Document of The World Bank Report No: ICR1947 IMPLEMENTATION COMPLETION AND RESULTS REPORT (Credit No.s 4426-GH & 4627-GH & 4746-GH) ON CREDITS IN THE AMOUNT OF SDR 25.9 MILLION (US$ 40 MILLION EQUIVALENT) TO THE REPUBLIC OF GHANA FOR NATURAL RESOURCES AND ENVIRONMENTAL GOVERNANCE FIRST, SECOND AND THIRD DEVELOPMENT POLICY OPERATIONS December 28, 2011 Environmental and Natural Resources Sustainable Development Department Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective December 28, 2011) Currency Unit = Ghana Cedis (GHS) 1.00GHS = US$0.60 US$ 1.00 = GHS 1.65 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AFD Agence Française de Développement ASM Artisanal & Small-scale Mining CAS Country Assistance Strategy CBO Community Based Organization CEA Country Environmental Analysis CEPS Customs, Excise & Preventive Service CHRAJ Commission on Human Rights and Administrative Justice CIDA Canadian International Development Agency CSO Civil Society Organization CRM Community Resource Management CSIF Country Strategic Investment Framework (for sustainable land management) DA District Assembly DFID Department for International Development of the United Kingdom DPO Development Policy Operation DP Development Partner DSA Debt Sustainability Analysis EA Environmental Assessment EC European Community EGPRC Economic Governance and Poverty Reduction Credit EIA Environmental Impact Assessment EITI Extractive Industries Transparency Initiative EKN Embassy of the Kingdom of the Netherlands (Ghana) ENRAC Environment and Natural Resources Advisory Committee EPA Environmental Protection Agency EU European Union FC Forestry Commission FLEGT Forest Law Enforcement, Governance & Trade GoG Government of Ghana GEF Global Environment Facility GDP Gross Domestic Product GESS Ghana Environment Sector Study GNPC Ghana National Petroleum Corporation GEITI Ghana Extractive Industries Transparency Initiative IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association IMF International Monetary Fund IMP Information Management System IMS Information Management System ISR Implementation Status and Results Report IRS Internal Revenue Service IMAT Independent Monitoring & Advisory Team MEST Ministry of Environment, Science & Technology M&E Monitoring & Evaluation MC Minerals Commission MDBS Multi-Donor Budget Support MDAs Ministries, Departments & Agencies MEST Ministry of Environment Science & Technology MLFM Ministry of Lands, Forests & Mines (former) MLGRD Ministry of Local Government & Rural Development MLGRDE Ministry of Local Government & Rural Development Environment (former) MLNR Ministry of Lands & Natural Resources MoFEP Ministry of Finance & Economic Planning MoV Means of Verification (of achievement of PAF targets & triggers) MTEF Medium-Term Economic Framework (GoG budget planning tool) MTR Mid-Term Review MSSP Mining Sector Support Program NCOM National Coalition on Mining NDPC National Development Planning Commission NGO Non-Governmental Organization NRE Natural Resources & Environment NREG Natural Resources & Environmental Governance NRMP Natural Resources Management Project OASL Office of the Administrator of Stool Lands PAD Project Appraisal Document PAF Performance Assessment Framework PAMAB Protected Area Management Advisory Board PDO Program Development Objective PES Payment for Environmental Services PFM Public Financial Management PHRD Policy & Human Resources Development (Japanese Trust Fund) PRSC Poverty Reduction Support Credit (World Bank DPL in support of national development strategy; latterly renamed „EGPRC‟ in Ghana) PSIA Poverty & Social Impact Assessment REDD Reduced Emissions from Deforestation & Degradation SBS Sector Budget Support SDAP Sustainable Development Action Plan SEA Strategic Environmental Assessment SLM Sustainable Land Management SMART Specific, Measurable, Attainable, Relevant & Time-bound (indicators) SSM Small Scale Mining/Miners SRMC Savannah Resource Management Center TA Technical Assistance TCC Technical Coordination Committee TIDD Timber Industry Development Division (of Forestry Commission) ToR Terms of Reference WD Wildlife Department UNFCC United Nations Framework Convention on Climate Change VAT Value Added Tax VLTP Validation of Legal Timber Programme VPA Voluntary Partnership Agreement (Forestry) Vice President: Obiageli K. Ezekwesili Country Director: Sergiy V. Kulyk (Acting) Sector Manager: Idah Pswarayi-Riddihough Project Team Leader: John W. Fraser Stewart ICR Team Leader: Stephen Ling THE REPUBLIC OF GHANA Natural Resources and Environmental Governance First, Second and Third Development Policy Operations CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring 1. Program Context, Development Objectives and Design: ................................................................... 1 2. Key Factors Affecting Implementation and Outcomes ....................................................................... 6 3. Assessment of Outcomes ................................................................................................................... 18 4. Assessment of Risk to Development Outcome ................................................................................. 24 5. Assessment of Bank and Borrower Performance .............................................................................. 24 6. Lessons Learned ................................................................................................................................ 27 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ................................... 29 Annex 1. Bank Lending and Implementation Support/Supervision Processes...................................... 30 Annex 2. Stakeholder Workshop Report and Results ............................................................................ 32 Annex 3. Summary of Borrower‟s Comments on Draft ICR ................................................................ 34 Annex 4. Comments of Cofinanciers and Other Partners/Stakeholders ................................................ 36 Annex 5. List of Key Supporting Documents ........................................................................................ 37 Annex 6. Full text of PDO indicators and triggers. ............................................................................... 39 Annex 7. NREG Program Matrices ....................................................................................................... 42 Annex 8. DPO1 Program Matrix targets for 2007 & 2008 that were not carried through (as opposed to re-worked) into the revised DPO2/3 Program Matrix .............................................................................. 52 Annex 9. Participation and Demand For Good Governance mechanisms in the NRE sectors ............. 55 Annex 10. Six main risks identified at the appraisal of DPO-1 ............................................................... 56 Annex 11. Key findings of the NREG Mid-Term Review (August 2010) on sector management systems ................................................................................................................................................................... 57 Annex 12. MAP ....................................................................................................................................... 58 A. Basic Information Country: Ghana Program Name: Natural Resources and Environmental Governance (NREG) Program Program ID: DPO-1: P102971 L/C/TF Number(s): DPO-1: IDA-4460 DPO-2: P113172 DPO-2: IDA-4470 DPO-3: P118188 DPO-3: IDA-47460 ICR Date: 12/28/2011 ICR Type: Core ICR Lending Instrument: DPL Borrower: Government of Ghana Original Total Commitment: Disbursed Amount: DPO-1: XDR 12.5 M DPO-1: XDR 12.5 M DPO-2: XDR 6.8 M DPO-2: XDR 6.8 M DPO-3: XDR 6.6 M DPO-3: XDR 6.6 M Implementing Agencies: Ministry of Finance & Economic Planning Cofinanciers and Other External Partners: Embassy of the Kingdom of the Netherlands (EKN), European Union (EU), Department for International Development (DFID, UK), Agence Française de Développement (AFD) B. Key Dates (all fields are entered by the system) First Natural Resources and Environmental Governance Development Policy Operation – P102971 Process Date Process Original Date Revised/Actual Date(s) Concept Review: 09/13/2007 Effectiveness: 08/05/2008 08/05/2008 Appraisal: 02/19/2008 Restructuring(s): N/A 1 Approval: 06/03/2008 Mid-term Review: N/A N/A Closing: 06/30/2009 06/30/2009 Second Natural Resources and Environmental Governance Development Policy Operation – P113172 Process Date Process Original Date Revised/Actual Date(s) Concept Review: 10/09/2008 Effectiveness: 10/14/2009 10/14/2009 Appraisal: 05/20/2009 Restructuring(s): N/A Approval: 06/30/2009 Mid-term Review: N/A N/A Closing: 06/30/2010 06/30/2010 Third Natural Resources and Environmental Governance Development Policy Operation – P118188 Process Date Process Original Date Revised/Actual Date(s) 1 The Bank did not conduct