accounting M Lack of reliable software customized to generate the CMRAP has accounting system financial reports of the project; purchased and (ii) Low Tompro; knowledge of the Implement appropriate training financial sessions based on agreed accounting management procedures. procedures of IDA. Internal S M Controls and Internal Audit Preparation of the Project The Manual of Fiduciary training will be Operations Manual (POM)will Procedures has rolled out to ensure PIU Weak compliance include FM Procedures. been finalized staff compliance with FM procedures manual and of circumventing internal control During Project systems implementation. Preparation of a Project Implementation Manual for the management of pension benefits to retirees. Funds Flow H S Risk of misuse and Recruitment of an independent of duplicate Payment Agency; (ii) Prior approval Over project payments to of the list of beneficiaries and the implementation phantom or amount to be transferred to the ineligible Payment Agency by the CMRAP Disbursement of beneficiaries, before any payment; (iii) a biometric pension benefits identification to be put in place to to eligible ensure an accurate count. retirees is conditional onhaving steps in place and Payment to beneficiaries to their acceptable to the bank accounts, whenever available. Bank. Existence of bank accounts will be confirmed by the Ministry of Budget. Financial M M Reporting (i) Purchase of an adequate 52 Delay and accounting software to computerize Tompro has been difficulties in the the accounting system. purchased. submission of Installation to acceptable IFRs to follow fiduciary IDA due to weak training. capacity of the FM (ii) Agreement of the format and team and to the content of the Interim Financial number of Report which will include the During stakeholders project specifics. negotiations involved in the project. External M M Auditing Recruit independent external auditor Four months Scope of the audit based on agreed ToR developed in after may not cover key line with International Accounting effectiveness. issues; poor Standards (Scope includes fraud and performance of the corruption). external auditor; or delays in submission of audit reports Fraud & H Anti-corruption action plan S including a specific safety Four months Corrupition mechanism that enables individual after circumventing the persons and NGOs to call attention effectiveness. internal control to abuses or irregularities will be system with prepared in addition to the robust colluding practices FM arrangements designed to such as bribes, mitigate the fiduciary risks. The abuse of implementing agency will prepare a administrative code of conduct including clear positions, mis- procedures for disciplinary action. procurement Overall FM S S risk Financial Management Action Plan to reinforce the control environment Issue Remedial action recommended Responsible Completion body Staffing Financial Management Specialist and CMRAP Financial Management Accountant. Specialist and Accountant are in place. Information system Installation of accounting software acceptable CMRAP Accounting software will accounting software to IDA and establishment of an accounting be installed following the system acceptable to IDA fiduciary training planned for November 2013. Financial reporting Format, content, and frequency of the IFR to be CMRAP IDA Discussed and agreed IFR prepared and discussed during project during project negotiation negotiation -corruptionactionpl Administrative, Develop a Manual of procedures CMRAP Ready Accounting (administrative, financial and accounting) that 53 and Financial also includes detailed procedures describing the Manual of payment of recurrent expenditures and detailed procedures sections on payment of benefits to retirees. Internal auditing Preparation of ToRs for the recruitment of an CMRAP Internal Auditor will be internal audit consultant to provide the risk recruited within four map of the project. months from effectiveness. ToRs to be submitted by end of November 2013 External financial Agree to the ToRs for the recruitment of the CMRAP Within four months after auditing external auditor acceptable to IDA effectiveness. ToRs to be submitted by end of November 2013 12. Staffing and Training: The CMRAP staffing should be adequate and commensurate with the extent of the activities under the project, sufficient to maintain accounting records relating to project-financed transactions, and able to prepare the project's financial reports. The FM function will be carried out by a team composed of (i) a qualified and experienced FM expert in charge of the supervision of all FM activities of the project; (ii) an experienced Accountant; and (iii) a Treasurer. The team will have the overall FM responsibility over budgeting, accounting, reporting, disbursement, internal control, and auditing. The FM expert will provide technical assistance to the existing FM team of CMRAP to build the capacity of the FM unit. The CMRAP accounting staff will have its capacity reinforced over the project implementation vis-h-vis the rolling out of the training plan that includes training on IDA disbursement procedures and financial reporting arrangements, among others; training on OHADA accounting principles and its implication for a donor-financed operation. 13. Budgeting: The CMRAP will prepare an annual work plan and budget for implementing project activities taking into account the project's objectives. The work plan and budgets will identify the activities to be undertaken and the role of respective parties in implementation. Annual work plans and budgets will be consolidated into a single document by CMRAP with the support of the FM team, which will be submitted to the CPMAP for approval, and thereafter to IDA for no objection no later than November 30 of each year proceeding the year the work plan is to be implemented. 14. Accounting Policies and Procedures: The accounting systems, policies, and administrative and financial procedures will be documented in the project's Administrative, Accounting, and Financial Manual. It will be used by (i) the project staff as a reference manual, (ii) IDA to assess the acceptability of the project's accounting, reporting, and control systems, and (iii) the auditors to assess project accounting systems and controls and to design specific project audit procedures. Accounting software with the possibility to add multi-project, multi-site, and multi-donor features will be procured. An FM project operations manual and accounting software should facilitate the project implementation and support the project's requests for funding, as well as meet its reporting obligations to fund providers. These tools are already being put in place. For the purposes of this IDA-financed project, a FM project operations manual, which is part of the PIM, will be prepared and adopted by effectiveness. The manual will focus on the following: (i) segregation of duties, (ii) physical control of assets, (iii) authorization and approval, (iv) clear channels of command, (vi) arithmetic and accounting accuracy, (vii) integrity and performance of staff at all levels, and (viii) supervision. Specific procedures will be documented for each significant accounting function. They will be written to depict document and transaction flows and will cover the flow of funds, recordkeeping and maintenance, the chart of accounts, formats 54 of records and books of account, authorization procedures for transactions, planning and budgeting, financial reports (including formats, linkages with chart of accounts, and procedures for reviewing them). This FM manual will be included in the Project Implementation Manual. 15. Internal Control and Internal Auditing: To ensure a strong financial management system, the CMRAP should have an adequate number and mix of skilled and experienced staff while the internal control system should ensure the conduct of an orderly and efficient payment and procurement process, which properly records and safeguards assets and resources. The internal control will be organized through the project's Administrative, Accounting, and Financial Manual with appropriate segregation of duties and responsibilities. Internal audit functions will be assumed by the government's internal audit institutions (IGF) whose professional capacity will be strengthened. A qualified and experienced internal audit consultant will be recruited on a competitive basis, no later than four months after effectiveness. His role will be to provide a risk map of the project which will help the government's internal audit institutions to apply a risk- based approach. The internal auditor will report directly to the Program Coordinator and Steering Committee, and will undertake periodic assessments of the strengths and weaknesses of the internal control system at all levels. All control deficiencies or circumvented practices identified will be communicated in a timely manner to the overall senior management of the project, mainly the MPS and the CMRAP for immediate corrective action as appropriate. One of each such report will also be communicated to the Bank. 2. Disbursements Funds Flow and Disbursement Arrangements: 16. Designated account: One Designated Account denominated in US dollars will be opened in a commercial bank on terms and conditions acceptable to IDA under the fiduciary responsibility of the CMRAP. The ceiling of the Designated Account (DA) will be increased to US$ 3.5 million equivalent to four (4) months expenditures forecast and will become effective upon grant effectiveness. This Designated Account will be used to finance all eligible project expenditures under the different components. Payments will be made in accordance with the provisions of the project operations manual (i.e. two authorized signatures will be required for any payment). The Designated Account will be made against withdrawal applications supported by Statements of Expenditures (SOE) and other documents as specified in the Disbursement Letter. All supporting documents should be retained by the project team and readily accessible for review by periodic IDA implementation support missions and external auditors. Disbursement arrangements: 17. Disbursement method: Upon Grant effectiveness, transaction-based disbursements will be used during the first year of the project implementation. Thereafter, the option to disburse against submission of a quarterly unaudited Interim Financial Report (also known as the report-based disbursements) could be considered, subject to the quality and timeliness of the IFRs submitted to the Bank and the overall financial management performance as assessed in due course. In the case of the use of the report-based disbursement, the DA ceiling will be equal to the cash forecast for two quarters as provided in the quarterly unaudited Interim Financial Report. The option of disbursing the funds through direct payments to suppliers/contractors for eligible expenditures will also be available for payments equivalent to 20 percent or more of the DA ceiling. Another acceptable method of withdrawing proceeds from the IDA grant is the special commitment 55 method whereby IDA may pay amounts to a third party for eligible expenditures to be paid by the Recipient under an irrevocable Letter of Credit (LC). The funds' flows diagram for the DA are as follows: I IIDA Transactions based D p ' , % 1 1Direct payment I --------- -'I I Commercial bank managed by PIU Designated Account I I II I I I I II I I I I Retirement payment Agency Suppliers Legend: Transfers offunds Flow of documents (invoices, good receipt notes, purchase order, contract) Payment to suppliers 18. Disbursement of funds to the Payment Agency (for the payment of pension benefits): The Project must provide evidence that the salary arrears, end-of-career benefits and social security pension contributions and any outstanding social debt of all eligible departed retirees have been fully accounted and certified by an independent auditor under terms and conditions satisfactory to the Bank. Based on these audited lists, the project team will make disbursements to the Payment Agency for specified activities under component 2 of the project as described in the Implementation Manual. The amount of benefits to be paid will be directly transferred from the IDA Grant Account to the Designated Account for onward transfer to the account of the Payment Agency opened in a commercial bank in the DRC. The Payment Agency will then proceed to the payment of each eligible retiree on the basis of a schedule provided by the CMRAP and agreed to by the Bank, and updated as necessary. These payments will be immediately audited by an independent auditor, including through a sample audit on the ground which will be further strengthened by a beneficiary survey by an independent consultant/NGO. The report will be used as part of the documentation of the outstanding DA. Specifically, a withdrawal application supported by a Customized Statement of Expenditures, which will reflect the eligible amounts as confirmed by the audit, will be submitted to IDA to report on the use of the advance made to the DA on account of the payments of retirement benefits. 19. Disbursement of Funds to other Service Providers and Suppliers: The CMRAP will make disbursements to service providers and suppliers of goods and services under both component 1 56 and 2 in accordance with the payment modalities, as specified in the respective contracts/conventions as well as the procedures described in the project's Administrative, Accounting, and Financial Manual. In addition to these supporting documents, the Project will consider the findings of the internal audit unit while approving the payments. The CMRAP, with the support of its internal audit unit, will reserve the right to verify the expenditures ex-post, and refunds might be requested for non-respect of contractual clauses. Misappropriated activities could result in the suspension of financing for a given entity. 20. Disbursements by category: The table below sets out the expenditure categories to be financed out of the Grant. This table takes into account the prevailing Country Financing Parameter for DRC in setting out the financing levels. In accordance with Bank standard procurement requirements, contracts will continue to be approved "all taxes included" for local expenditures. The project will, however, claim invoiced amounts excluding taxes. The Government will take appropriate steps to cover the tax portion of contracts signed by the project with contractors and suppliers of goods and services. IDA / Amount of the Percentage of Expenditures Category Financing Allocated to be Financed (expressed in US$) (inclusive of Taxes) Goods, Works, Non-Consulting 44.95 US$ M 100% Services, Consultants' Services, Operating Costs, and Training for the Project. Refund of the PPA 1.65 US$ M Payment of Pension Benefits to 23.4 US$ M 100% Eligible Retirees under Component 2.1 of the Project Unallocated [Contingencies] 7 US$ M Total Amount 77 US$ M 21. Fraud and corruption: The risk of fraud and corruption for payment of retirement benefits and weak internal management structures, controls, and oversight are assessed as high. Therefore, an anti-corruption plan has been prepared (see Annex 8- Governance Issue). 22. Supervision plan: Based on the current overall residual FM risk, the project will be supervised twice a year to ensure that project FM arrangements still operate well and funds are used for the intended purposes and in an efficient way. 23. Financial Reporting and Monitoring: Financial reports will be designed to provide quality and timely information on Project performance to Project management, and relevant stakeholders. 