Mid-Term Reviews for each operation. A Mid-Term Review exercise for the whole NREG Program was conducted under the leadership of EKN and GoG early in FY11, and is discussed below. i Concept Review: 12/16/2009 Effectiveness: 12/08/2010 11/02/2010 Appraisal: 04/12/2010 Restructuring(s): N/A Approval: 06/03/2010 Mid-term Review: N/A N/A Closing: 06/30/2011 06/30/2011 C. Ratings Summary C.1 Performance Rating by ICR Outcome: Moderately satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately unsatisfactory Borrower Performance: Moderately satisfactory C.2 Detailed ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Government: NA unsatisfactory Quality of Moderately Implementation NA Supervision: unsatisfactory Agency/Agencies: Overall Bank Moderately Overall Borrower Moderately Performance: unsatisfactory Performance: satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation Performance Indicators QAG Assessments (if any) Rating Potential Prob. Program at any time (Yes/No): No Quality at Entry (QEA): None Problem Program at any time(Yes/No): No Quality of Supervision (QSA): None DO rating before Closing/Inactive status: Satisfactory D. Sector and Theme Codes First Natural Resources and Environmental Governance Development Policy Operation – P102971 Original Actual Sector Code (as % of total Bank financing) Forestry 29 General Energy Sector 14 General Transportation Sector 14 Mining and other extractive 29 Other Social Services 14 Theme Code (as % of total Bank financing) Environmental policies and institutions 67 Other environment and natural resources management 33 ii Second Natural Resources and Environmental Governance Development Policy Operation – P113172 Original Actual Sector Code (as % of total Bank financing) Forestry 33 General agriculture, fishing and forestry sector 17 Mining and other extractive 33 Other Industry 17 Theme Code (as % of total Bank financing) Biodiversity 18 Climate change 18 Environmental policies and institutions 36 Other rural development 10 Rural policies and institutions 18 Third Natural Resources and Environmental Governance Development Policy Operation – P118188 Original Actual Sector Code (as % of total Bank financing) Forestry 40 Mining and other extractive 40 Oil and gas 20 Theme Code (as % of total Bank financing) Biodiversity 18 Environmental policies and institutions 54 Lead administrations and management 10 Rural policies and institutions 18 E. Bank Staff Positions At ICR At Approval Vice President: Obiageli K. Ezekwesili Obiageli K. Ezekwesili Country Director: Sergiy V. Kulyk (Acting) Ishac Diwan Sector Manager: Idah Pswarayi-Riddihough Marjorie-Anne Bromhead TTL: John W. Fraser Stewart Jean-Christophe Carret ICR Team Leader: Stephen Ling ICR Primary Author: Sylke von Thadden / Stephen Ling iii F. Results Framework Analysis Program Development Objective: The objectives of the three operations in this DPO series were to: (a) ensure predictable and sustainable financing for the forest and wildlife sectors and effective forest law enforcement; (b) improve mining sector revenue collection, management, and transparency; (c) address social issues in forest and mining communities; and (d) mainstream environment into economic growth through Strategic Environmental Assessment (SEA), Environmental Impact Assessment (EIA), and development of a climate change strategy. Revised Program Development Objective: No substantive changes (see section 1.3). The PDO indicators below are taken from 3-year outcomes identified under the 1st operation (DPO-1), and substantially revised as the Key Outcome Indicators during the preparation of DPO- 2. However, the outcome indicators were not given appropriate attention during the remainder of the DPO series and therefore do not fully reflect the agreed triggers. Section 2.1 presents the PDO indicators alongside the triggers for a clearer understanding of the disconnect between the two and the achievements in focal areas of the Program. (a) PDO Indicator(s) Baseline Value Original Target Formally Revised Actual Values (from approval Values Target Values Achieved documents) (from approval at Completion or documents) Target Years PDO Indicator 1: Strengthen institutions and governance [in forestry sector] Value Baseline study on  Reduced level of (a) 10% increase in (a) Baseline share (quantitative or percentage of legal illegality by X% legal wood supply to of domestic timber qualitative) timber in the  100% timber domestic markets; market from legal domestic market exports verified (b) first Forest Law sources (sawmills completed in legal Enforcement and bush mills) September 2009. Governance and estimated at 16%. Trade (FLEGT) (b) First license license issued. awaiting completion of tracking system pilot –expected shortly. Date achieved Comments Partially achieved. Draft policies for increasing legal domestic supply require further (incl. % development. Baseline estimated through market surveys, but not yet repeated. Strong achievement) implementation of FLEGT systems, but 1st license delayed by pilot stage. PDO Indicator 2: Sustainably finance and promote investment in forestry sector Value Baseline revenue  Budget allocation (a) Timber Revenues (a) Revenues (quantitative or study in June 2009 FC: 95% increased by 15%; increased by 30% Qualitative)  Approved district (b) plantation forest between 2006 and area increased by iv budgets released: 15%, through 2008, but then 80% increased private declined by almost  Revenues investment. 50% to 2009. collection rate: (b) Plantation forest 80% area increased by 19% from 2007 to 2009, with private investment contributing a third of the total. Date achieved Comments Partially achieved. Revenue collection performance increased, but overall revenue has (incl. % fallen recently due to shortage of commercial timber. Plantation expansion exceeded achievement) target, but mostly through government action. PDO Indicator 3: Reduce social conflict issues in mining communities and improve support to small scale miners (SSM) Value No tool or tracking Reduced social (a) design of a survey (a) Tool developed (quantitative or of perception of conflicts and other tool and carrying out and piloted in three Qualitative) social conflicts in negative impacts as a of at least one areas as part of mining communities result of survey, baseline study. consultations among (b) SSM established (b) SSM 2 cooperatives in government, mining through three co- cooperatives have existence (2006 communities/civil operatives in mining not yet been baseline) society, and mining areas with improved established as companies including performance survey processes to implementation of identify suitable guideline areas have taken longer than anticipated. Date achieved Comments Mostly achieved. 3a fully achieved. Over 60 candidate SSM sites. Survey activities have (incl. % been conducted at 7, but 2 of the first sites explored proved unsuitable and no site has achievement) yet been formally designated or formal cooperatives established. PDO Indicator 4: Improve mining sector revenue collection, management, and transparency Value Zero mine fiscal Increased mining (a) fiscal model (a) Application of (quantitative or models in use (2006 revenues to applied to three fiscal models Qualitative) baseline) government mines; completed. Macro (b) up to date data on model created. No mining macro- mining incomes, (b) Sub-national model royalties and local transfers have been revenues published at included in Data on local mining district level; Extractive Industry incomes, royalties, (c) survey tool to Transparency and local revenues track perception of Initiative (EITI) and their distribution use of mining reports. not published revenues at local (c) Social specialist level designed, and No tracking of one survey hired, but tool not perception of use of undertaken. developed by close local mineral of DPO-3. revenues Date achieved Comments Mostly achieved. 4a & 4b were achieved, although traditional authorities are blocking v (incl. % publication of details of royalty payments they receive. Revenue perception survey tool achievement) was not a PAF target, and has not been prioritized. PDO Indicator 5: Promote investment in climate change adaptation and mitigation Value No investments for Climate change preparation of one Investment plan (quantitative or adaptation to climate adaptation and long-term investment was not prepared by Qualitative) change in the 2008 mitigation measures plan the end of DPO3, budget are adopted by all due to the decision relevant Ministries, to drop preparation Departments and of a national Agencies (MDAs) at adaptation strategy different levels and in favor of a the National comprehensive Development and National Climate Planning Change Commission Framework. (NDPC). Date achieved Comments Partially achieved. A general National Climate Change Framework has been (incl. % developed, and investment planning is underway in specific sectors, but a achievement) comprehensive investment plan had not yet been formulated. PDO Indicator 6: Strengthen national environmental impact assessment system Value Strategic Enhanced EIA (a) updated (a) Preparation of a (quantitative or Environmental service delivery, legislative instrument law on SEA has Qualitative) Assessment in need including application on Strategic begun. Sectoral of update vis-a vis of 8 sectoral Environmental EIA guidelines legislation and guidelines and Assessment (SEA), have been development of enhanced sector guidelines for produced. sector guidelines consultation and oil, mining, forestry, Environmental needed disclosure energy, transport guidelines for the procedures, Polluter sectors for oil sector have been 30% of EIA Pays Principle environmental issued. applications implemented assessment; (b) Performance processed within the (b) 60% of EIA target met in prescribed time applications assessed sectors. frame and with the processed within the requested prescribed time consultation and frame. disclosure procedures Date achieved Comments Mostly achieved. Sector guidelines prepared and SEA institutionalized, although SEA (incl. % law is still being drafted. 6b was achieved based on an assessment of the last year of the achievement) NREG Program using the new on-line EIA processing system. (b) Intermediate Outcome Indicator(s) Intermediate Outcome Indicators were not identified in the program documents. G. Ratings of Program Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (US$mil.) vi 1 - P102971 05/27/2009 Satisfactory Satisfactory 19.75 2 - P113172 11/11/2009 Satisfactory Satisfactory 10.77 3 - P118188 H. Restructuring N/A. vii 1. Program Context, Development Objectives and Design: 1.1.Context at Appraisal Macro-economic Context 1. The first development policy operation (DPO-1) was prepared in the context of a strong macroeconomic performance with GDP growth at 6.3 percent in 2007, down slightly from 6.4 percent in 2006. Performance was driven by several sectors (mining, finance and insurance and real estate, construction and in services), which greatly outweighed the output declines in other sectors (such as manufacturing, electricity and water production). Stimulus was also provided by fiscal policy, with government services rising by 6 percent, and yielding an additional 1 percent of real GDP growth. 2. Additionally, export revenues increased due to a continuous rise in prices for cocoa and gold by 60 and 125 percent respectively over the previous seven years. However, despite a good performance of the export sector as well as positive net capital inflows, the surge in imports (attributed in particular to a 17 percent increase in oil and non-oil imports) led to a weakening in the country‟s external position. The current account deficit widened to 12 percent of GDP (including official transfers) in 2007, from 10 percent in 2006. 3. Since the second half of 2006, government expenditures have risen faster than revenue collections, leading the overall fiscal deficit to reach 7.5 percent of GDP in 2006. The main driver of growth in government spending has been the public sector wage bill and energy sector subsidies. Nevertheless, government spending maintained its pro-poor orientation in 2007 at 9.4 percent, though slightly lower than in 2006 (10.5 percent) but up from 8.5 percent in 2005. 4. Fiscal and balance of payments factors have influenced the interest and exchange rates. Between September 2007 and mid March 2008, the exchange rate (Cedis to the US$) declined by 5.2 percent (against an already declining US Dollar), prompting the Bank of Ghana to increase its prime rate twice over the same period to 14.2 percent by mid March 2008. Meanwhile, the consumer price index rose from 10.9 percent in 2006 to 12.7 percent by end of 2007, driven by external supply-side shocks (e.g. higher crude oil prices, higher imported food prices) and internal pressures (e.g. higher food prices following the drought and flood in northern Ghana and adjustments in utility tariffs). 5. At the start of implementation of the DPO series, the Ghanaian economy continued its strong GDP growth performance (7.3 percent in 2008), driven by a surge in export revenues and sustained public and private domestic demand for goods and services. Estimates for 2009 and 2010 suggested a significant slowing of GDP growth (down to an average of 4 percent), due to the global slowdown and decelerated domestic demand, and through the combined impact of fiscal stabilization, tighter credit conditions, and lower remittances and foreign direct investment. Continued fiscal expansion in 2008, combined with exogenous shocks led to a fiscal deficit of 15.5 percent. In response, the Government adopted a multi-year fiscal stabilization plan, supported by the IMF, with complementary support is provided by the Bank‟s Economic Governance and Poverty Reduction Credit (EGPRC). Government has faced some fiscal and balance of payments challenges during the course of the NREG Program, especially with the advent of the crisis, but has responded through sound planning in coordination with key development partners. Sector background 6. Ghana‟s growth has historically been fueled by natural resources. At preparation, the forestry, wildlife and mining sectors accounted for 15 percent of Ghana‟s GDP, 25 percent of Government revenues, 60 1 percent of foreign exchange, and significant employment. Over 70 percent of the population was dependent on natural resources for their basic food, water, and energy requirements. However, absence of effective regulatory institutions, lack of effective inter-sectoral collaboration among the natural resources sectors and weak mechanisms for citizen participation led to institutional inefficiencies and put both sustainability and long-term economic growth at risk. Ghana‟s resources were being depleted at an alarming rate: (i) 50 percent of the original forest has been converted to agriculture, while timber and non-timber forest products, and biodiversity were in serious decline; (ii) mining and forestry revenues were suspected not to be well captured; and declining environmental quality has affected the quality of life and productivity of Ghana‟s population, notably through air pollution and inadequate clean water supply and sanitation. According to the findings of the Country Environmental Analysis (CEA)2, the high rate of natural resource degradation represented an annual cost of about 10 percent of GDP, representing almost half of Ghana‟s US$ 1.5 billion annual Official Development Assistance.3 7. In this context, the Government of Ghana (GoG) decided to launch a five-year Natural Resources and Environmental Governance (NREG) 2008-2012 program to address governance issues related to the mining and forestry sector and to improve environmental management with the overall objective of ensuring economic growth, poverty alleviation, increasing revenues and improving environmental protection. Rationale for Bank assistance & contribution to higher level objectives 8. The Bank‟s involvement in NREG built upon on support already provided for natural resources management and the environment over the previous decade, centered around the Natural Resources Management Project (NRMP) and two related GEF grants – the High Forest Biodiversity Conservation Project and the Northern Savanna Biodiversity Conservation Project. NRMP was envisaged as a 10-year, 3- phase APL, but was discontinued after the initial 2-year phase because the structure of the project was considered to be too complex, and policy and governance gaps limited the effectiveness of project investments4. A renewed policy dialogue, anchored in a series of analytical studies shared among key development partners, was considered necessary to identify and lay the groundwork to overcome the systemic weaknesses (see summary of background analysis in section 2.2). Involvement of the Bank was seen as critical in order to convene support of the other DPs, not only through its financial contribution, but also due to the Bank‟s experience in policy lending for the natural resources and environment (NRE), including DPOs in Cameroon and Gabon, as well as a multi-sector NRE DPOs in Brazil, Colombia, Mexico, and Peru. 9. The program was consistent with Government‟s national priorities as described in the 2006-2009 2nd Growth and Poverty Reduction Strategy (GPRS II), and was intended to complement the EGPRC DPO series, allowing greater focus on natural resource and environmental policy issues. The GPRS II laid the foundation for the NREG program with the Government‟s commitment to reducing environmental degradation and identified priorities for environmental management through an SEA for each of the GPRS II key pillars (private sector competitiveness, human resource development, and good governance and civil 2 World Bank, AFD, EKN & DFID (2007) 3 Out of the total US$730 million costs of lost productivity due to damage to five classes of natural assets (agriculture land, forest and savanna woodlands, coastal fisheries and wetlands, wildlife, and Lake Volta) and of damages to human health (incurred from urban air pollution, indoor air pollution and inadequate potable water supply, sanitation and hygiene), the two highest costs are from timber depletion (US$270 million) and inadequate potable water supply, sanitation and hygiene (US$180 million). 