24. Formats of the various periodic IFRs to be generated from the financial management system will be developed using the World Bank's Financial Management Practices in WB-financed Investment Operations. The quarterly IFR includes (i) the statements of sources and used funds, and utilization of funds per category, (ii) the updated procurement plan, (iii) the physical progress, (iv) expenditure types and implementing agent, showing comparisons with budgets; (iv) Designated Account activity statements and explanation notes to the IFR; and (v) the summary of missions of internal audit as well as implementation status of the recommendations 57 of internal or external audit and supervision missions. The IFR will be prepared and submitted to IDA 45 days after the end of each quarter. In compliance with International Accounting Standards and IDA requirements, the Project will produce annual financial statements. These include: (i) a Balance Sheet that shows Assets and Liabilities; (ii) a Statement of Sources and Uses of Funds showing all the sources of Project funds, expenditures analyzed by Project component and category expenditures; (iii) a Designated Account Activity Statement; (iv) an Implementation Report containing a narrative summary of the implementation progress of the Project; (v) a Summary of Withdrawals using SOE (transactions-based disbursement), listing individual withdrawal applications by reference number, date and amount; and (vi) notes related to significant accounting policies and accounting standards adopted by management and underlying the preparation of financial statements. The financial statements will be submitted for audit at the end of each year or other periods to be stated. 25. External Auditing: The project's financial statements and internal control system managed by CMRAP will be subjected to external annual audit by an independent external auditor which will be recruited on ToRs acceptable to IDA. The external auditor will give an opinion on the annual financial statements in accordance with auditing standards of IFAC. In addition to audit reports, the external auditor will also produce a management letter on internal control to improve the accounting controls and compliance with financial covenants under the financing agreement. The project will be required to submit, no later than June 30 of each fiscal year, the annual audited financial statements. In line with the new access to information policy, the project will comply with the disclosure policy of the Bank's audit reports (for instance making available to the public without delay after receipt of all final financial audit reports including qualified audit reports) and place the information on its official website within one month after acceptance of the final report by IDA. 26. Implementation Support Plan: the Bank's FM implementation support mission will be consistent with a risk-based approach and will involve a collaborative approach with the Task Team. A first implementation support mission will be performed six months after project effectiveness. Afterwards, missions will be scheduled by using the risk based approach model and will include the following diligences: (i) monitoring of the financial management arrangements during the supervision process at intervals determined by the risk rating assigned to the overall FM Assessment at entry and subsequently during Implementation (ISR); (ii) integrated fiduciary review on key contracts; (iii) review of the IFRs; (iv) review of the audit reports and management letters from the external auditors and follow-up on material accountability issues by engaging with the Task Team Leader, Client, and/or Auditors; (v) monitoring the quality of the audit (internal and external) to ensure that it covers all relevant aspects and provide enough confidence on the appropriate use of funds by recipients; (vi) physical supervision on the ground; and (vii) assistance to build or maintain appropriate financial management capacity. 27. Conclusions of the FM Assessment: The overall residual FM risk at preparation is considered Substantial. The proposed financial management arrangements for this project are considered adequate to meet the Bank's minimum fiduciary requirements under OP/BP10.00. 3. Procurement: General 58 28. Procurement rules and procedures: Procurement activities under this project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated January 2011; "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated January 2011; as well as the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan/Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Recipient and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 29. Use of the National Procurement Law / Code provisions and the related institutions and texts of application: For all contracts that are not advertised internationally, the Bank may authorize the use of the national institutions and regulations that comprise the law including its texts of application, the institutions set up for the control and regulation and the institutions responsible for procurement activities implementation. The national competitive bidding procedures currently in force in the DRC deviate slightly from the World Bank Procurement Guidelines on NCB procedures for procurement of Works, Goods and services (other than consultants services); thus, they have been already reviewed and appropriate modifications have been proposed to assure economy, efficiency, transparency, and broad consistency with the provisions included in Section I and paragraphs 3.3 and 3.4 of the Bank Procurement Guidelines (refer to the paragraph below). Requirements for National Competitive Bidding 30. The procedures to be followed for National Competitive Bidding shall be those set forth in the Recipient's Procurement Code of April 27, 2010, as revised from time to time in a manner deemed acceptable to the Association, subject, however, to the modifications described in the following paragraphs required for compliance with the Procurement Guidelines: a) No restriction based on nationality of bidders and/or origin of goods shall apply. Foreign bidders shall be allowed to participate in NCB without restriction and shall not be subject to any unjustified requirement which will affect their ability to participate in the bidding process such as, but not limited to, the proof that they are not under bankruptcy proceedings in the Recipient's territory; have a local representative; form a joint venture with a local firm. Recipient's government-owned enterprises or institutions shall be eligible to participate in the bidding process only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not dependent agencies of the Recipient; b) Invitation to bids shall be advertised in a national newspaper of wide circulation; c) Standard bidding documents acceptable to the Association shall be used for any procurement process under NCB; d) No domestic preference shall be given for domestic bidders and/or for domestically manufactured goods; 59 e) Bidders shall be given at least four (4) weeks from the date of the invitation to bid or the date of availability of bidding documents, whichever is later, to prepare and submit bids; f) Bids shall be opened in public immediately after the deadline for their submission in accordance with the procedures stated in the bidding documents; g) Qualification criteria shall be clearly specified in the bidding documents, and all criteria so specified, and only such criteria so specified shall be used to determine whether a bidder is qualified: (i) a contract shall be awarded to the qualified bidder offering the lowest-evaluated and substantially responsive bid; (ii) bidders shall not be eliminated on the basis of minor, non-substantial deviations; h) In accordance with paragraph 1.16(e) of the Procurement Guidelines, each bidding document and contract financed from the proceeds of the Financing shall provide that: (i) the bidders, suppliers, and contractors and their subcontractors, agents, personnel, consultants, service providers or suppliers, shall permit the Association, at its request, to inspect their accounts, records and other documents relating to the submission of bids and contract performance, and to have them audited by auditors appointed by the Association; and (ii) the deliberate and material violation by the bidder, supplier, contractor or subcontractor of such provision may amount to obstructive practice as defined in paragraph 1.16(a)(v) of the Procurement Guidelines; and i) Each bidding document and contract financed from the proceeds of the Financing shall include provisions on matters pertaining to fraud and corruption as defined in paragraph 1.16 (a) of the Procurement Guidelines. The Association may sanction a firm or individual, at any time, in accordance with prevailing Association sanctions procedures, including by publicly declaring such firm or individual ineligible, either indefinitely or for a stated period of time: (i) to be awarded an Association-financed contract; and (ii) to be a nominated sub-contractor, consultant, supplier or service provider of an otherwise eligible firm being awarded an Association-financed contract. 31. Procurement of Works: Works procured under this project include the rehabilitation of office space necessary for the implementation of the project. The procurement will be done using the Bank's Standard Bidding Documents (SBD) for all ICB and National SBD found acceptable by the Bank. Other methods of procurement will be Direct contracting and quotations. 32. Procurement of Goods: Goods procured under this project include office furniture and equipments, as well as IT equipments. The procurement will be done using the Bank's SBD for all ICB and National SBD found acceptable by the Bank. Other methods of procurement will be direct contracting, LIB, and Shopping. 33. The first two contracts for Works and the first two contracts for Goods and services other than consultants' services will be subject to prior review by the World Bank. 60 34. Procurement of non-consulting services: Non-consulting services under this project include the procurement of the services of a payment agency and various services including training. The procurement will be done using appropriate SBD consistent with IDA Guidelines. 35. Selection of Consultants: Consultancy services required for the project would cover consultancies for studies and technical assistance. All consulting services contracts with estimated costs equal to or more than US$ 200,000 equivalent for firms will be awarded through Quality and Cost Based Selection (QCBS) method. Contracts for specialized assignments with costs less than US$ 200,000 equivalent may be contracted through Consultant's Qualifications (CQ) and Quality Based Selection (QBS) method. Contracts for standard accounting audits and of a routine nature may be awarded under Least Cost Selection (LCS). Single Source Selection (SSS) may be employed with prior approval of the Bank and will be in accordance with paragraphs 3.8 to 3.11 of Consultant Guidelines. All services of Individual Consultants (IC) will be procured under individual contracts in accordance with the provisions of paragraphs 5.1 to 5.6 of Consultant Guidelines. Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. All TORs will be subject to prior review by the Bank 36. Operating Costs: The operating costs for this project will include expenses related to management of the CMRAP. These expenses shall consist of some staff (consultant) salary costs, office supplies, travel expenses and subsistence expenditures, operation and maintenance costs for vehicles and equipment, which would be procured using the implementing agency's administrative procedures. 37. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the procurement manual. Table A. 3.2 Thresholds for Procurement Methods and Prior Review Contract Value Contracts Subject to Prior Review Expenditure Category Threshold Procurement Method (US$) (US$) 1. Works >10,000,000 ICB All >5,000,000 NCB All <5,000,000 NCB Two first contracts <200,000 Shopping None All amount Direct contracting All 2. Goods >1 000,000 ICB All >100,000 NCB Two first contracts <100,000 Shopping None All amount Direct contracting All 2. Services Firms >200,000 QCBS All <200,000 CQ and LCS Two First contract All amount SSS All Individual Cons. >100,000 IC All <100,000 (*) IC None All amount SSS All 61 (*): Except for special assignment (see paragraph 5.4 of the World Bank Guidelines: "Selection and Employment of Consultants by World Bank Borrowers" dated January 2011). Assessment of the agency's capacity to implement procurement 38. An assessment of the capacity of the Implementing Agency within the Ministry of Public Services to implement procurement actions for the project was carried out by the Bank procurement team based in DRC in February 2013. The assessment reviewed the organizational structure for implementing the project and the interaction between the project's staff responsible for procurement and the Ministry's relevant central unit for administration and finance. The assessment found that the capacity of the implementing agency was weak and did not have the required staff with necessary qualifications and experience to handle the project procurement activities. Since then the project implementation unit in the Ministry of Public Service has hired an experienced local procurement specialist and has planned to recruit also a part time International Procurement Expert no later than four months from Effectiveness. Assessment on the risks and measures to mitigate 39. The risk factors for procurement performance include those listed in the country context and those due to the low procurement capacity of the Ministry of Public Service that is responsible for project implementation. In terms of the country context, the Country Procurement Assessment Review (CPAR) published in 2004 and the experience of other World Bank-assisted projects indicate that procurement on the project is likely to involve the following risks: * A weak governance environment, weaknesses in accountability arrangements, and an overall lack of transparency in conducting procurement processes which creates significant risks of corruption, collusion, and fraud; * Government officials likely to be involved in project procurement through tender committees may not be familiar with procurement procedures; * Control and regulation mechanisms according to the provisions of the new procurement law and its application procedures could delay the procurement process if mandatory reviews are required; and * Few companies are interested in supplying goods and constructing works for development projects in the current country conditions. Goods may not be available or may be exorbitantly expensive, especially up-country, because there may be insufficient competition resulting in the higher prices of these goods and services. 40. The main recommendations of the 2004 CPAR were to (i) prepare and approve a public procurement code; (ii) do a survey of the existing capacity on procurement; (iii) conduct a needs assessment of the institutional and human capacity requirements for public procurement in the country; and (iv) prepare an action plan for the procurement reform. All of these recommendations have been implemented. 41. The procurement reform in DRC began soon after the 2004 CPAR with assistance from the Bank, including the drafting of an Act on the Public Procurement Code. The Act was promulgated on April, 27 2010 and has been effective since October 2010. The related procurement institutions (the regulatory body and the prior review institution) began functioning at the same time. 62 42. The overall project risk for procurement is high. Measures to mitigate the risks 43. The following strategy has been devised in the project to mitigate procurement risks: * To mitigate risks related to the low level of capacity both at the project coordination unit and Ministry of Public Services, all proposed procurement decisions at a given threshold (to be determined and fixed in the PIM) will be subjected to mandatory review by the Prior Review Institution, according to the provisions of the Procurement law; * To avoid delays in the procurement process due to the interventions of the national control and regulation system, the Bank procurement team will identify the sources of delays and propose appropriate solutions to be discussed and agreed during negotiations; * The publicly accessible project website will include all relevant information to facilitate transparency and integrity of implementation, including the following: Project Appraisal Document and Grant Agreement; advertisements; funding proposals; terms of reference for all activities; contract awards; progress reports from implementing entities; a procedure for handling complaints satisfactory to the Word Bank; and complaints received and action taken; * All ICB contracts for goods and works, and all consulting contracts costing US$ 200,000 and above, will be published in the UNDB and World Bank external website, in accordance with World Bank Guidelines; * The Government project team will apply a 'one-strike' policy to all contractors and consultants and any case of complicity in corruption, collusion, nepotism and/or fraud will lead to dismissal, disqualification from all further project activities and prosecution; * A project launch workshop will be carried out for all project stakeholders, including civil servants of all entities involved, the civil society and trade unions; * For all procurement, the Project Implementation Manual, to be adopted by Board approval, will include procurement methods to be used in the project along with their step by step explanation as well as the standard and sample documents to be used for each method; * The SG/Ministry of Public Services, in close relation with the PIU, will create a database of suppliers of the required goods, construction contractors and consultants (firms and individuals). The database will also include information on current prices of goods. Procurement Plan 44. The Recipient, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Recipient and the Project Team in October 2013 and is available at the Project Implementation Unit files. It will be updated and made available in the project's database and in the Bank's 63 external website. The Procurement Plan will also be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Frequency of Procurement Supervision 45. In addition to the prior review supervision to be carried out from Bank offices, quarterly supervision missions will be conducted to visit the field during the initial two years of the project. Details of the Procurement Arrangements Involving International Competition A. Goods, Works, and Non Consulting Services (a) List of contract packages to be procured following ICB and direct contracting: 1 2 3 4 5 6 7 8 9 Ref. Contract Estimated Procurement P-Q Domestic Review Expected Comm No. (Description) Cost ('000 Method Preference by Bank Bid-Opening ents US$) (yes/no) (Prior / Date (dd/mm/yy) I_ I I I I I Post) Goods [ Equipment 740 NCB no Posteriori 08-05-14 for CMRAP Works 1 Rehabilitatio 200 NCB no Posteriori 17-01-14 n of offices for CMRAP (b) Contracts estimated to cost the equivalent of US$ 10,000,000 or more for works and the equivalent of US$ 1,000,000 or more for goods and Non-consultant services per contract and all direct contracting will be subject to prior review by the Bank. B. Consulting Services List of consulting assignments with short-list of international firms 1 2 3 4 5 6 Ref. Description of Assignment Estimated Selection Review Date of publication of No. Cost ('000 Method by Bank expression of interest US$) (Prior / (dd/mm/yy) Post) Component 1 Sub component 1.1 1 International firm to 400 QCBS Prior 20-11-2013 support preparation of legal framework for the reform 2 International Consultant 100 IC Prior 15-11-13 for the M&E for the 64 reform implementation 3. International firm to 750 QCBS Prior 15-02-2014 develop the communication strategy Sub component 1.2 4. International Firm to 800 QCBS Prior 02-12-2013 provide TA on the implementation of Governance Audit recommendations 5. International Firm to 400 QCBS Prior 15-11-2014 support the elaboration of JPRONAREC I_I_I_I Sub component 1.3 6. International firm to 500 QCBS Prior 10-01-2014 support identification and verification of biometric database 7. Individual International 300 IC Prior 07-05-2014 Consultant in Charge of Independent Audit of HR Database 8. International Firm to 450 QCBS Prior 15-01-2014 support capacity-building of the Inspection Department of MPS Sub component 1.4 9. International Firm to 550 QCBS Prior 15-07-2014 support HR management systems 10. International Firm to 400 QCBS Prior 15-03-2014 support the review and rationalization of payroll system Sub component 1.5 11. International firm to 550 QCBS Prior 30-04-2014 support recruitment of 500 YPs and 50 senior professionals 12 International Firm to 250 QCBS Prior 20-01-2014 design the Young Professionals Program Sub component 1.6 13 National Consultant for 96 IC Prior 20-02-2014 Internal Audit 14. International Firm for 200 QCBS Prior 10-09-2014 External Audit 15. International Firm to 200 QCBS Prior 06-03-2014 support Web-site development of MPS 16. International Procurement 200 IC Prior 15-02-2014 Consultant Component 2 Sub-component 2.1 17. International firm to 250 QCBS Prior 15-07-2014 support a posteriori audit for the verification and 65 application of the formula for retirement benefits 18. International firm to verify 1000 QCBS Prior 06-02-2014 and finalize the list and manage the payment of retirement benefits 19. International firm to 300 QCBS Prior 07-05-2013 design and deliver orientation training courses Sub-component 2.2 20 Individual consultants to 250 IC Prior 07-05-2014 support the grievance and dispute resolution mechanism Sub-component 2.3 21. International firm 500 QCBS Prior 31-05-2015 to support implementation of systems and procedures for the management of the pension fund (a) Prior review: (a) each contract estimated to cost more than US$ 200,000 per contract for Firms and US$100,000 per contract for individuals consultants; (b) all single source selection; (c) all training; (d) all TOR, and (e) all amendments of contracts raising the initial contract value by more than 15 percent of original amount or above the prior review thresholds will be subject to IDA mandatory prior review in accordance with the provisions of paragraphs 2 and 3 of Annex 1 of the Bank's Consultants selection Guidelines. (b) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US$ 100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. (c) Post review: For each contract for services not submitted to the prior review, the procurement documents will be submitted to IDA for post review in accordance with the provisions of paragraph 4 of Annex 1 of the Bank's Consultant selection Guidelines. The post review will be based on a ratio of at least 1 to 5 contracts. 4. Environmental and Social 46. Retirement benefits and pensions are defined by Law and the starting assumption under this project is that legal provisions will be strictly applied. The decrees and inter-ministerial regulations issued by the Government in May 2010 are based on the principles of social justice and sustainability, and repatriation benefits were set a level that is both a reflection of current cost (as previously these were set in the now defunct currency of Zaire) and would allow for the Government to continue these payments once they will need to be made from the State budget. In addition, a grievance and dispute resolution mechanism (GDRM) will be established as a global mechanism which will help persons or groups affected by retirement plans and will ensure that due process will be followed when designing and implementing such programs. 66 47. The credibility of pension payments to retirees remains a risk due to low budget credibility. Accordingly, PFM reforms combined with the reduction of debt payment obligations arrived at as part of HIPC completion point should, in combination, improve the regularity of pension payments. Moreover, the linkage between pension payments and overall Government pay policy 26 will ensure that pension payments will rise in line with future pay rises of active civil servants Since the project primarily serves to pay one-off separation payments in addition to build capacity and provide advisory services, an environmental impact assessment is not required. Minor works include the refurbishment of office space for the CMRAP, and the Ministry of Finance to install equipment. Such repairs/refurbishment will be done according to national and local laws and regulations. 5. Monitoring and Evaluation 48. The overall responsibility for monitoring and reporting on Project results as defined in the accompanying results framework will be carried out by the CMRAP. In doing so, the CMRAP will include an M&E Specialist responsible for implementing the results monitoring plan which includes the methodology, data sources, and frequency of reporting for each project indicator. The project monitoring system will use administrative data from the responsible ministries to be provided with support from the focal points identified within each of the targeted ministries. In this way the project will help reinforce monitoring capacity within each of the targeted ministries. 49. To ensure a strong M&E system, it is necessary to develop a detailed project activity framework/architecture that is aligned with the results framework. This architecture should link key activities to expected project outcomes by aligning the activity with each relevant PDO level result, as well as the intermediate results indicators which it supports. Another important deliverable will be the development of a detailed M&E plan to show how each of the results indicators will be tracked with emphasis on their definitions, unit of measure, method of analysis, and calculation of target achievements. Accordingly, it may be necessary to conduct an in-depth beneficiary assessment to determine the project's effectiveness in qualitative and quantitative terms. 50. For accountability purposes, the CMRAP is committed to providing regular reports to the Government of DRC as well as the World Bank. For its part, the World Bank will undertake periodic implementation support missions and ensure that key findings resulting from such visits are fully implemented to improve the overall project performance. A mid-term evaluation will be carried out and the findings and recommendations will be used to improve project performance, effectiveness, and efficiency. The M&E expert will also produce semi-annual reports with the latest data for each indicator that will be available to the Minister of Public Services, the CPMAP and the partners, and will be posted on the project website to be created. 51. Project monitoring will be complemented by an impact evaluation component with support from the Bank's Development Impact Evaluation Initiative (DIME). The impact evaluation will focus on testing different schemes for motivating employees to effectively retire at the mandatory retirement age. Options that will be discussed with the Government include schemes 26In accordance with current legislation, pension payments should be equal to 75 percent of the last earned basic salary. 67 under which end of career allowance and repatriation benefits are provided at the time of mandatory retirement age, provision of non-monetary recognition awards for people who decide to retire at the mandatory age, and the implementation of a pension scheme. At the same time, the impact of a young professional program will be assessed while it is being implemented. The evaluations will be initiated early in project implementation (within one year) in order to identify the most successful scheme to be applied through the remainder of the Project. 68 ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) DEMOCRATIC REPUBLIC of CONGO: Public Service Reform and Rejuvenation Project Project Stakeholder Risks Rating Substantial Description: Risk Management: Mandatory retirement of civil servants who have passed their retirement age of 55 The project supports a number of innovative mechanisms, including: (i) Extensive remains a sensitive issue in DRC. With very few employment opportunities outside the consultations with high level government officials and ministers to build public service, letting go of a large number of civil servants could have political as well consensus at each step of the retirement program and ensure that the process is as social and economic consequences which must be carefully managed. Staff retired carried out in a transparent and fair manner to avoid arbitrariness and perceptions from the targeted ministries included in the project might also perceive to be de-facto of victimization; (ii) a formal consultation process with labor unions prior to the discriminated against in comparison with eligible staff of other ministries (not included payment of retirement benefits; (iii) a biometric census to ensure correct in the project) who remain at work after retirement age. identification of eligible staff; and (iv) the establishment of complaints handling mechanisms, to be managed and periodically reviewed by the PIU Furthermore, the operation is aligned with a new reform strategy (revised strategy for Experience has shown that the design of reforms by the Government itself the implementation of the Public Service Reform) adopted by the Public Administration contributes to a high degree of ownership and helps to accelerate the Modernization Steering Committee (CPMAP) in 2013. Accordingly, government implementation of these reforms. This is the case of the Public Administration ownership of the reform program is critical to avoid the risk of postponement or non- reform agenda approved by the Government in 2013, which has been designed to adoption. enable direct involvement at the highest level of the Government through its reporting line to the inter-ministerial Committee (CPMAP), chaired by the Prime Minister. Moreover, close engagement with the government aims to ensure signing and official promulgation of the legal acts required to authorize staff retirement ('Ordonnance pr6sidentielle' for senior management positions and "Arr&6 ministerielle" for the other categories). Resp: Stage: Due Date Status: Client Throughout Continuous Ongoing Implementing Agency Risks Capacity Rating: Substantial Description: Risk Management: The experience of the ongoing public sector reform projects, namely the PRCG and the A Project Coordination Team will be established within the CMRAP in the 69 PRC-GAP has revealed considerable weaknesses in institutional capacity and Ministry of Public Administration. With the support of the Project Preparation performance. There is a lack of effective human resource management, public financial Advance, the project has already supported the MPS to hire a senior procurement management falls short of international standards and practices, and public procurement specialist and a senior financial management specialist who are already familiar management is fraught with loopholes and abuses. Given these challenges, it is critical with Bank's fiduciary requirements. A treasurer has also been hired and an that a professional team manages this process and ensure the success of the reform accountant is in the process of being hired. The project manager has extensive efforts. experience with Bank projects as he used to be the deputy project manager of a previous governance project financed by the Bank. Moreover an international public procurement expert will be hired on a part-time basis to provide assistance. Also, the Project Team will be supported by the World Bank Procurement and FM specialists based in Kinshasa. The MPS has already benefited from training in leadership provided by the PRC-GAP and it is expected that the new ministerial team will continue to benefit from rapid results initiatives training, and support of Procurement processes remain a challenge as capacity is weak, leading to frequent other experts. delays in handling procurement cases. In addition to this, competition is very limited given the country's environment. In case the Government decides to use the new Procurement functions for the new project will be handled by a full-time procurement institutions created by the new Procurement Law, political interference procurement specialist and a part-time international procurement specialist. The risk will remain an additional issue. latter will have the mandate to oversee and to advise on procurement-related issues, which will ensure an additional safeguard. Financial Management issues may pose a risk to the successful implementation of the project. The retirement program presents risks for fraud and errors since the identity of The proposed mitigating measures consist of: (i) the recruitment of a Financial eligible civil servants remain to be verified and the volume of individual payments is Management Expert, whose objectives will be to assist the financial management large. Accordingly, the payment agency would have to be monitored to ensure proper team dedicated to the project; (ii) the recruitment of an Accountant; (iii) the beneficiary account reconciliation. recruitment of a Treasurer; (iv) the acquisition of adequate accounting software; (v) the development of a comprehensive project operations manual acceptable to IDA; (vi) the establishment of a credible internal audit function; (vii) the recruitment of an independent external auditor in compliance with acceptable Terms of Reference; and (viii) the rolling out of a training plan which includes, inter-alia, training on IDA disbursement procedures, training on OHADA (Organisation pour l'Harmonisation en Afrique du Droit des Affaires) accounting principles and their implication for donor-financed operations, and training on IDA financial reporting arrangements. 