4 NRMP ICR (2003): “There were several serious flaws in project design, however that were largely responsible for the problems encountered during Project implementation. . . Project design failed to identify as a risk, that it would be very difficult to complete the myriad of policy reforms in a complex sector such as Forestry in 2 years. Thus, the project was overly ambitious given the number of activities in each sub-component, the number of co-financiers and the weak human capacity� 2 responsibility). NREG was also aligned with the 2008-2011 CAS which has a substantial section on sustainable management of natural resources as well as a number of specific priorities aligned with the NREG Program, including: (a) transparent fiscal and revenue frameworks in natural resources management; (b) the analysis and governance of extractive industries through a value chain approach; (c) engagement and dialogue with civil society organizations and local communities; (d) increased coordination between natural resource/environment ministries and agencies; (e) increased attention to climate change mitigation and adaptation; and (f) sound environmental management of the oil and gas sectors. 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) 10. The objectives of the three operations in the DPO series were to: (a) ensure predictable and sustainable financing for the forest and wildlife sectors and effective forest law enforcement; (b) improve mining sector revenue collection, management, and transparency; (c) address social issues in forest and mining communities; and (d) mainstream environment into economic growth through Strategic Environmental Assessment (SEA), Environmental Impact Assessment (EIA), and development of a climate change strategy. 11. The PDO indicators are based on the six key outcome indicators identified in the DPO-2 & -3 program documents, which are linked to the PDO (see annex 6). They are drawn from the 16 3-year (2008-2010) expected outcomes in the revised NREG Performance Assessment Framework (PAF). The DPO-1 program document did not identify key outcome indicators, but did identify 3-year outcomes for the 8 (of an original 24) program / policy objectives corresponding to the DPO triggers. The outcome indicators and baselines in the DPO-1 document were generally qualitative, and substantially revised during the preparation of DPO-2. 1.3. Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 12. The same statement of objectives was included in all three program documents, although it was first explicitly labeled as the Program Development Objective and linked to a set of Key Outcome Indicators in the DPO-2 program document. 1.4 Original Policy Areas Supported by the Program (as approved): 13. The NREG DPOs supported reforms in three natural resource sectors – forestry and wildlife, mining, and environmental protection – under the institutional mandate of three semi-autonomous agencies, the Forestry Commission (FC), the Minerals Commission (MC), and the Environmental Protection Agency (EPA), respectively. The selection of policy areas was based on the findings of a number of analytical studies carried out prior to the NREG preparation5 as well as policy interventions and reforms implemented by the Government under the GPRS I. 14. The forestry and wildlife sector was identified as an important pillar of economic growth. The formal sector employed about 120,000 Ghanaians, and is dominated by sawmills that focus on international markets. Processed wood products accounted for only 11 percent of exports, and Government did not capture high levels of timber values. The residual forest rent not collected by government was estimated to be typically US$10 to US$45 million per year. Of the total industry turnover of US$500 million in 2004, GoG captured only US$22 million. The potential of the timber industry had not been realized as market practices were inefficient in their utilization of wood extracted, employed outdated technology and considerably exceeded the annual allowable cut required to sustain the productive base of the industry. 5 See section 2.2 for further details. 3 Domestic demand for timber was estimated to be roughly equal to that of the export market yet there was insufficient supply from legal sources to meet this demand. The illegal chainsaw industry provided US$ 1.3 million in income for an estimated 50,000 people in 2003, yet was un-regulated, unsustainably managed, and wasteful due to processing of logs by chainsaw as opposed to sawmills. 15. Data across 46 forest reserves, comparing inventories in the 1950‟s, 1970‟s and 1990s showed that forest stocks were being degraded, with a loss of 0.13m2/ha/yr in average basal area of stems. Degradation of forest reserves accelerated dramatically in the last decade from over-logging, encroachment, illegal logging, and bushfires. Off-reserve, losses arose from the combined expansion of farming (especially cocoa) and demand for timber for domestic (informal) markets. The CEA estimated that timber depletion results in an annual cost of about 3.5 percent of Ghana‟s GDP. A key challenge for the FC was insufficient budget that hindered performance of its management, regulatory and enforcement mandates. Furthermore, opportunities existed for attracting investment in ecotourism and plantation development, and for the promotion of value-added processing, but had not received sufficient attention. 16. In order to ensure good governance in the forestry sector, the Government prioritized its actions under four strategic policy areas: (i) strengthening institutional capacity of the sector to ensure effective policy implementation and law enforcement and securing predictable and sustainable financing of the forestry sector, (ii) promoting collaborative resource management, promoting forest and wildlife investments, (iii) increasing supply of legal timber on the domestic market and (iv) securing the natural ecosystem and strengthening monitoring and evaluation and information communication technology. 17. At preparation, revenues from Ghana‟s mining sector represented about 5 percent of GDP and 12 percent of Government‟s revenues and the mining industry accounted for 37 percent of Ghana‟s total exports. Ghana has one of the worlds‟ largest gold ore reserves, ranking around tenth worldwide in gold production and second in Africa. Ghana is also a significant producer of manganese ore, and diamonds. Metal prices have risen greatly in recent years, and gold prices more than doubled. Nonetheless, with the use of older calculation procedures along a sliding scale and lack of capacity for collection, it was widely suspected that GoG was not benefitting from mining revenues as fully as it should have been, given the increase in resource prices. Ghana‟s EITI (Extractive Industries Transparency Initiative) reports also illustrated inadequate scrutiny of mining sector revenues, estimating that this could cost Ghana a significant amount in terms of foregone revenue. 18. At the time of the program, seven large and one medium-scale gold mining company formally employed about 15,000 people, with an additional 5,000 working on other minerals. A further 500,000 people are estimated to work in artisanal and small-scale mining (ASM), although the actual figure is not reliably known. Mining in Ghana has been characterized by divergent interests, cultures and institutions, lack of clarity over legal compensation and the distribution of benefits, conflict and a lack of trust between communities, industry and Government, as well as tensions between local communities and migrants. With increasing gold price and government strategy to attract more foreign investment, disputes have been on the rise. Moreover, large-scale mining operations often cause involuntary resettlement, resulting in loss of land, livelihoods and resources for local communities. Another area of concern has been the environmental damage resulting from mining activities, especially unregulated ASM. Conscious of these challenges, GoG and its development partners (DPs) identified establishment of a modern policy and regulatory framework, the improvement of mining sector revenue collection, management, and transparency and the tackling of social issues in mining communities as critical areas for reform under NREG. 19. With respect to environmental protection, health costs related to water supply, sanitation and indoor air pollution were identified as one of the key sources of the high cost of