70 Resp: Due Date : Status: Client/Ban Stage: Throughout Continuous On going k Governance Rating: High Description: Risk Management: The proposed project is at the forefront of the new Public Administration reform To strengthen accountability, an operational manual will be developed to guide agenda. However, given the urgency to scale up the project, areas of control may be implementation processes and procedures. In addition, internal controls and over looked. Additionally, existing rules and procedures might not be sufficient to procedures will be established. There will be emphasis on results-based work plan handle the requirements of the project as well as to ensure timely decision making and and budgeting which will be linked to the project's results framework. implementation. The integration of the HR data between MOF and MPS is not covered in the With respect to proper HR data management, there is a risk of a failure to adapt the ICT project since support is already provided by PRCG. The team has already systems (payroll managed by the MoF and civil service registry managed by the MPS) included contingencies that might be used for the creation of the functioning through a functioning interface. interface for HR data management in the (unlikely) scenario that this activity will not be funded under PRCG. Given the asymmetric approach of this project, it will be necessary to manage the tensions that will arise within government when other agencies/ministries request The team has engaged in extensive consultations with high level government similar treatment. The government (and the team) should plan how the other civil officials and ministers to build consensus at each step of the retirement program servants will over time get the same options as these pilot ministries. and ensure that the process will be carried out in a transparent and fair manner to avoid arbitrariness and perceptions of victimization. In addition, the project includes an allocation for a communications strategy which will support 'internal' dialogue between management and the civil servants who will be affected directly by this project to address their concerns, as well as 'external' dialogue with other ministries to explore opportunities to scale-up the reform program beyond the pilot phase. Resp: Stage: Due Date: Status: Client Implementation Continuous Not yet Due Project Risks Design Rating: Substantial Description: Risk Management: A new Organic Law on Public Services has been prepared by the Ministry of Public Dialogue is ongoing with the counterparts to address these issues. During 71 Services as well as the new Statut G6n6ral for the public service. Both pieces of implementation, close engagement with the counterparts will ensure that critical legislation have been submitted to the Council of Ministers for approval but remain legal acts are signed and officially promulgated. pending. Also, the new organogram of the Ministry of Public Services (including set up of the CMRAP) has yet to be approved by the Cabinet. Moreover, the targeted staff eligible for retirement might not be retired given the lack of promulgation of authorizing legal acts (Ordonnance pr6sidentielle' and 'Arrt6 ministerielle) The recruitment process (examination and screening) will be well designed to ensure transparency, involving an independent recruitment agency with external Given decades of politicized and nepotistic hiring in the civil service, a new hiring experts to monitor the process if necessary. process may bear the risk of such practices being repeated and undermine the proposed young professional recruitment component of the project. The risks of attracting (and retaining) highly-qualified candidates exist and a right The integration and retention of young professionals may be affected by the level of the balance will have to be made between short-terms incentives (including monetary starting salary and subsequent career progression prospects. In addition, once the young incentives) and long-term sustainability goals. Accordingly, an Impact Evaluation professionals are recruited and trained, to ensure that they are challenged on the job so study is planned to assess the most effective strategies to attract and retain that they develop practical skills and maintain their motivation. qualified YPs. Secondly, a communication strategy will help to support the project's efforts to change management culture and create an enabling environment for talented professionals. Last, the project will provide TA to clarify the Visions and the Objectives of the YP program, including rights and duties of all parties involved. Resp: Stage: Due Date : First year of Status: Client/Ban Implementation project implementation Not yet Due k Social & Environmental Rating: Moderate Description: Risk Management: The credibility of pension payments to retirees remains a risk due to low budget Retirement benefits and pensions are defined by Law and the starting assumption credibility. under this project is that legal provisions will be strictly applied. In addition, a grievance and dispute resolution mechanism (GDRM) will be established as a global mechanism which will help persons or groups affected by retirement plans and will ensure that due process will be followed when designing and implementing such programs. During implementation, the Bank's team will monitor the regularity of pension payments and the extent to which pensions are calculated according to legal provisions in place, in order to mitigate the risk of adverse social impact. 72 Resp: Rep: Stage: Status: Client/Ban Stage: Due Date : Continuous Sttu k Implementation Not yet Due Program & Donor Rating: Low Description: Risk Management: The project might still be perceived as 'donor driven" in the implementation stage and During the design process, the level of government ownership and understanding the Government might remain unwilling to implement key aspects of the retirement & of the logic underpinning the Bank intervention have significantly increased. recruitment program beyond simply agreeing to the payment of retirement benefits for Detailed discussion with the key counterpart (Ministry of Public Services), the eligible staff of the targeted ministries targeted Ministries and higher level of Government (Office of the Prime Minister) have all contributed to clarify to the various stakeholders that the ownership and delivery of results rests in the hands of the government. Moreover, coordination has been ensured with donors to ensure that the Bank can play a leading role in the reform process while aligning with the government's own reform program. Also, during implementation, workshops will be organized at each critical stage of the reform process, to raise awareness and build consensus among all stakeholders involved. Potential fragmentation of development partner support is a risk. Although project The Project has been designed and prepared in close coordination with the preparation reflects a highly consultative process, it is necessary to maintain dialogue African Development Bank and the French Cooperation. Other key development with other donors throughout project implementation. partners involved in the public administration reform include South African Republic providing financial and technical assistance for civil servants biometric census, UNDP supporting the establishment of civil servants database and funding studies related to the creation of a public service pension fund, and the UN mission (MONUSCO) ensuring dissemination of public service laws. Resp: Clint! Stage: Due Date : Status: Clit Throughout Continuous Ongoing Bank Delivery Monitoring & Sustainability Rating: High Description: Risk Management: 73 Poor planning of activities and lack of well-defined arrangements for indicator tracking There will be a strong emphasis on results-based planning and budgeting. A and reporting could undermine overall project performance and sustainability. detailed M&E plan will be prepared to delineate key arrangements for indicator tracking and reporting. Staff of the PIU will be trained on how to manage for Given the high uncertainty in such a fragile political and institutional environment, it is results. important to maintain flexibility in project design and complementarity with other projects' interventions. However, depending on other projects' interventions gives rise The complementarity with other projects (including PRCG, PRC-GAP) will be to risks which could affect the sustainability of project outcomes. closely monitored and adjustments will be made during the implementation stage if circumstances change. This will also be facilitated by overlapping team members across the three PSG operations. Resp: Stage: Due Date: Client Throughout Continuous Status: Ongoing Bank Overall Risk Implementation Risk Rating: HIGH 74 ANNEX 5: IMPLEMENTATION SUPPORT PLAN Strategy and approach for Implementation Support The strategy for implementation support (IS) has been developed based on the nature of the project and its risks profile. It will aim at making implementation support more flexible and efficient for the client, and will focus on implementation of the risk mitigation measures defined in the ORAF. Procurement. Implementation support will include: (a) hiring of a procurement specialist with at least 8 years of relevant experience; (b) reviewing procurement documents and providing timely feedback to the Procurement Committee; (c) providing detailed guidance on the Bank's Procurement Guidelines to the Procurement Committee; and (d) monitoring procurement progress against the detailed Procurement Plan. Financial management. Supervision will review the project's financial management arrangements, including but not limited to, accounting, reporting and internal controls. Supervision will devote specific attention to the financial management arrangements in place to support the payment of retirement benefits, so as to avoid payments being made to those who are not eligible, or eligible staff not being paid. Social Impact. The Bank's team will monitor the regularity of pension payments and the extent to which pensions are calculated according to legal provisions in place, in order to mitigate the risk of adverse social impact. This will be done in the context of the Bank's regular monitoring of the 'Etats de Suivi Budgetaire' in the context of which pension payments will be given particular attention. The Bank will also support work on the definition and implementation of a sustainable pension system, which would address the issue of budget credibility and pension levels in a permanent manner. Anti-Corruption. The Bank's team will supervise the implementation of the agreed Governance and Accountability measures. Implementation Support Plan Most of the Bank's team members are based in the Kinshasa office or in neighboring countries, except for the small team of economists. This will ensure timely, efficient and effective implementation support to the client. Task team leadership will be transferred to the new Kinshasa-based IRS once he/she will be in place. Formal supervision and field visits will be carried out quarterly. Detailed inputs from the Bank team are outlined below: Technical inputs. The team will ensure that technical inputs are provided by economists to track the fiscal impact of supported reforms, a public expenditure specialist to track pension payments and technical specialists to review the solidity of staff verification and identification arrangements. Fiduciary requirements and inputs. Training will be provided by the Bank's financial management specialist and procurement specialist before the commencement of project implementation. The team will also help the Ministry of Public Services identify capacity building needs to strengthen its financial management capacity and to improve procurement 75 management efficiency. Both the financial management and the procurement specialist will be based in the country office to provide timely support. Formal supervision of financial management will be carried out quarterly, while procurement supervision will be carried out on a timely basis as required by the client. Operation: An operation team in AFPM, based in DC, will provide overall guidance and advisory support to the team. The main focus of implementation support is summarized below. Partner Time Focus Resource Estimate rle Role First six months Technical and procurement review of contracts Economist and public sector specialist (2 NA for the payment agency and consultants W) Procurement training Procurement specialist (1 W) FM training and supervision FM specialist 2 SWs Reviewing staff identification processes Economist and Public Sector Specialist 4 SWs Reviewing new organizational models Public Sector Specialist 2 SWs Reviewing recruitment arrangements and retiree Public sector specialist 4 SWs consultant facility Team leadership TTL 8 SWs Technical and procurement review of contracts Economist and public sector specialist (4 for consultants W) Procurement specialist (2 W) FM supervision FM specialist 2 SWs 6-15 NA months Review M&E reports M&E specialist 2SWs Reviewing staff identification processes Economist and Public Sector Specialist 4 SWs Reviewing new organizational models Public Sector Specialist 2 SWs Tracking pension payments (starting Jan 2011) Public expenditure analyst 3 SWs Reviewing recruitment arrangements and retiree Public sector specialist 4 SWs consultant facility Task leadership TTL 10 SWs Note: SW - Staff-Week 76 Staff skill mix required, per year, is summarized below Skills Needed Number of Staff Weeks Number of Trips Comments TTL 10 2 (provincial) Based in Tanzania Senior Public Expenditure 5 Kinshasa based Specialist Public Expenditure 10 Kinshasa based Specialist Governance Specialist 10 2 DC based Legal adviser 1 1 (for negotiations) DC based Procurement specialist 5 Kinshasa based FM specialist 5 Kinshasa based M&E specialist 4 1 DC based IE Specialist 4 2 DC based 77 ANNEX 6: PROJECT PREPARATION SCHEDULE AND TEAM COMPOSITION Team composition Name Title Unit Tony Verheijen Task Team Leader AFTPR Carine Doganis Senior Public Sector Management Specialist AFTPR Shiho Nagaki Economist AFTPR Mohammed Bekhechi Sr. Counsel LEGAF Jean Charles Amon Kra Sr. Financial Management Specialist AFTFM Susan Opper Sr. Education Specialist AFTHE Thomas Jeffery Ramin Sr. Operations Officer AFTRL Erinn Wattie Consultant AFTPR Chiara Bronchi Task Team Leader AFTP5 Jean Mabi Mulumba Sr. Public Sector Management Specialist AFTP5 Evariste Niyonkuru Governance Specialist AFTP5 Denis Tshibombi Governance Specialist AFTP5 Marco Larizza Public Sector Specialist AFTP5 Andrew Osei Asibey Sr. Monitoring&Evaluation Specialist AFTDE Anthony Molle Sr. Legal Counsel LEGAM Altaf Ahmad Legal Program Assistant LEGAM Alexandra C. Bezeredi Regional Environmental Safeguards Advisor AFTSG Philippe Mahele Liwoke Sr. Procurement Specialist AFTPW Isabella Micali Drossos Sr. Counsel LEGAM Michael Christopher Jelenic Consultant AFTPM Sadia Aderonke Afolabi Consultant AFTP5 Aissatou Diallo Sr. Finance Officer CTRLA Bourama Diaite Sr. Procurement Specialist AFTPW Siaka Bakayoko Sr. Financial Management Specialist AFTOS Lucie Lufiauluisu Bobola Program Assistant AFCC2 Maude Jean Baptiste Program Assistant AFTP5 Lydie Ahodehou Program Assistant AFTP5 Karima Laouli Ladjo Program Assistant AFTP5 Jennifer Ngenyi Wabidia Team Assistant AFCC2 78 ANNEX 7: ECONOMIC AND FINANCIAL ANALYSIS This annex is organized in two main sections: i. Section 1 presents an economic analysis of the rejuvenating targeted ministries. The analysis focuses on the retirement component (US$ 29 million - component 2) and the Young Professional program (22 US$ million - component 1); ii. Section 2 provides an HR database analysis of civil servants eligible for retirement from each of the targeted ministries and agencies, disaggregated by grade and age cohorts, to calculate the costs of the retirement benefits. Two different scenarios are presented, to compute costs according to the current (55) and proposed (62) retirement age. L Economic analysis of rejuvenating the target ministries 1. One of the objectives of the project is to rejuvenate the civil service in the target ministries and agencies. In DRC, the public service continues to suffer from the progressive depletion of skilled manpower and a constantly aging work-force. Today, 55-60 percent of all civil servants have passed the mandatory retirement age, which currently is 55 years old or 30 years of service, with many officials continuing to work and being compensated beyond the age of 70. The distortions in incentives created by this poorly managed situation have meant that the civil service has substantially aged, causing substantial financial and productivity losses for the entire public service. This unfortunate situation accounts for ministries' incurring inordinate costs, by retaining a disproportionate share of the work force that are at senior-level status and often inactive, at the expense of younger and better qualified professionals who could contribute to a more effective public administration. 2. The purpose of this section is to compare benefits and costs of financing the rejuvenation of target ministries and agencies. An analysis will be carried out for the payment of one-time pension benefits to 5,975 civil servants who have reached 62 years of age27. The cost of this support is around US$ 29 million, including payment and control mechanisms, as well as the grievances mechanisms that will ensure the correct implementation and reliability of the process. A similar analysis will be carried out for the young professional (YP) program, estimated at US$ 22 million. 3. The cost-benefit analysis shows that overall the support to the rejuvenation (retirement and young professionals) of the target ministries and agencies will bring substantial economic savings. 4. Other qualitative aspects related to rejuvenation of the civil service should be emphasized: retirement will create fiscal savings but also an opportunity to re-organize and re- size to achieve more effective production processes. This, combined with the employment of younger and better qualified civil servants, will introduce efficiency gains in the target services. 27 Since the draft organic law on civil service is proposing to increase the retirement age from 55 to 62 years, the government has requested to start the retirement process with those civil servants who have already reached 62 years of age. 79 Cost-benefit analysis of the retirement program 5. A cost-benefit analysis (Table A7.1) of financing the retirement program would indicate that the payment of a one-time lump-sum pension benefit to eligible civil servants could account for (i) a significant reduction in aggregate payroll expenditure for the affected ministries and agencies, and (ii) a fairly rapid amortization of the one-time lump-sum retirement benefit payment. In other words, the benefits of the program outweigh the associated costs supported by 28 this project. The analysis shows that from the year the retirement benefits are paid , it will be possible to attain fiscal savings of about US$ 6 million per year after pension payments are taken into account. Assuming the fiscal savings is earning the on-going real interest rate of 6 per cent (DRC Central Bank October 2013), the cost-benefit analysis would indicate that the opportunity costs for the Government to retire those eligible civil servants could bring cumulative savings in net present value up to US$ 28.7 million over a period of 10 years. Such net savings would be sufficient to recover the entire cost of the payment of retirement benefits four years after they have been paid and to generate more savings. This simple cost-benefit analysis provides a strong case to justify the 'productive purposes' of US$ 29 million IDA financing.29 Cost-benefit analysis of the Young Professional program 6. The purpose of this section is to evaluate the Net Present Value of the benefits the project will yield through the financing of the YP program for 500 young professionals at an estimated cost of US$ 22 million. 7. The objective of this project is to inject young and better qualified employees in order to rejuvenate and improve the productivity of some key positions in the targeted ministries. Several studies show that a worker's productivity increases at early ages but decreases with age. Building on these findings, the analysis estimates that the marginal productivity of civil servants well beyond the mandatory retirement age, as is the case in DRC, is negligible. In contrast, the estimated marginal productivity of younger civil servants is positive and increases over time, as workers tend to reach the peak of their productivity around 40 years of age. The underlying assumption of the analysis is that after the re-organization of the target ministries and the retirement of a number of retirement-aged civil servants, a relatively smaller number of young and better qualified professionals will be able to bring efficiency gains to the administration. This expectation is also in line with evidence from other countries' historical experiences on 31 severance payment retirement programs 8. A conservative cost-benefit analysis (Table A7.2) indicates that the benefits of the YP program financed by the Bank would account for a significant increase in productivity; its net 28 The project plans to pay retirement benefits in the 3rd year. 29 In the hypothetical scenario that the IDA grant would have been a credit - the government would have had a positive 'virtual' rate of return on the borrowed amount and would have been able to compensate the borrowing (US$ 26 million) after three years from the year in which the retirement is paid, and make savings after that. 3( For a literature review see Vegard Skirbekk (2003) 'Age and Individual Productivity: a Literature Survey', Max Planck Institute for Demographic Research Working Paper Series, 2003-028, Rostock, Germany. 31 Holzmann, Robert, Pouget, Yann and Vodopivec, Milan (2001) Severance Pay Programs around the World: History, Rationale, Status, and Reforms, Social Protection and Labor Discussion Paper N 1111, Washington DC, World Bank. 80 present value should cover the costs incurred by the project three years after the employment of the first group of YPs. In line with the project, the analysis assumes that YP hiring will be staggered: 100 will be recruited in the first year of the project, 200 in the second year and 200 in the third year; YPs will be trained for two years before entering the civil service as full time employees. The analysis also assumes that the YPs will become productive when employed, hence during the first two years of the project there will be only costs linked to the management of the YP program and the training. It is also assumed that as soon as employed, the YPs will be productive and the value of the professional contribution corresponds to a YP average monthly compensation of US$ 1200, which is kept constant over the entire period of the analysis. For sake of simplicity, the analysis assumes that all 500 YPs will be employed. 9. The cost-benefit analysis of the YP program would indicate that hiring young and well trained professionals could bring efficiency gains. Such gains would be sufficient to recover the 322 entire cost of the program once the YPs are employed .3 32 In the hypothetical scenario that the IDA grant would have been a credit - the government would have had a positive 'virtual' rate of return of the borrowed amount and would have been able to compensate the borrowing (US$ 22 million) the first year all YPs are employed. 81 Table A7.1: Cost Benefit Analysis of Retirement Benefits, over a 10 year period (US$ '000,000) Years 1 2 3 4 5 6 7 8 9 10 Costs for pension benefits 1.5 1.5 24 1 1 0 0 0 0 0 Fiscal savings from 0.0 0.0 6.0 6.4 6.7 7.1 7.6 8.0 8.5 9.0 retirement of eligible civil servants. Fiscal Savings minus Costs -1.5 -1.5 -18.0 5.4 5.7 7.1 7.6 8.0 8.5 9.0 Cumulative -1.5 -3.0 -21.0 -15.6 -9.9 -2.8 4.8 12.9 21.4 30.4 Discount rate 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 Annual discounted amount -1.4 -1.4 -17.0 5.1 5.4 6.7 7.1 7.6 8.0 8.5 Cum. NPV -1.4 -2.8 -19.8 -14.8 -9.3 -2.6 4.5 12.1 20.2 28.7 Cost of Pension Benefits = full project cost associated with paying one-time pension benefits in the 3d year of the project. Fiscal savings = salaries minus pensions paid to 5975 civil servants starting from year 3 and remunerated with a 6 percent interest rate (in line with DRC central bank interest) from year 4 onwards; Discount factor = 6 percent. Table A7.2: Cost Benefit Analysis of the Young Professional Program, over 10 year period (US$ '000,000) Years 1 2 3 4 5 6 7 8 9 10 Cost of YP program 2.1 6.3 6.3 6.3 0.0 0.0 0.0 0.0 0.0 0.0 Productivity of YPs 0.0 0.0 1.4 4.3 7.2 7.2 7.2 7.2 7.2 7.2 Productivity minus Cost -2.1 -6.3 -4.9 -2.0 7.2 7.2 7.2 7.2 7.2 7.2 Cumulative -2.1 -8.4 -13.3 -15.2 -8.0 -0.8 6.4 13.6 20.8 28.0 Discount rate 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 Annual Discounted -2.0 -5.9 -4.6 -1.9 6.8 6.8 6.8 6.8 6.8 6.8 Amount Cum. NPV -2.0 -7.9 -12.5 -14.4 -7.6 -0.8 6.0 12.8 19.6 26.4 Cost of YP Program = full project cost associated with YP program for three cohorts (100 the first year, 200 second year and 200 the third year) of YPs assumed to become productive after two years of training. Productivity of YP = the average productivity of a YP is assumed to be equivalent to a monthly remuneration of US$ 1,200 and remain constant over the period; Discount factor = 6 percent. 82 Table A7.3: Financial Savings of the Mandatory Retirement Number of A. Total annual B. Total of annual Financial impact eligible agents salary (US$) pension (US$) (A-B) Ministry of Budget 1045 968,792.01 386,648.35 582,143.66 Ministry of Planning 283 522,714.18 201,501.89 321,212.29 Ministry of Finance (including DGI, DGRAD and DGDA) 2752 4,993,320.79 1,921,237.41 3,072,083.38 Ministry of Public Service 1580 2,686,834.83 1,104,477.79 1,582,357.04 Ministry of Portfolio 59 119,902.29 42,254.33 77,647.96 National Institute of Statistics 260 536,429.24 194,227.33 342,201.90 Total 5,979 9,827,993.34 3,850,347.11 5,977,646.23 Source: Official Data of the Ministry of Public Services. Notes Table A7.3 above shows that the payment of retirement benefits targeting around 6000 people will create approximately US$ 6 million of fiscal savings on a yearly basis, once pension payments to new retirees are taken into account. This could enable the Government to increase low salaries in order to attract better qualified professionals to rejuvenate and re-energize the public service. Fiscal space can also be used to initiate a civil servant's pension to fund the low level of basic salaries33 to retain and/or to invest into other development projects. This financial impact has been calculated based on the following formula: {12 months of salary composed of the basic wage (2012) and special allowance34} - { 12 months of pension (75% of last monthly basic wage) } 33 For example, the basic wage for the secretary general, top of the civil servants is only 61,923FC (US$65) per month, Director, 59,923FC (63US$), Huissier, the lowest level, 35,OOOFC (37US$). The excessive special allowance should also be integrated into the basic wage through the wage reform. 34 The rate of special allowance varies according to the ministry. For the purposes of these calculations, we have used the allowances rates provided by the Ministry of Public Service. Costs and savings are therefore subject to change and will be finalized after biometric identification. 