environmental degradation in Ghana. EIA systems are relatively well-established in Ghana, and the country has been a regional pioneer in the application of Strategic Environmental Assessment (SEA). However, several challenges remained for 4 effective regulatory mechanisms, especially enforcement of compliance. There was a need to improve coverage and effectiveness of the current EIA systems, including decentralizing the EIA review process to avoid bottlenecks in Accra, and developing sectoral guidelines. Ghana also needed to consolidate its leadership in SEA through mainstreaming application to sectoral policies and district plans. Monitoring and enforcement of the recommendations of various environmental assessment tools has also been weak partly due to resource constraints for the EPA. To enhance environmental governance, there was also a need to establish mechanism and a platform for more comprehensive dialogue and partnership between government agencies and sector stakeholders. In the context of an assessment of Ghana‟s vulnerability to the impacts of climate change under the Initial National Communication to the UNFCCC, there was also increasing appreciation of the potential vulnerability of Ghana‟s coastal zone, agriculture (including fisheries, cocoa, cereals, and root crops production), and water resource sectors, as well as human health, poverty, and women‟s livelihoods, to climate change and variability. 20. To improve the effectiveness of environmental management, NREG identified as key areas of reform: (i) carrying out SEAs to inform decision-making and mainstream environment in sector planning; (ii) improving cross-sectoral environmental management, including development and implementation of an inter-sectoral climate change strategy; (iii) strengthening of the EIA process and compliance bydecentralizing environment management, reinforcing monitoring and effective dissemination; and (iv) regularizing funding for EPA and ensuring better civil society participation. 21. Two other natural resource sectors were considered for inclusion in NREG, but not carried forward as core pillars of the program. Discussions were held with the Fisheries Department, but given its institutional home within the Ministry of Food and Agriculture, it was considered more appropriate to support fisheries policy reform through the Bank‟s Agricultural Development DPO series. Anticipation of rapid development of the oil and gas sector in Ghana was growing at around the time that the NREG Program was being developed, and consideration was given to how this sector might be supported in parallel to mining and forestry. NREG partners were concerned, however, that the expected rapid growth of the oil and gas sector might overwhelm the already broad NREG agenda, and, therefore, it was decided not to address it directly under the present program. 1.5 Revised Policy Areas (if applicable): 22. No changes were made to the general policy areas during the course of the three DPOs, although the Performance Assessment Framework (PAF) was streamlined during the preparation of DPO-2 with a reduction in the policy objectives (from 24 to 16) and targets (from more than 60 to around 40), together with considerable efforts to tighten the indicators to make them more precise and measurable. Support for sustainable management of the oil sector through a SEA was also included. In the context of the third DPO, the prior action on submission of a climate change adaptation strategy to cabinet was dropped as it was superseded by the Government‟s new policy to develop a comprehensive (i.e. adaptation and mitigation) National Climate Change Framework. In general terms, however, attention to climate change issues has intensified during and with support of NREG, through publication of the Economics of Adaptation to Climate Change, and emergence of new opportunities for forest carbon financing. 1.6 Other significant changes: 23. Changes since preparation of DPO-1:  IDA financing. During the identification and preparation of the NREG program the indicative IDA allocation for the Bank‟s support to the program, rose from US$3 million for the first year, to US$10 million, and eventually to US$20 million, when the potential for inclusion of considerable activities in the oil and gas sector appeared high. Following resistance from other development 5 partners (DPs) to inclusion of major oil and gas activities, however, it was decided that the IDA allocation for the subsequent two years would remain at $10m per year. Despite these amounts being discussed and agreed with the Ministry of Finance & Economic Planning (MoFEP), it created an impression amongst the NREG ministries, departments and agencies (MDAs) that funding had been reduced relative to expectations. Whilst this was unlikely to have had much material effect on the implementation of the NREG program, given that absorption by the three core agencies has lagged behind the available funding, the perceived cut did create some tension, adding to existing sensitivities in the forestry sector over the Bank‟s earlier decision to discontinue support to NRMP.  Institutional setting. When NREG was first under preparation, EPA was under the Ministry of Local Government, Rural Development and Environment (MLGRDE). Prior to Appraisal of DPO- 1, however, it became effectively independent, although formally still under the oversight of the Ministry of Local Government and Rural Development. Then in 2009, it was included within the reformed Ministry of Environment Science and Technology (MEST). As a result, the routing of funds to the EPA for NREG activities has changed a number of times, as has the autonomy with which it could act. This has at times led to some delays in the transfer of funds to the EPA as well as in the implementation of its activities.  Change of government. National elections were held in autumn 2008, shortly after DPO-1 became effective, and a new government was installed in early 2009. As with the institutional changes above, this did not lead to any appreciable change in the policy content of the program, but it did delay certain activities, particularly policy dialogue and coordination with senior levels of government. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance: 24. The Performance Assessment Framework (PAF) for the NREG Program details annual targets grouped under policy objectives. Six triggers were drawn from the targets for each operation6. Outcome indicators were also specified for each policy objective at 5 years (end of the GoG NREG Program) and, during development of DPO-2, also at 3 years (end of the Bank‟s DPO series). Annex 7 summarizes the PAF for the 3 years of the Bank DPO series, based on the streamlined version created for DPO-2, but including relevant parts of the DPO-1 matrix. 25. All triggers for all three DPOs were met, with the exception of the dropped DPO-3 trigger on submission of a climate change adaptation strategy which was waived (see section 1.5 above). However, there is a performance gap between the achievement of the triggers and achievement against the PDO indicators, largely due to a disconnect between the triggers (which received particular attention during the Program) and the PDO indicators (which did not). The PDO indicators were not referenced in the legal documents, and after their initial formulation were not given much emphasis, nor were they revised during preparation of DPO-3, despite changes to related PAF targets. The following tables summarize achievements within each sector in relation to both the triggers and corresponding PDO indicators, to give a clearer picture of achievement within the focal areas of the Program than is evident from review of the PDO indicators alone. The disconnect with the triggers is evident in the occurrence of PDO indicator targets which: 6 Annex 6 lists all the triggers according to the exact language in the legal agreements. Triggers were used as a basis for World Bank approval of each operation. Other DPs disbursed against a more holistic assessment of progress against PAF targets. 6  are not directly related to any PAF targets – e.g. survey to track perception of use of mining revenues at local levels, and updated legislative instrument on SEA.  are directly related to PAF targets, but not to the triggers – e.g. increase in the legal wood supply to domestic markets, increase in plantation forest area, and establishment of SSM cooperatives.  