83 II. HR Database Analysis Table A7.4: Retirement Compensation in the Ministry of Budget SCENARIO 1 (55 YRS and/or 30 ye ars of service on 3111212015) ___________ No Grade Total Agents by Eligible Eligible Number of Base End of Repatriatio Compensation Compensation, Agents Organigra Agents as Female Eligible Salary Career n Costs by Agent Total m % of Agents as % Agents 2013 Allocation (US$) (US$) (US$) total of the total (CDF) (US$) of eligible Agents 1 Secr6taire G6n6ral 1 1 100.00 0.00 1 83923 1,069.99 2,000.00 3,069.99 3,069.99 2 Directeur 2 9 100.00 0.00 2 81923 1,044.49 2,000.00 3,044.49 6,088.98 3 Chef de Division 81 242 85.19 8.70 69 79430 1,012.71 2,000.00 3,012.71 207,876.80 4 Chef de Bureau 202 199 80.69 11.66 163 77403 986.86 2,000.00 2,986.86 486,858.76 5 Attach6 de Bureau de lere Classe 955 336 43.25 19.37 413 73564 937.92 2,000.00 2,937.92 1,213,359.95 6 Attach6 de Bureau de 2eme Classe 834 296 25.30 16.59 211 71956 917.42 2,000.00 2,917.42 615,574.79 7 Agent de Bureau de 1eee Classe 692 119 29.91 16.91 207 70692 901.30 2,000.00 2,901.30 600,569.20 8 Agent de Bureau de 2"m Classe 428 20 33.18 13.38 142 69894 891.13 2,000.00 2,891.13 410,539.92 9 Agent Auxiliaire de lere Classe 107 0 65.42 8.57 70 69256 882.99 2,000.00 2,882.99 201,809.43 10 Agent Auxiliaire de 2eme Classe 22 1 86.36 0.00 19 62638 798.61 2,000.00 2,798.61 53,173.68 11 Huissier 11 0 63.64 0.00 7 57000 726.73 2,000.00 2,726.73 19,087.12 Total 3,335 1,223 1,304 3,818,008.63 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade. Total Eligible Agent 1,304 Total Compensation (US$) 3,818,008.63 84 Table A7.5: Retirement compensation in Ministry of Planning SCENARIO 1 (55 Y RS aiiidI/or 30 years of service on 31/12/2015 - No Grade Total Agents by Eligible Eligible Number of Base Salary End of Repatriation Compensation Compensation, Agents Organigram Agents as % Female Eligible 2013 (CDF) Career Costs by Agent Total of total Agents as % Agents Allocation (US$) (US$) (US$) of the total of (US$) eligible Agents 1 Secr6taire G6n6ral 2 1 100.00 50.00 2 83923 1,069.99 2,000.00 3,069.99 6,139.98 2 Directeur 10 17 100.00 0.00 10 81923 1,044.49 2,000.00 3,044.49 30,444.92 3 Chef de Division 49 74 100.00 8.16 49 79430 1,012.71 2,000.00 3,012.71 147,622.65 4 Chef de Bureau 93 175 95.70 12.36 89 77403 986.86 2,000.00 2,986.86 265,830.86 5 Attach6 de Bureau de 1ere Classe 143 26 65.73 15.96 94 73564 937.92 2,000.00 2,937.92 276,164.25 6 Attach6 de Bureau de 2eme Classe 208 51 28.85 11.67 60 71956 917.42 2,000.00 2,917.42 175,044.96 7 Agent de Bureau de 1ere Classe 157 36 36.31 21.05 57 70692 901.30 2,000.00 2,901.30 165,374.13 8 Agent de Bureau de 2eme Classe 91 15 36.26 3.03 33 69894 891.13 2,000.00 2,891.13 95,407.17 9 Agent Auxiliaire de 16r Classe 31 0 45.16 7.14 14 69256 882.99 2,000.00 2,882.99 40,361.89 10 Agent Auxiliaire de 2eme Classe 14 1 57.14 0.00 8 62638 798.61 2,000.00 2,798.61 22,388.92 11 Huissier 8 0 100.00 12.50 8 57000 726.73 2,000.00 2,726.73 21,813.85 Total 806 396 424 1,246,593.58 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade. Exchange rate (fiscal year 2013): 1 US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010. Summary Table Total Eligible Agent 424 Total Compensation (US$) 1,246.593.58 85 Table A7.6: Retirement compensation in Ministry of Finance (including DGI, DGRAD and DGDA) SCENARIO 1 (55 YRS andor 30 years of service on 31/12/2015) No Grade Total Agents by Eligible Eligible Female Number of Base Salary End of Repatriation Compensati Compensation Agents Organigram Agents as Agents as % of Eligible 2013 (FC) Career Costs on by Agent , % of total the total of Agents Allocation (US$) (US$) Total eligible Agents (US$) (US$) 1 Secr6taire G6n6ral 40 1 100.00 0.00 40 83923 1,069.99 2,000.00 3,069.99 122,799.66 2 Directeur 83 8 75.90 1.59 63 81923 1,044.49 2,000.00 3,044.49 191,803.00 3 Chef de Division 225 32 68.44 3.90 154 79430 1,012.71 2,000.00 3,012.71 463,956.91 4 Chef de Bureau 601 143 67.89 4.66 408 77403 986.86 2,000.00 2,986.86 1,218,640.34 5 Attach6 de Bureau de lere Classe 3629 536 43.54 15.00 1580 73564 937.92 2,000.00 2,937.92 4,641,909.73 6 Attach6 de Bureau de 2m Classe 3726 462 28.23 14.26 1052 71956 917.42 2,000.00 2,917.42 3,069,121.70 7 Agent de Bureau de lee Classe 4048 258 21.89 11.51 886 70692 901.30 2,000.00 2,901.30 2,570,552.21 8 Agent de Bureau de 2eme Classe 2307 79 20.76 14.20 479 69894 891.13 2,000.00 2,891.13 1,384,849.46 9 Agent Auxiliaire de Ieee Classe 424 9 47.88 9.85 203 69256 882.99 2,000.00 2,882.99 585,247.36 10 Agent Auxiliaire de 2eme Classe 132 0 56.82 5.33 75 62638 798.61 2,000.00 2,798.61 209,896.09 11 Huissier 84 4 59.52 4.00 50 57000 726.73 2,000.00 2,726.73 136,336.59 Total 15,299 1532 4990 14,595,113.06 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade Exchange rate (fiscal year 2013): 1 US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010. Summary Table Total Eligible Staff 4990 Total Compensation (US$) 14,595,113.06 86 Table A7.7: Retirement compensation in Ministry of Public Services SCENARIO 1 (55 YRS and/or 30+ service on 31/12/2015) No Grade Total Agents by Eligible Eligible Number of Base End of Repatriation Compensation Compensation, Agents Organigram Agents as Female Eligible Salary Career Costs by Agent Total % of total Agents as % Agents 2013 Allocation (US$) (US$) (US$) of the total of (CDF) (US$) eligible Agents 1 Secr6taire G6n6ral 9 2 100.00 33.33 9 83923 1,069.99 2,000.00 3,069.99 27,629.92 2 Directeur 30 53 100.00 13.33 30 81923 1,044.49 2,000.00 3,044.49 91,334.76 3 Chef de Division 90 157 98.89 4.49 89 79430 1,012.71 2,000.00 3,012.71 268,130.94 4 Chef de Bureau 241 289 97.10 8.55 234 77403 986.86 2,000.00 2,986.86 698,926.08 5 Attach6 de Bureau de lere Classe 1261 793 60.98 19.25 769 73564 937.92 2,000.00 2,937.92 2,259,258.60 6 Attach6 de Bureau de 2eme Classe 804 676 39.93 19.00 321 71956 917.42 2,000.00 2,917.42 936,490.56 7 Agent de Bureau de leRe Classe 812 655 36.45 16.22 296 70692 901.30 2,000.00 2,901.30 858,784.94 8 Agent de Bureau de 2em Classe 524 337 35.88 13.83 188 69894 891.13 2,000.00 2,891.13 543,531.73 9 Agent Auxiliaire delere Classe 197 13 46.19 9.89 91 69256 882.99 2,000.00 2,882.99 262,352.27 10 Agent Auxiliaire de 2e Classe 103 4 60.19 12.90 62 62638 798.61 2,000.00 2,798.61 173,514.10 11 Huissier 44 3 81.82 5.56 36 57000 726.73 2,000.00 2,726.73 98,162.35 Total 4115 2982 2125 6,218,116.24 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade Exchange rate (fiscal year 2013): 1 US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Summary Table Total Eligible Staff 2125 Total Compensation (US$) 6,218,116.24 87 Table A7.8: Retirement compensation in Ministry of Portfolio SCENARIO 1 (55 YRS and/or 30 years of service on 31/12/2015) No Grade Total Agents by Eligible Eligible Number of Base Salary End of Repatriation Compensation Compensation Agents Organigram Agents as % Female Eligible 2013 (CDF) Career Costs by Agent of total Agents as % Agents Allocatio (US$) (US$) Total of the total of n (US$) eligible (US$) Agents I Secr6taire G6n6ral 1 1 100.00 1 83923 1,070.11 2,000.00 3,070.11 3,070.11 2 Directeur 0 4 7.14 0 81923 1,044.60 2,000.00 3,044.60 0.00 3 Chef de Division 14 17 100.00 7.14 14 79430 1,012.81 2,000.00 3,012.81 42,179.41 4 Chef de Bureau 14 30 100.00 20.00 14 77403 986.97 2,000.00 2,986.97 41,817.56 5 Attach6 de Bureau de lere Classe 63 62 23.81 0.00 15 73564 938.02 2,000.00 2,938.02 44,070.26 6 Attach6 de Bureau de 2ee Classe 86 35 12.79 0.00 11 71956 917.51 2,000.00 2,917.51 32,092.65 7 Agent de Bureau de 1ere Classe 48 5 18.75 0.00 9 70692 901.40 2,000.00 2,901.40 26,112.57 8 Agent de Bureau de 2eme Classe 12 2 50.00 25.00 6 69894 891.22 2,000.00 2,891.22 17,347.33 9 Agent Auxiliaire de ler Classe 4 0 100.00 0.00 4 69256 883.09 2,000.00 2,883.09 11,532.34 10 Agent Auxiliaire de 2em Classe 1 0 100.00 1 62638 798.70 2,000.00 2,798.70 2,798.70 11 Huissier 0 111 0 57000 726.81 2,000.00 2,726.81 0.00 Total 243 267 75 221,020.91 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade. Exchange rate (fiscal year 2013): 1 US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Total Eligible Staff 75 Total Compensation (US$) 221,020.91 88 Table: A7.9: Retirement compensation in the National Institute of Statistics (INS) 3 SCENARIO 1 (55 YRS and/or 30 years of service on 31/12/2015) No Grade Number of Base End of Repatriatio Compensation, by Compensation eligible Salary Career n Costs agent , total agents 2012 Allocation (US$) (US$) (US$) (CDF) (US$) I Secr6taire G6n6ral 37 66923 853.25 2,000.00 2,853.25 105,570.14 2 Directeur 117 64923 827.75 2,000.00 2,827.75 330,846.46 3 Chef de Division (Affaires foncibres et Habitat/Urbanisme) 54 62430 795.96 2,000.00 2,795.96 150,981.98 4 Chef de Bureau 41 61403 782.87 2,000.00 2,782.87 114,097.62 5 Attach6 de Bureau de lre Classe 11 56564 721.17 2,000.00 2,721.17 29,932.90 6 Attach6 de Bureau de 26me Classe 54956 700.67 2,000.00 2,700.67 0.00 7 Agent de Bureau de lere Classe 53692 684.56 2,000.00 2,684.56 0.00 8 Agent de Bureau de 2eme Classe 52894 674.38 2,000.00 2,674.38 0.00 9 Agent Auxiliaire de lre Classe 52256 666.25 2,000.00 2,666.25 0.00 10 Agent Auxiliaire de 2eme Classe 45638 581.87 2,000.00 2,581.87 0.00 11 Huissier 40000 509.99 2,000.00 2,509.99 0.00 Total 260 731,429.10 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade Exchange rate (fiscal year 2013): 1 US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Summary table Total Eligible staff 260 Total compensation (in US$) 731,429.10 35 The data from the INS have not been officially validated and will need to be double-checked for accuracy. 89 Table A7.10: Scenario 1 - Synthesis of the costs for the retirement compensation of all the ministries covered under the project No Grade Total Agents by Eligible Eligible Number Base Salary End of Repatriation Compensation Compensation, Agents Organigram Agents as Female of 2013 (CDF) Career Costs by Agent Total % of total Agents as % Eligible Allocation (US$) (US$) (US$) of the total of Agents (US$) eligible Agents 1 S6cretaire G6n6ral 53 6 100 7.41 53 83,923.00 1,069.99 2,000.00 3,069.99 276299.24 2 Directeur G6n6ral 0 0 0 0.00 0 83,923.00 1,069.99 2,000.00 3,069.99 34207.73 3 Directeur 125 91 84 2.46 105 81,923.00 1,044.49 2,000.00 3,044.49 675877.25 4 Chef de Division 459 522 82 5.21 375 79,430.00 1,012.71 2,000.00 3,012.71 1292451.38 5 Chef de Bureau 1151 836 79 6.48 908 77,403.00 986.86 2,000.00 2,986.86 2834533.53 6 Attach de Bureau de lre Classe 6051 1753 47 12.98 2871 73,564.00 937.92 2,000.00 2,937.92 8467078.39 7 Attach6 de Bureau de 2me" Classe 5658 1520 29 13.43 1655 71,956.00 917.42 2,000.00 2,917.42 4828323.58 8 Agent de Bureau de lre Classe 5757 1073 25 10.30 1455 70,692.00 901.30 2,000.00 2,901.30 4221392.18 9 Agent de Bureau de 2e Classe 3362 453 25 8.62 848 69,894.00 891.13 2,000.00 2,891.13 2451675.03 10 Agent Auxiliaire de Isr Classe 763 22 50 7.68 382 69,256.00 882.99 2,000.00 2,882.99 1101302.92 11 Agent Auxiliaire de 26m Classe 272 6 61 7.48 165 62,638.00 798.61 2,000.00 2,798.61 461771.4 12 Huissier 147 118 69 3.93 101 57,000.00 726.73 2,000.00 2,726.73 275399.91 Total 23,798 8,918 26,920,313 Total Including INS 9,178 90 Table A7.11: Retirement Compensation in the Ministry of Budget SCENARIO 2 (62 YRS and/or 30 years of service on 31/12/2015 ___ No Grade Total Agents Eligible Eligible Number of Base End of Repatriation Compensation Compensation, Agents by Agents as Female Eligible Salary Career Costs by Agent Total Organigr % of total Agents as % Agents 2013 Allocation (US$) (US$) (US$) am of the total of (CDF) (US$) eligible Agents 1 Secr6taire G6n6ral 1 1 100.00 2.00 1 83923 1,069.99 2,000.00 3,069.99 3,069.99 2 Directeur 2 9 50.00 90.00 1 81923 1,044.49 2,000.00 3,044.49 3,044.49 3 Chef de Division 81 242 71.60 204.45 58 79430 1,012.71 2,000.00 3,012.71 174,737.02 4 Chef de Bureau 202 199 73.76 124.21 149 77403 986.86 2,000.00 2,986.86 445,042.67 5 Attach6 de Bureau de 16re 955 336 34.35 73564 937.92 2,000.00 2,937.92 963,636.96 Classe 146.49 328 6 Attach6 de Bureau de 2eme 834 296 18.35 71956 917.42 2,000.00 2,917.42 446,364.66 Classe 402.41 153 7 Agent de Bureau de 1re Classe 692 119 23.41 115.33 162 70692 901.30 2,000.00 2,901.30 470,010.68 8 Agent de Bureau de 2e Classe 428 20 24.53 17.33 105 69894 891.13 2,000.00 2,891.13 303,568.25 9 Agent Auxiliaire de lere Classe 107 0 58.88 0.00 63 69256 882.99 2,000.00 2,882.99 181,628.49 10 Agent Auxiliaire de 2e Classe 22 1 81.82 0.78 18 62638 798.61 2,000.00 2,798.61 50,375.06 11 Huissier 11 0 63.64 0.00 7 57000 726.73 2,000.00 2,726.73 19,087.12 Total 3,335 1223 1045 3,060,565.39 Legend: End of career allocation : Salary x 100% x 12 months Repatriation costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade Exchange rate (fiscal year 2013) : 1US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Summary Table Total Eligible Staff 1045 Total Compensation (US$) 3,060,565.39 91 Table A7.12: Retirement compensation in Ministry of Planning SCENARIO 2 (62 YRS and/or 30 years of service on 31/12/2015) No Grade Total Agents by Eligible Eligible Number Base End of Repatriati Compensa Compensation, Agents Organigra Agents as Female of Salary Career on Costs tion by Total m % of total Agents as % Eligible 2013 Allocation (US$) Agent (US$) of the total of Agents (CDF) (US$) (US$) eligible Agents 1 Secr6taire Gn6ral 2 1 100.00 50.00 2 83923 1,069.99 2,000.00 3,069.99 6,139.98 2 Directeur 10 17 90.00 0.00 9 81923 1,044.49 2,000.00 3,044.49 27,400.43 3 Chef de Division 49 74 95.92 8.51 47 79430 1,012.71 2,000.00 3,012.71 141,597.24 4 Chef de Bureau 93 175 82.80 11.69 77 77403 986.86 2,000.00 2,986.86 229,988.50 5 Attach6 de Bureau de 16re 143 26 73564 937.92 2,000.00 2,937.92 149,833.80 Classe 35.66 13.73 51 6 Attach6 de Bureau de 2ame 208 51 71956 917.42 2,000.00 2,917.42 70,017.99 Classe 11.54 12.50 24 7 Agent de Bureau de 1sre Classe 157 36 20.38 9.38 32 70692 901.30 2,000.00 2,901.30 92,841.61 8 Agent de Bureau de 2em Classe 91 15 21.98 5.00 20 69894 891.13 2,000.00 2,891.13 57,822.52 9 Agent Auxiliaire de lere Classe 31 0 29.03 11.11 9 69256 882.99 2,000.00 2,882.99 25,946.93 10 Agent Auxiliaire de 2eme Classe 14 1 35.71 0.00 5 62638 798.61 2,000.00 2,798.61 13,993.07 11 Huissier 8 0 87.50 14.29 7 57000 726.73 2,000.00 2,726.73 19,087.12 Total 806 396 283 834,669.19 Legend: End of career allocation: Salary x 100% x 12 months Repatriation costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade Exchange rate (fiscal year 2013): 1US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Summary Table Total Eligible Staff 283 Total Compensation (US$) 834,669.19 92 Table A7.13: Retirement compensation in Ministry of Finance (including DGI, DGRAD and DGDA) SCENARIO 2 (62 YRS and/or 30 years of service on 31/12/2015) No Grade Total Agents Eligible Eligible Female Numbe Base End of Repatriation Compensatio Compensation, Agents by Agents as % Agents as % of r of Salary Career Costs n by Agent Total Organigr of total the total of Eligibl 2013 Allocation (US$) (US$) (US$) am eligible Agents e (CDF) (US$) Agents 1 Secr6taire G6n6ral 40 1 95.00 0.00 38 83923 1,069.99 2,000.00 3,069.99 116,659.68 2 Directeur 83 8 53.01 2.27 44 81923 1,044.49 2,000.00 3,044.49 133,957.65 3 Chef de Division 225 32 40.00 4.44 90 79430 1,012.71 2,000.00 3,012.71 271,143.65 4 Chef de Bureau 601 143 56.07 3.56 337 77403 986.86 2,000.00 2,986.86 1,006,573.03 5 Attach6 de Bureau de 16re Classe 3629 536 27.80 15.36 1009 73564 937.92 2,000.00 2,937.92 2,964,358.81 6 Attach6 de Bureau de 2eme Classe 3726 462 13.31 16.73 496 71956 917.42 2,000.00 2,917.42 1,447,038.37 7 Agent de Bureau de lere Classe 4048 258 8.75 12.15 354 70692 901.30 2,000.00 2,901.30 1,027,060.37 8 Agent de Bureau de 2eme Classe 2307 79 8.32 14.58 192 69894 891.13 2,000.00 2,891.13 555,096.23 9 Agent Auxiliaire de lere Classe 424 9 25.00 7.55 106 69256 882.99 2,000.00 2,882.99 305,597.14 10 Agent Auxiliaire de 2eme Classe 132 0 38.64 3.92 51 62638 798.61 2,000.00 2,798.61 142,729.34 11 Huissier 84 4 41.67 2.86 35 57000 726.73 2,000.00 2,726.73 95,435.61 Total 15,229 1532 2752 8,065,649.88 Legend: End of career allocation: Salary x 100% x 12 months Repatriation costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade Exchange rate (fiscal year 2013): 1US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Summary Table Total Eligible Staff 2752 Total Compensation (US$) 8,065,649.88 93 Table A7.14: Retirement compensation in Ministry of Public Services SCENARIO 2 (62 YRS and/or 30 years of service on 31/12/2015) No Grade Total Agents by Eligible Eligible Number of Base Salary End of Repatriati Compensatio Compensatio Agents Organigra Agents Female Eligible 2013 (CDF) Career on Costs n by Agent n, m as % of Agents as Agents Allocation (US$) (US$) Total total % of the (US$) (US$) total of eligible Agents Secr6taire G6n6ral 9 2 100.00 33.33 9 83923 1,069.99 2,000.00 3,069.99 27,629.92 2 Directeur G6n6ral 0 0 0.00 2,000.00 2,000.00 18,000.00 3 Directeur 30 53 100.00 13.33 30 81923 1,044.49 2,000.00 3,044.49 91,334.76 4 Chef de Division 90 157 94.44 4.71 85 79430 1,012.71 2,000.00 3,012.71 256,080.11 5 Chef de Bureau 241 289 93.78 8.85 226 77403 986.86 2,000.00 2,986.86 675,031.17 6 Attach6 de Bureau de 1re Classe 1261 793 47.11 20.03 594 73564 937.92 2,000.00 2,937.92 1,745,123.03 7 Attach6 de Bureau de 2eme Classe 804 676 26.49 19.72 213 71956 917.42 2,000.00 2,917.42 621,409.62 8 Agent de Bureau de 1re Classe 812 655 23.77 11.92 193 70692 901.30 2,000.00 2,901.30 559,950.99 9 Agent de Bureau de 2me Classe 524 337 19.85 12.50 104 69894 891.13 2,000.00 2,891.13 300,677.13 10 Agent Auxiliaire de lre Classe 197 13 30.96 8.20 61 69256 882.99 2,000.00 2,882.99 175,862.51 11 Agent Auxiliaire de 2eme Classe 103 4 31.07 12.50 32 62638 798.61 2,000.00 2,798.61 89,555.67 12 Huissier 44 3 75.00 6.06 33 57000 726.73 2,000.00 2,726.73 89,982.15 Total 4115 2982 1580 4,650,637.05 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82-030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade Exchange rate (fiscal year 2013): 1 US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Summary Table Total Eligible Staff 1580 Total Compensation (US$) 4,650,637.05 94 Table A7.15: Retirement Compensation in the Ministry of Portfolio __________SCENARIO 2 (62 YRS and/or 30 years of service on 31/12/2015) ______ No Grade Total Agents by Eligible Eligible Number of Base Salary End of Career Repatriation Compensation Compensation, Agen Organigra Agents as Female Eligible 2013 (CDF) Allocation Costs by Agent Total ts m % of total Agents as % Agents (US$) (US$) (US$) (US$) of the total of eligible Agents 1 Secr6taire Gn6ral 1 1 100.00 0.00 1 83923 1,070.11 2,000.00 3,070.11 3,070.11 2 Directeur 0 4 0 81923 1,044.60 2,000.00 3,044.60 0.00 3 Chef de Division 14 17 100.00 7.14 14 79430 1,012.81 2,000.00 3,012.81 42,179.41 4 Chef de Bureau 14 30 92.86 7.69 13 77403 986.97 2,000.00 2,986.97 38,830.59 5 Attach6 de Bureau de 16re 63 62 73564 938.02 2,000.00 2,938.02 35,256.21 Classe 19.05 8.33 12 6 Attach6 de Bureau de 2eme 86 35 71956 917.51 2,000.00 2,917.51 14,587.57 Classe 5.81 0.00 5 7 Agent de Bureau de lere Classe 48 5 12.50 0.00 6 70692 901.40 2,000.00 2,901.40 17,408.38 8 Agent de Bureau de 2eme Classe 12 2 33.33 0.00 4 69894 891.22 2,000.00 2,891.22 11,564.88 9 Agent Auxiliaire de 1ere Classe 4 0 75.00 0.00 3 69256 883.09 2,000.00 2,883.09 8,649.26 10 Agent Auxiliaire de 2eme Classe 1 0 100.00 0.00 1 62638 798.70 2,000.00 2,798.70 2,798.70 11 Huissier 0 2 0 57000 726.81 2,000.00 2,726.81 0.00 Total 243 158 59 174,345.09 Legend: End of Career Allocation: Salary x 100% x 12 months Repatriation Costs: Based on Article 17 (4), 18, 19, 20, 21, and 23 of Ordinance No. 82- 030 19 March 1982, repatriation cost is covered by the spouse and children of the retiree. However, given the difficulties in computing the rate, the government decided to apply a lump-sum payment in CDF equivalent to 2000 US$ for all civil servants, regardless of their grade. Exchange rate (fiscal year 2013): 1 US$ = 941.2 CDF Base salary: Harmonized between the central and provincial governments in 2010 Summary Table Total Eligible Staff 59 Total Compensation (US$) 174,345.09 95 Table A7.16: Scenario 2 - Synthesis of the costs for retirement compensation of all the ministries covered under the project No Grade Total Agents by Eligible Eligible Number of Base End of Repatriatio Compensa Compensation, Agents Organigr Agents as Female Eligible Salary Career n Costs tion by Total am % of total Agents as Agents 2013 Allocation (US$) Agent (US$) % of the (CDF) (US$) (US$) total of eligible Agents 1 SGH 0 0 83,923.00 1,069.99 2,000.00 3,069.99 2 S6cretaire G6n6ral 53 6 96.23 7.69 51 83,923.00 1,069.99 2,000.00 3,069.99 270159.25 3 Directeur G6n6ral 0 0 0 0.00 0 83,923.00 1,069.99 2,000.00 3,069.99 33169.74 4 Directeur 125 91 67.20 2.74 84 81,923.00 1,044.49 2,000.00 3,044.49 611942.92 5 Chef de Division 459 522 64.05 4.94 294 79,430.00 1,012.71 2,000.00 3,012.71 1048422.1 6 Chef de Bureau 1151 836 69.68 6.08 802 77,403.00 986.86 2,000.00 2,986.86 2517926 7 Attach6 de Bureau de 1ere Classe 6051 1753 32.95 12.73 1994 73,564.00 937.92 2,000.00 2,937.92 5890524.7 8 Attach6 de Bureau de 2eme Classe 5658 1520 15.75 13.99 891 71,956.00 917.42 2,000.00 2,917.42 2599417.72 9 Agent de Bureau de lee Classe 5757 1073 12.98 8.90 747 70,692.00 901.30 2,000.00 2,901.30 2167271.45 10 Agent de Bureau de 2me Classe 3362 453 12.64 7.95 425 69,894.00 891.13 2,000.00 2,891.13 1228728.65 11 Agent Auxiliaire de lere Classe 763 22 31.72 7.58 242 69,256.00 882.99 2,000.00 2,882.99 697684.04 12 Agent Auxiliaire de 2eme Classe 272 6 39.34 7.59 107 62,638.00 798.61 2,000.00 2,798.61 299451.75 13 Huissier 147 9 55.78 3.92 82 57,000.00 726.73 2,000.00 2,726.73 223592.01 Total 23,798 5,719 16,767,860.62 Total Including INS 5,979 17,588,290 Source: Ministry of Public Services 96 Figure A7.1: Agents eligible for retirement as % of total workforce, by grade (all ministries) 100 90 - 80 - 70 - 60 - 50 - 40 - 30 - 20 - 10 Secrétaire Directeur Chef de Chef de Attaché de Attaché de Agent de Agent de Agent Agent Huissier SGH Général Division Bureau Bureau de Bureau de Bureau de Bureau de Auxiliaire deAuxiliaire de 1ère Classe 2ème Classe 1ère Classe 2ème Classe 1ère Classe 2ème a Scenario 1 M Scenario 2 Classe (55+ and or 30 years service) (62+ and or 30 years of service) Source: Ministry of Public Services 97 Figure A7.2: Ministry of Budget - Agents eligible for retirement as % of total workforce by grade 100 90 80 70 60 50 40 30 20 10 0 Secrétaire Directeur Chef de Chef de Attaché de Attaché de Agent de Agent de Agent Agent Huissier Général Division Bureau Bureau de Bureau de Bureau de Bureau de Auxiliaire deAuxiliaire de 1ère Classe 2ème Classe 1ère Classe 2ème Classe 1ère Classe 2ème Classe a Scenario 1 M Scenario 2 (55+ and or 30 years service) (62+ and or 30 years of service) Source: Ministry of Public Service 98 Figure A7.3: Ministry of Finance (and revenue agencies): Agents eligible for retirement as % of total workforce by grade 100 90 80 70 60 50 40 30 20 10 0 Secrétaire Directeur Chef de Chef de Attaché de Attaché de Agent de Agent de Agent Agent Huissier Général Division Bureau Bureau de Bureau de Bureau de Bureau de Auxiliaire Auxiliaire 1ère 2ème 1ère 2ème de 1ère de Classe Classe Classe Classe Classe Deuxième Classe * Scenario 1 * Scenario 2 (55+ and or 30 years service) (62+ and or 30 years of service) Source: Ministry of Public Services 99 Figure A7.4: Ministry of Public Services - Agents eligible for retirement as % of total workforce by grade 100 90 - 80 - 70 - 60 - 50 - 40 - 30 - 20 - 10 - 0 Secrétaire Directeur Chef de Chef de Attaché de Attaché de Agent de Agent de Agent Agent Huissier Général Division Bureau Bureau de Bureau de Bureau de Bureau de Auxiliaire Auxiliaire 1ère Classe 2ème 1ère Classe 2ème de 1ère de Classe Classe Classe Deuxième Classe a Scenario 1 M Scenario 2 (55+ and or 30 years service) (62+ and or 30 years of service) Source: Ministry of Public Services 100 Figure A7.5: Ministry of Planning - Agents eligible for retirement as % of total workforce by grade 100 90 80 70 60 50 40 30 20 10 0 Secrétaire Directeur Chef de Chef de Attaché de Attaché de Agent de Agent de Agent Agent Huissier Général Division Bureau Bureau de Bureau de Bureau de Bureau de Auxiliaire Auxiliaire 1ère Classe 2ème 1ère Classe 2ème de 1ère de Classe Classe Classe Deuxième Classe a Scenario 1 *Scenario 2 (55+ and or 30 years service) (62+ and or 30 years of service) Source: Ministry of Public Services 101 Figure A7.6: Ministry of Portfolio - Agents eligible for retirement as % of total workforce by grade 100 90 80 70 60 50 40 30 20 10 Secrétaire Directeur Chef de Chef de Attaché de Attaché de Agent de Agent de Agent Agent Huissier Général Division Bureau Bureau de Bureau de Bureau de Bureau de Auxiliaire Auxiliaire 1ère Classe 2ème 1ère Classe 2ème de 1ère de Classe Classe Classe Deuxième Classe a Scenario 1 M Scenario 2 (55+ and or 30 years service) (62+ and or 30 years of service) Source: Ministry of Public Services 102 Figure A7.7: Total Civil Servants eligible for retirement, by age group 5000 60 4500 49 4000 50 3500 40 3000 2500 30 2000 1500 20 1000 10 500 0 0 <54 55-61 62-70 >71 ý Age Cohort - age cohort, % of total eligible staff Table A7.17: Total Civil Servants eligible for retirement, by age group and grade Cohort-54 Cohort 55-61 Cohort 62-70 Cohort 71+ 1 Secrétaire Général 0 4 37 12 2 Directeur 0 46 41 18 3 Chef de Division 4 121 147 104 4 Chef de Bureau 16 246 420 228 5 Attaché de Bureau de Première Classe 91 1367 1111 307 6 Attaché de Bureau de Deuxième Classe 51 985 507 114 7 Agent de Bureau de Première Classe 44 895 409 115 8 Agent de Bureau de Deuxième Classe 14 496 265 73 9 Agent Auxiliaire de Première Classe 1 167 137 77 10 Agent Auxiliaire de Deuxième Classe 2 65 72 26 11 Huissier 1 27 54 19 Totals 224 4419 3200 1093 103 ANNEX 8: GOVERNANCE ISSUES Objectives 1. This Annex describes mechanisms to strengthen project governance and management, thereby mitigating the risk of corruption, collusion, fraud, waste and mismanagement, and to ensure that project objectives are achieved. This action plan: (i) highlights the potential risks arising from the fragile governance and accountability environment, (ii) presents mechanisms to be integrated into the Operation Manual (OM) to address these risks, and (iii) designates responsibility for implementing these mechanisms to particular project units. The Governance Action Plan demonstrates the commitment of the Government of the DRC, and more specifically, the Ministry of Public Services (MPS), as well as the line ministries, and other agencies involved in strengthening public sector efficiency, transparency and integrity. Country overview 2. A growing consensus has emerged that the quality of government institutions has an impact on the performance of government on the provision of services and infrastructure (World Bank 2012). Strengthening institutional capacity is also critical to restore confidence in the state and develop resilience in a post-conflict and fragile state environment (WDR 2011). 3. Several cross-country indicators illustrate the magnitude of this challenge. DRC's performance has further deteriorated on the ease of doing business (DB), according to the joint World Bank Group Doing Business 2013 survey and was among the bottom three countries (with only Chad and Central African Republic reporting worse performance). Comparatively, the country's ranking on the DB Index remains low at 183rd out of 185 countries, as compared to the Sub-Saharan average of 140 The quality of public administration, as measured in the 2012 Country Policy and Institutional Assessment (CPIA), is stable at 2.0 (out of 6) as compared to the average among IDA borrowers of 2.9. DRC ranked 164th out of 180 countries as one of the most corrupt countries in the Corruption Perceptions Index (CPI) of International Transparency in 2010. According to the 2012 World Governance Indicators, DRC ranks in the lowest 10th percentile on voice and accountability and regulatory quality, and as low as the 5th percentile on Government effectiveness, the rule of law, political stability and control of corruption. This performance remains significantly below the LIC and Sub-Saharan averages (Figure A8.10 and A8.11, respectively). 4. Efforts to strengthen institutional capacity and improve the quality of governance remain a priority for DRC. State effectiveness is the foundation of DRC's second PRSP (adopted at the end of 2011) and a core objective of the Government development program. Despite this commitment, serious challenges remain to implement major governance reforms in the DRC. The underlying dynamics in the political system-inability of citizens to effectively articulate interests, inability of elites to make credible commitments to each other, including on issues that are clearly in the broader public interest-combined with new political fault lines (coalition politics, the interplay of central and provincial governments) make implementing holistic reforms particularly difficult. Therefore, pragmatism and using coalitions for change where they emerge need to be the key elements of any reform management strategy. In terms of institutional reform, this means opting to support incremental implementation of reforms on a sector-by- sector basis. 104 Figure A8.1: The Quality of Governance in DRC relative to other low income countries, 2012 Control of Corruption Pohtical Stabiity 10 Rule of Law Government Effectiveness Regulatory Quality - DRC - Average, Low Income Countries Source: 2012 World Governance Indicators. Economies are divided in income group according to 2011 GNI per capita, calculated using the World Bank Atlas method. LICs have GNI per capita income of $1,025 or less. Figure A8.2: The Quality of Governance in DRC relative to the regional average, 2012 RuCe of Law Efdns Regulatory Quaty -DRC -Average, Sub-Saharan Africa Source: 2012 World Governance Indicators. Mechanisms to combat fraud in project administration and management 5. The Government project team recognizes the inherent complexity and risks of a project that cuts across a number of units within ministries, especially a project that traverses several ministries in a high-risk environment. The project proposes to address these complexities, and the governance challenges they pose, in a systematic manner, actively promoting greater transparency, accountability, and integrity through smart project design and implementation arrangements. 6. The Project Coordination Unit (PIU) will have the overall responsibility for project fiduciary management. The FM function will be carried out by a team composed of (i) a qualified and experienced FM expert, in charge of the supervision of the overall FM activities of the project; (ii) an experienced Accountant; and (iii) a Treasurer. The team will have the overall FM responsibility over budgeting, accounting, reporting, disbursement, internal control, and 105 auditing. The FM expert will provide technical assistance to the existing FM team of PIU to build the capacity of the FM unit. PIU accounting staff will have its capacity reinforced over the project implementation, the rolling out of the training plan, which includes, among initiatives, training on IDA disbursement procedures, training on OHADA accounting principles, and its implication for a donor-financed operation, and training on IDA financial reporting arrangements. 7. Ensuring proper controls on the flow of funds will be particularly important in the context of this project, considering the large portion going to the payment of retirement benefits. Overall, the residual FM risk for the project is assessed as "Substantial". As a mitigation measure, a payment agency of international reputation will be hired to effectuate these payments. For other elements of the project, existing FM capacity under the PIU will be used and sufficiently reinforced by the FM expert. 8. Based on the current overall residual FM risk, the project will be supervised twice a year to ensure that project FM arrangements still operate well and funds are used for the intended purposes and in an efficient way. 9. In addition, a biometric identification of eligible agents for the mandatory retirement is essential before processing payment of benefits. It has been agreed with the Government that this process should be the premise of payment operation to ensure transparency and accuracy. The operation includes sensitization, fingerprint identification and issuing the ID for identified agents and will be conducted through a sector-by-sector process, based on a standard methodology. 10. Procurement will be handled by the CMRAP for all components of the project. During project preparation (under PPF financing) existing capacity of the PRCG project at the Ministry of Decentralization has been used to ensure due diligence and exercise quality control over procurement until the Procurement Specialist was hired. The CMRAP will also benefit periodically from the technical support of a senior procurement expert whenever necessary. A Project Operations manual, satisfactory to the Bank, will be adopted upon project effectiveness to define and describe: (i) the procurement procedures and process; (ii) the roles and responsibilities of each actor/beneficiary in the management of the procurement cycle and the process to be followed; and (iii) the role of the Bank in the review process. 11. Much of the project's spending will be in four areas: (a) supporting the public administration reform program; (b) supporting the retirement process, mainly through payment of benefits and support to the creation of the legal basis for a public service pension fund; (c) supporting renewal of the public administration by reforming human resources systems and supporting the Young Professional pilot Program; and (d) the implementation capacity. 