were not updated after DPO-2, and are therefore out of sync with revised DPO-3 action targets, e.g.: - increase in legal timber supply, although the end-of-DPO-3 target was only for a baseline to be evaluated. - FLEGT license to be issued, although the DPO-3 target was only for completion of the wood tracking pilot. - design and implementation of a conflict tracking tool, although the DPO-3 target was only to initiate development of an annual tracking mechanism. - establishment of 3 SSM cooperatives, although the DPO-3 target was only to conduct exploration in new areas after the initial areas identified appeared unsuitable. - long-term climate investment plan, although the DPO-3 target was only for a consolidated National Framework for Climate Change, which did not include the identification of specific investments. Forestry: Key Outcome Triggers Outcome indicator targets7 Indicator DPO-1 (2008) DPO-2 (2009) DPO-3 (2010) Pilot wood tracking (a) 10% increase in legal wood supply to Define elements VPA signed commenced domestic markets; of VPA [Achieved] with at least 3 (b) first FLEGT license issued. [Achieved] companies [Partially achieved] [Achieved] Implementation of FLEGT systems in the formal forestry sector has progressed well through a consultative process. The Voluntary Partnership Agreement (VPA) was signed with the EU, outlining the safeguards that Ghana would follow to retain access to EU timber markets, a tracking Strengthen system to verify the legality of timber has been piloted with 4 companies, and a Timber Verification institutions and Department established in FC to issue FLEGT licenses. Implementation of the tracking system has governance been complex and slower than anticipated, and therefore issuance of the first license is somewhat delayed. In the meantime, faced with a largely uncontrolled informal industry, the stocks of quality timber available for the formal, export sector appear to be rapidly dwindling. Ghanaian sawmills are required to provide 20% of output to the domestic market. In reality the figure is probably closer to around 5%, as domestic buyers are unwilling to pay export prices. A proposal to increase domestic supply by allowing chainsaw operators to retrieve stumps and residues from licensed timber coupes is delayed by questions over legal rights. Other proposals, to (i) better enforce the requirement on sawmills to supply the domestic market or (ii) regularize informal chainsaw operators more generally, have yet to be developed into detailed policies. Procedures to Financial Implement improve (a) Timber Revenues increased by 15%; Framework approved transparency of (b) plantation forest area increased by Sustainably submitted to Financial forestry revenue 15%, through increased private investment. finance and cabinet Framework disbursement [Partially achieved] promote [Achieved] [Achieved] [Achieved] investment in Under the Financial Framework, measures were implemented to improve the collection rates of forestry sector stumpage fees and debts, and revenue collection performance has risen to 95%. A number of legislative options for increasing revenues were proposed by FC, but have met with obstacles:  Park visitor fees have been revised upwards, but this is a very small component of overall forest 7 Details of assessment of achievement of PDO indicators are in Section F above. 7 revenues.  Timber export levy was decreased from 3% to 1.5% following complaints by the timber companies that this is no longer ear-marked for re-investment in the industry.  Conversion of timber concessions to Timber Utilization Contracts is subject to legal review.  Linking stumpage fees to exchange rates is under consideration, but resisted by the industry.  Proposals to establish a payment for environmental services (PES) system to fund forest areas are at an exploratory stage. Timber revenues did initially increase, but then declined in 2009 and 2010. Changes are likely due mainly to cutting cycles and the general decline in the availability of valuable timber – the available data do not reveal the impact of improved collection performance. On revenue transparency, district revenues have been published, although dissemination at the local level remains rudimentary. Ghana plans to make forestry EITI-compliant, and combining with mining and oil sectors offers potentials for strengthening dissemination of sub-national revenue that Ghana is attempting to pioneer through its EITI program. NREG targets on the signing of leases and benefit-sharing agreements contributed to expansion of plantations beyond the 15% target, but FC struggled to attract as much private sector investment as desired, and most of the increase was through direct government action. Mining: Key Outcome Triggers Indicator DPO-1 (2008) DPO-2 (2009) DPO-3 (2010) Outcome indicator targets (a) design of a conflict survey tool and Proposal on Consultations Social carrying out of at least one survey, social on social responsibility (b) SSM established through three co- responsibility responsibility guidelines operatives in mining areas with improved guidelines guidelines issued performance [Achieved] [Achieved] [Achieved] [Mostly achieved] Social responsibility guidelines (non-binding) for mining companies in mining communities have Reduce social been developed. These consist of principles and a set of operating guidelines designed to serve conflict issues companies, regulators, communities and civil society as benchmarks for development and in mining implementation of social responsibility activities. These have been assessed to be of high quality and communities focus on corporate governance and ethics, human rights, employment and labor standards, health and improve and safety, environmental stewardship, supply-chain stewardship, community development, support to stakeholder engagement, and compliance and reporting. M&E systems will need to be strengthened small scale going forward to assess the implementation and impact of the guidelines and other conflict- miners (SSM) mitigating measures. A conflict monitoring instrument has been developed, and used for a baseline study, but needs to be developed into a regular conflict monitoring process, however. Over 60 candidate SSM sites have been identified, and survey activities conducted at 7 of them, with a further 8 planned for 2012. However, the process has taken longer than anticipated as two of the first sites proved unsuitable (gold deposits too deep), and no site has yet been formally designated. In the meantime, the MC have carried out capacity-building and monitoring activities with small- scale miners, but formal cooperatives have yet to be established. (a) fiscal model applied to three mines; Pilot audit of (b) up to date data on mining incomes, Revenue Task Draft mining one mine and royalties and local revenues and their Force, action Improve policy and fiscal model distribution published at the district level; plan, and fiscal mining sector regulations applied to three (c) at least one survey to track perception model piloted revenue [Achieved] mines of use of mining revenues at district and [Achieved] collection, [Achieved] municipal level. management, [Mostly achieved] and The development of the Mining Policy has helped re-orient the minerals sector towards improving transparency durable economic outcomes for Ghana (including revenue generation, diversification, generating employment, support industries and infrastructure) with due regard to social and environmental issues. The Multi-Agency Minerals Revenue Task Force is considered to have worked effectively. The 8 macroeconomic models, financial models and audits used by the Task Force (i) demonstrated that the fiscal regime in Ghana was internationally competitive, rather than excessively favorable to investors as had been suggested; and (ii) revealed some specific gaps in revenue collection and led to government proposals for a streamlined and more progressive regime. A flat 5% royalty has replaced the former sliding rate based on mine profits, for easier administration. Other proposals for the 2012 would increase income and windfall taxes, and significantly increase revenues. District transfers and revenue use guidelines have been published, but local dissemination is weak. Environmental protection: Key Outcome Triggers Indicator DPO-1 (2008) DPO-2 (2009) DPO-3 (2010) Outcome indicator targets Draft National Adaptation Climate Change Strategy Preparation of long-term investment plan - Adaptation submitted to [Partially achieved] Strategy Cabinet [Achieved] [Dropped] The Adaptation Strategy developed in 2008-09 reviews areas of climate vulnerability in Ghana and Promote identifies priority adaptation programs. This was subsequently complemented by work on the social investment in dimensions and Economics of Adaptation to Climate Change in Ghana, which particularly climate change highlighted the vulnerabilities and costs in the agricultural sector and for the rural poor. Submission adaptation and of the Adaptation Strategy to cabinet was dropped in favor of development of a comprehensive mitigation National Climate Change Framework, combining the work on adaptation needs with the draft NAMAs. An overview document entitled Ghana Goes for Green Growth was prepared. It remains to be converted into a coherent program including identification of specific investments, but efforts are ongoing, and climate planning and action is