12. There will not be such implementation of construction contracts under all the components. The CMRAP will assure that all the technical assistance activities are done in compliance with the Bank's Procurement Guidelines and procedures. 13. The implementation of the retirement program will create fiscal space, allowing the Government to spend resources on new recruitment to rejuvenate the public service. Given decades of politicized and nepotistic hiring in the civil service, a new hiring process may bear the risk of such practices being repeated. To prevent nepotism and patronage, the project will 106 provide external support through an independent agency to ensure professional and transparent recruitment processes in the rejuvenation process. 14. Overall, the main governance risks identified for the implementation of the Public Sector Reform and Rejuvenation Project include: (i) volatility of the political environment with vested interests and weak coordination and coherence in the Government, (ii) possible discord with labor unions on the retirement benefits rate, (iii) weak internal management structures, controls and oversight, (iv) transparency and corruption risks related to the payment of retirement benefits, (v) political hiring for new staff and nepotism, (vi) resources freed up, which are not used for investment in a strengthen public service. 15. To mitigate the governance risks and promote greater accountability, the project supports the development and strengthening of a number of innovative mechanisms, including (i) maintaining an active political-economy dialogue on key aspects of the reform agenda and seek to build consensus at every step of the way; (ii) formal consultation process with labor unions prior to the payment of retirement benefits; (iii) using external payment agencies; (iv) biometric census; and (v) safeguards on merit-based recruitments. 16. These risks and the mitigation actions can be summarized as follows: Governance Risks Risk Description Mitigation Actions Complex political The DRC is a particularly Maintaining an active environment and interference complex political political-economy dialogue on environment, with strong key aspects of the reform vested interests, and weak agenda and seek to build coordination and coherence in consensus at every step of the the Government. Vested way. interests and fragmented governance structures are likely to hinder an across-the board approach to programs implementation. Discordance with labor unions The decision on the retirement It has been agreed that the on the retirement benefits rate benefits rate by the Government will undertake a Government might incur formal consultation process objections from labor unions. with the labor unions prior to In particular, the amount of the payment of retirement Secretary General's salary was benefits, and ensure their full clearly re-defined in the agreement. signed decree, changing from 936280 CDF to 61923 CDF. It is this latter amount according to which the retirement allowance would be calculated Weak internal management A prolonged period of public Since the "Cour des structures, controls and sector mismanagement led to a Comptes", the Supreme Audit 107 oversight very limited Government Institution, has been assessed capacity and as a result the as weak, a qualified, inability to achieve the experienced, and independent projected administrative external auditor will be reform, including retirement recruited on approved terms of program and put in place reference. control and oversight mechanisms. Transparency and Corruption Based on the 2005 experience, It is expected that: risk in the payment of there is a significant risk to the (i)Hiring a strong external retirement benefits use of funds for other audit firm will be crucial to purposes. the success of operations. In the payment process of (ii)Actual payments will be retirement benefits, there also made through an independent exists a significant copuption payment agency. risk. (iii)Payments will be made based on biometric census results (iv) provincial authorities will be enlisted in the process of verification of staff entitled to retirement benefits which will add a further layer of accountability Financial Management is In the absence of civil (i) Based on the good practice weak. Internal controls, audit servant's census results, the of biometric census in the delays; risk of duplicate retirement program presents Ministry of Defense (FARDC) payments, phantom or risks for fraud and erors since and the Ministry of ineligible beneficiaries the number of civil servants to Environment, which be retired is unknown and the successfully identified the volume of individual precise number of civil payments is large. The servants having reached payment agency would have retirement age, a biometric to be carefully monitored to census will be the only ensure proper beneficiary appropriate way to ensure an account reconciliation, accurate count; (ii) Financial Management functions will be handled by a team composed of (i) a qualified and experienced FM expert, in charge of the supervision of the overall FM activities of the project; an experienced Accountant; and _______________________ _______________________ (iv) a Treasurer. Risk of circumventing internal The possibility of The implementing agency will control systems circumventing internal control prepare a code of conduct 108 system, with practices such as including clear procedures for bribes, abuse of administrative disciplinary action. and/or political positions, mis- In addition, a detailed FM procurement (e.g. recruitment manual with specific sections of payment agency/external on the management and technical or financial payments of beneficiaries will auditors...i) is a critical issue. be designed to mitigate fiduciary risks. Procurement risks (delays) Procurement processes remain Procurement functions for the the achilles' heel of most DRC new project will be handled by operations as capacity is weak, a full-time procurement leading to frequent delays in specialist and a part-time handling procurement cases. international procurement In addition to this, competition specialist. The latter will have is very limited given the the mandate to oversee and to country's environment. In case advise on procurement-related the Government decides to use issues. This will ensure an the new procurement additional safeguard. institutions created by the new Procurement Law, political interference risk will remain an additional issue. Limited capacity of the The management of program (i)The renewed political implementing Agency implementation will be the interest in the retirement issue, responsibility of the CMRAP, combined with pressure from under the Ministry of Public line ministries, will help speed Service. This poses risks of up the retirement program. implementation delays since (ii) FM, Procurement, and the MPS has shown to have Fiduciary aspects of the very limited capacity. project will be handled by highly qualified and experienced experts hired based on ToRs acceptable to the Bank. (iii) An independent payment agency will be contracted for payment purposes. Political hiring and nepotism Given decades of politicized The recruitment process and nepotistic hiring in the (examination, screening, etc.) civil service, a new hiring will be well designed to process may bear the risk of ensure transparency, involving such practices being repeated. an independent recruitment agency with external experts. The project will support a specific mechanism for merit- based recruitments Resources freed up not used It will be important to ensure The task team will encourage 109 for investment in a that resources made available the DRC's Government to strengthened public service through this operation are allocate resources made invested in reforming and available to the public service strengthening the public restructuring by involving the service through processes such expertise of Public Finance as new recruitment, review of Management (PFM) and payroll system and funding the public service reform pension fund. Proper HR Data Management With respect to proper HR The team has already included data management, there is a contingency funding that risk of failure to adapt the ICT might be used for creating a systems (payroll managed by functioning interface for HR the MoF and civil service data management in the registry managed by the MPS) (unlikely) scenario that this through a functioning activity will not be funded interface. A functioning link under PRCG. (ideally through a unique employee ID) between a cleaned-up civil service registry and the payroll would represent a very strong control mechanism that could help eliminate phenomena of ghost workers, double-dipping by retirees and/or officials with multiple posts, and unauthorized recruitments. Independence of the Payment Given the importance of the To ensure compensation is Agency GRM as a mitigating strategy directed at the right to ensure that retirement plans beneficiariesas well as to follow due process and that avoid a situation similar to the compensation is directed to 2005 DPL the team will the right beneficiaries, it is recruit a strong external audit important to provide firm. Actual payments will be reassurances of the made through an independent independence of the agency payment agency based on that will implement it. biometric census results, and provincial authorities will be enlisted in the process of verification of staff entitled to retirement benefits, which will add a further layer of frm. accountability. 110 Project Implementation Arrangements 17. Overall policy guidance for project implementation will be provided by the CPMAP, a small inter-ministerial coordination structure chaired by the Prime Minister and consisting of five ministers, which was established on August 3, 2012 as the main Government instrument to lead public administration reform. The CPMAP will meet at least every trimester to evaluate progress on the reform, including the retirement and rejuvenation process supported under this project. 18. Technical coordination will be exercised by the CMRAP, which has been recently created by a ministerial order (Arr&t6 No CAB.MIN/FP/J-CK/GELB/FMD/GMK/082/2012). CMRAP will ensure effective oversight over all actions related to the reform process. 19. Technical implementation will be managed by the CMRAP. In the implementation of the retirement process the CMRAP will be supported by the Retirement Working Group in the Ministry of Public Services, which holds the technical expertise on this issue. 20. The CMRAP will be responsible for all Monitoring and Evaluation and will prepare all project implementation plans and project implementation reports. Measures to promote public information, enhance disclosure and transparency 21. The CMRAP shall: (i) establish and maintain a project website which provides updated information on project activities and can be accessed by the general public, and arrange the provision of an electronic link between the websites of all the ministries participating in the project with that of the project. 22. The CMRAP will, within 30 days of the activities listed hereafter, make publicly available, through the project website: (i) all annual procurement plans and schedules, including all updates thereof, (ii) all short-lists of consultants (firms and individuals for contracts over threshold levels established in the POM) together with the names and dates of all expressions of interests received, (iii) in the case of pre-qualification, all lists of pre-qualified contractors and suppliers together with the names and dates of proposals received, (iv) summaries of all bidding documents as well as all requests for proposals issued in accordance with the procurement provisions of this agreement. 23. The CMRAP will make publicly available, within 6 weeks of the activities listed hereafter, through the project website: (i) all annual audit reports (financial or otherwise, and including qualified audit reports) and audit management letters prepared in accordance with the financing agreements for this project, and all formal responses and follow-up actions of the Government; the disclosure of audit reports will be completed no later than 30 days after receipt of these reports by project management, (ii) all World Bank mid-term review reports prepared for this purpose, in accordance with this agreement. Complaints Handling Mechanisms 24. All complaints from bidders, observers, or other parties should be promptly forwarded by the CMRAP to the Project Steering Committee for consideration and follow-up action. 111 25. The Project Coordination Team shall periodically review the results of complaints handling mechanism for the project, particularly provisions for follow-up investigations of serious and unresolved complaints by the internal auditors, and/or third party audit to ensure independency and reliability of the system. The procedures for complaints handling are set out in the OM and will be reviewed on a semi-annual basis. Sanctions & Remedies 26. The Government project team requires the concerned ministry/institution to take action, including prosecution, against staff involved in corruption, collusion, or nepotism. 27. The Government project team shall apply a 'one-strike' policy to all contractors and consultants and any case of complicity in corruption, collusion, nepotism and/or fraud will lead to dismissal, disqualification from all further project activities, and possible prosecution. 28. The Project Steering Committee will drop/discontinue an entire sub-component if it fails to properly deal with issues of corruption, collusion, nepotism, fraud and/or persistent procurement irregularities. 112 MAP SECTION CENTRAL AFRICAN REPUBLI SOUTH SUDAN BanguV T ongo Glbadolite uba Bondo Fa ---emnenl Businga V DEM. REP. Buta * ro Watsa OF CONGO ?5r Imese < Akuaumba ORIENTALE Wamba Buni UGANDA 90 Bongandanga L aaj ~uiiBnake A D EQUATEUR Yangambi. Beni Kisangani Butembo )Margherita Peak 0 M~~ý\bandaa . Boende wneRkl NORD "Lke GABON C Lubutu KIVU Edward Lak/ . e Bro Ikela 06-- - - - - - - -- Lowa Goma T- r / . I Victoria om aRuhengen b nongo BtmaLake Kivu I..-. YbemKalima Bukavu Kbye -. RWANDA Kutu . .1 . [un Kindu SUID - KINSHASA Bandundu °una Lodia KIVUvia Te c k MNIE a Buiumbura BANDnNDru BURUNDI BANDUND, a ngai sn! .r N-lSA Bfunolebo KASAI Malela lN'~S HÅSA Bulungu LsmollF Lusambo Kasongo Lulimba 5°S CABINDA AS-CONGO Kkitk Idoa O5°S (ANGOLA) o Lu ngolo TANZANIA j afl oa Mbanzå Ngungu AaéTi 19cran Noe Bb g KASAI Kananga Mbuji- Kaleme Lak ATLANTIC ata Fesi CCIDENTA " y Kabinda Ka6a1o Tanganyika OCEAN Thikapa Tnoyk DEMOCRATIC REPUBLIC OF CONGO OFCONGOKapanga Pwe - o SELECTED CITIES AND TOWNS Kamina • . *e PROVINCE CAPITALS* ANGOLA Kil Lake wa Mweru ® NATIONAL CAPITAL . Sandoa Lubudi 0°.S RIVERS MAIN ROADS TO> IROADS 0 100 200 300 400 Kilometers Dilolo Likasi n ZAM B I A RAILROADS TO | |' ' Lake I I I Lcano AR akawi - PROVINCE BOUNDARIES 0 100 200 Miles •-. j Lubumbashi - - INTERNATIONAL BOUNDARIES {W This ýp wsproduced by the Map Design Unit of The World Bank. * ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ h Tm ý helfl d-eornnatan anf 26y newe Provincesa wsppoebyhertktnofte25Cn,iuintoakefebyFbur, h a n "| "M '" °°"!Z A M B|IA r S.k.ni c lleetio ol2eerPndeeeuppeel>~, Bftl201Suuuleuu eeks lfelysbee, nioen on this rnap do not imnply on the part of The World Bank7A IV BIATo Skna* 2'"9''"r.*'ls"l'' g"eatdele, thspe e dundo.osnsn Group, eny ¡edgment on t lg tat any terrony r -n - - -- Ki .lo ,i....d......,.....i. ge., ,,... i,ii,ht,,..n. I" °' -"'°°°6°°"""' | 25° E 30° E (upillnuelo,n,ftlohiOunk ndoren,ener opo,tnu, (noc boodnris. I25'E \. ~3'