relatively advanced within key sectors – forestry, agriculture, coastal management, health, transport and energy. EPA is trying to mainstream climate change in national planning through NDPC (alongside new SEA requirements). Energy and transport SEAs [Achieved] Environmental Tourism SEA (a) updated legislative instrument on Appraisal of management and review of Strategic Environmental Assessment; EIA service guidelines and national SEA (b) 60% of EIA applications processed delivery draft SEA for experience within the prescribed time frame. processes and oil sector [Achieved] [Mostly achieved] sectoral [Achieved] Strengthen guidelines national [Achieved] environmental Under the NREG program, a number of additional sector SEAs have been conducted, and Ghana‟s impact national experience in promoting the use of SEAs reviewed. Ghana‟s SEA model emphasizes use of assessment simple (i.e. largely no-quantitative) tools through participatory processes for engagement around system environmental issues, building understanding and capacity. A weakness is that SEAs have typically been applied ex-post, and their policy impact has therefore been limited. Following the review, EPA and NDPC have worked to introduce the use of basic SEA tools into routine local government planning. New legislation to mandate the use of SEA in targeted planning processes is at an early stage of development. The draft SEA of the oil sector reviewed environmental assets and the legal framework, established 3 development scenarios, and identified accident prevention and response as a key priority. The SEA process will be completed with support of the Oil and Gas TA project, and a team including GNPC, NDPC and EPA has been established to lead this process. EPA has established an on-line EIA system that has improved performance and monitoring. 26. Performance against the wider range of annual PAF targets (beyond the World Bank disbursement triggers) has been considerable, given the large number of actions involved. Around half have been fully achieved and most of the rest were partially achieved (see table below). As reported in the DPO-2 Program Document, the results of the 2009 PAF assessment were markedly better, but the 9 Independent Advisory and Monitoring Team‟s (IMAT) assessment8 for the same year pointed out a number of weaknesses and deviations from the original means of verification (MoVs)9, suggesting that the later joint assessment benefited from more flexibility in the interpretation of MoVs as well as the additional time to complete delivery. Implementation against NREG work plans prepared by the MDAs also encountered delays, partly due to delays in the transfer of funds10, but mainly to limits on absorptive capacity imposed by staffing constraints and procurement processes. Budget performance of NREG MDAs has been steadily improving during the course of the program, but up to September 2010, MoFEP had only transferred a total amount of GhC 68.7 million, out of an available GhC 97 million11. These constraints on implementation suggest that expectations on completion of all annual PAF targets to schedule were overly ambitious. Achievement of PAF targets Year Unclear / Source Fully Partially Not no longer achieved achieved achieved valid12 2008 36 14 2 19 MTR interpretation of descriptive statements in DPO-2 PD 28 5 2 Ratings stated in DPO-3 document 2009 ICR interpretation of descriptive statements in IMAT report 4 12 4 1 (NB: Forestry not included) Ratings stated in DPs‟ letter (dated 27 June 2010) 2010 21 14 5 summarizing Joint Assessment of 2010 PAF 2.2 Major Factors Affecting Implementation: Government's commitment 27. Ownership of the NREG Program and associated matrix by the three natural resource agencies, and engagement by Ministry of Finance & Economic Planning (MoFEP) have been strong, and is cited as a step-change from the earlier experience in the NRM sectors under a traditional project modality. MDAs uniformly feel empowered by and enthusiastic about the NREG process than previous investment projects (see annex 3). The Technical Coordination Committee (TCC), led by MoFEP and including representatives from participating MDAs and the National Development Planning Commission (NDPC), has generally provided an effective platform for inter-agency dialogue and coordination, including annual performance reviews and updates to the PAF. Leadership by MoFEP has been key13, and the recent appointment of a Natural Resources Director (a former Technical Director for forestry in the Ministry of Land & Natural Resources) is evidence of the strong engagement by the Ministry. 8 For mining and environment only; forestry was not included due to an road accident that befell the IMAT‟s forestry specialist. 9 E.g. the establishment of an inter-ministerial environment and natural resources forum was supposed to be evidenced by the minutes of the first meeting, but a draft TOR for establishment of the Environment and Natural Resources Advisory Committee (ENRAC) was instead provided as ENRAC didn‟t meet until later 2010. 10 E.g. out of the GhC 8.4 million transferred to the EPA by Feb 2010, the agency received the bulk (60 percent) only within preceding three months. (IMAT 2010) 11 Ecorys (2010) NREG-PFM support mission Ghana, September 2010 12 I.e. the description of the achievement against the target was unclear, or the target had been dropped by the time of the assessment. 13 “Coordination by MoFEP [through the TCC] has been very successful in bringing together the sector ministries and agencies in a constructive manner, leading to efficiency gains within the sector through cross-agency learning.� (MTR, 2010) 10 28. Nevertheless, the Program would have benefited from supplementary capacity to meet coordination, M&E and reporting requirements, and from more engagement from senior decision- makers around contentious issues, such as revisions to the forestry fiscal regime. NREG coordinators in all the key MDAs, including the MoFEP NREG Program Coordinator14, have numerous other duties, which significantly constrained program management capacity (for e.g., close oversight of PHRD and other consultancies, development of sector strategies, monitoring and reporting). Engagement by senior policy- makers also lagged behind engagement at the technical level, in part due to disruptions from the change of government during the first year of the Program and the protracted institutional transition of the EPA to the newly re-formed Ministry of Environment, Science & Technology (MEST). The Policy Committee envisaged in the original NREG design was replaced by an Environment and Natural Resources Advisory Council (ENRAC) with a long-term mandate, but it was not convened until late 2010, with the first substantive meeting on policy issues occurring in February 2011. Select members of parliament have attended some NREG meetings, but more could have been done to educate legislators on the Program and issues. Stakeholder involvement 29. NREG involved strong commitment to stakeholder inclusion, notably through the organization of annual Sector Summits, but the approach to civil society inclusion could be further elaborated and institutionalized. Many government activities related to civil society engagement and transparency have been implemented, including a pioneering EITI program, a public environmental rating and disclosure process, and consultation platforms at national and local level (see annex 9 for more details), but the overall approach could have been more systematic. Although the span of activities has been wider, much of the discussion on civil society within NREG has focused on how to coordinate input from civil society organizations (CSOs) to workshops and dialogue. A comprehensive strategy would have given more recognition to other aspects, such as community co-management, adoption of transparency standards, participatory monitoring, etc. Engagement could also be strengthened at the local level. For instance, data on district-level revenues from mining and forestry have been published but effective dissemination to impacted communities is limited, and District and Regional Forest Forums need more support. Civil society is increasingly vibrant and recognized as a potentially important development resource in Ghana, but attitudes within Government still vary between individuals and agencies who appreciate the value-added of civil society engagement15, and others which view it primarily as an issue of compliance with minimum consultation requirements. 30. Direct support to CSOs on environment and natural resource issues was successfully piloted. In addition to government activities, the Embassy of the Kingdom of the Netherlands (EKN) established direct capacity-building support to CSOs, including parallel civil society reviews of the NREG Program, through the Kasa (“speak out� in Twi) mechanism16. The multi-donor civil society facility originally envisaged in the DPO-1 Program Document did not materialize, but Kasa commenced in the 2nd year of NREG and was assessed to have „done remarkably well for a pilot with effectively 18 months of implementation‟, although with some more attention needed to strategic direction and gender focus17. It promoted increased civil society engagement in NRE issues, including through establishment of CSO platforms and working 14 Notably, he is also head of the EITI Secretariat. 15 E.g., the EPA perceives the strength of its mandate to be linked to its ability to mobilize public understanding and concern around environmental issues, and is therefore enthusiastic on civil society engagement. 16 Kasa‟s activities focused on (i) supporting capacity enhancement activities of civil society groups, (ii) providing grants to civil society, research and media organizations to conduct advocacy, (iii) facilitating platforms for information sharing with Government and DPs and (iv) documenting lessons learned to inform a longer-term civil society advocacy mechanism for equitable natural resource and environmental governance in Ghana. 17 Nordic Consulting Group (2011) Final evaluation of Kasa. 11 relationships with the media. CARE and DANIDA have stepped in to continue support to Kasa beyond the initial pilot phase, but due to a change in EKN funding priorities, longer term support remains in doubt. 31. Many Ghanaian NGOs have a healthy skepticism towards government. Building the robust relationships and understanding that will facilitate constructive dialogue is a gradual process. Overall, NREG has seen markedly increased dialogue between government NRM agencies and civil society, but not all CSOs are familiar with NREG, still fewer have been actively involved in government-led meetings, and trust remains weak in some quarters. Consultations have led to increased expectations and to some frustrations from CSOs that their feedback was not subsequently incorporated into policy18. According to the World Bank Civil Society Monitoring program that reviewed NREG in 201019, CSOs suggested a number of platforms for further engagement with civil society, including Publish What You Pay, a CSOs- led transparency and accountability network, the new Ghana Oil Platform bringing together CSOs to interface with government on petroleum matters, and the National Coalition on Mining (NCOM). NREG has also illuminated complexities of engaging with traditional authorities. They are important stakeholders and community representatives in their own right, and are routinely included in consultation structures, but they have also resisted attempts to increase transparency of the use of natural resource revenues that flow to them. The MTR also pointed out that structured involvement of the private sector in policy discussions has been limited. Soundness of the background analysis 32. NREG design was founded on a considerable analytical base, which identified areas of concern, but left room for more precise policy analysis as part of the program. In particular, the Country Environmental Analysis (CEA; World Bank, DFID, RNE, AFD 2007) evaluated the economic costs of environmental degradation in Ghana, building on the Ghana Natural Resources Management and Growth Sustainability Economic and Sector Work (World Bank, DFID, 2006), and the Ghana Environment Sector Study (GESS, EKN 2006), which reviewed institutional capacity for environmental management20. The CEA identified environmental governance as key for sustainable management of the country‟s natural resources and this became a catalyst for the creation of the NREG budget support program. It also laid out a broad agenda of reform, that was highly influential in the development of the PAF, e.g. making recommendations to review fiscal regimes in forestry and mining, pay more attention to local consultation and social safeguards in forestry and mining, introduce more transparency and competition in bidding for timber concessions, introduce legal timber verification systems, encourage private sector involvement in forest plantation, promote CSR by mining companies, establish programs for management of ASM, and increase capacity for environmental management within the mining sector. 33. During NREG preparation, institutional and contextual analyses were undertaken through a recipient-executed PHRD grant, including a Stakeholder and Risk Analysis, a Public Revenue Analysis, a review of budget, expenditure & financial management in the NRE sectors, and a study of options to empower civil society. The PHRD studies were useful, but could have gone into more depth and detail. Delivery was delayed, with the result that outputs were not timely for program preparation and over 40 percent of the funds21 were returned, as the grant had to be closed once NREG became Effective. 18 Partly this is a result of naivety amongst young CSOs, who sometimes assume that having a voice should automatically equate to policy influence, rather than appreciating that their influence ultimately relies on the quality of what they bring to the debate in terms of novel analysis or effective representation of broader constituencies. 19 Ghana Anti-Corruption Coalition (2010) Pilot Review of Six World Bank Assisted Projects in Ghana. 20 The choice of instrument and financial aspects were also informed by the “Budget Support, Aid instrument and Environment Ghana Case Study� (ODI, 2007), the annual national External Reviews of Public Financial Management and the draft (2009) Public Expenditure Financial Accountability report . 21 Roughly US$245,000 of US$600,000. 12 34. The Program design also drew on lessons from previous Bank interventions in the NRE sectors in Ghana, the ongoing Multi-Donor Budget Support program, a Bank environment DPO in Mexico and an environment sector budget support program in Senegal supported by EKN. Similar Bank environmental DPOs in Gabon and Cameroon were not cited amongst the lessons learnt, presumably because they were considered too young during NREG preparation. Lessons focused on the need for ownership, establishing an effective monitoring and evaluation system with sound baseline data and the importance of public participation. Choice of instrument 35. At the time of preparation, there was general consensus amongst DPs and GoG to make increased use of budget support. Following earlier donor-supported interventions for the environment and in the natural resources (particularly forestry) sectors, there was a desire to move away from isolated investments to a sector-based approach that could tackle systemic governance issues and elevate the level of the dialogue. A conventional, sector-wide approach was discussed, but around the time of preparation, sector budget support (SBS) was becoming increasingly popular with a number of donors, and was seen by both GoG and DPs as a more mature approach that would provide for enhanced ownership against a relatively strong record of governance and development performance in Ghana. Development policy lending provided an instrument by which the Bank could contribute to the NREG Program. In line with the donor harmonization agenda22 and Ghana‟s good track record of implementing the EGPRC as part of a Multi- Donor Budget Support program, close to 59 percent of lending under the current CAS is currently via DPOs. Flexible sector-based financing is considered to have been instrumental in strengthening sector ownership and engaging MoFEP and NDPC in the substance of the Program, ultimately leading to much stronger support for reform. 36. Nevertheless, the transition from traditional investment lending, and the combination of SBS (emphasizing predictable support to implementation of broad programs of activities through strengthened sector systems) and development policy lending (focused specifically on policy reform) within a single instrument, engendered a steep learning process and a degree of compromise. The NREG PAF included a range of activities, which did not always have a very strong policy focus, and many staff working on NREG have a tendency to focus on technical activities23. At a practical level, many activities could have been achieved through a technical assistance (TA) investment operation, such as the development of social responsibility guidelines and monitoring in the mining sector, the preparation of climate change strategies, or the strengthening of environmental assessment systems. Some activities, such as expansion of forest plantations, were GoG sector priorities, but were not fully reflected in NREG as they were more investment than policy focused. The PAF contained targets for facilitation of private sector investments in forest plantations, but two thirds of the recent growth in plantations has still come from direct government investment. The transition to programmatic support also requires effective sector systems, which were not well developed at the start of NREG. Progress has been made on sector systems through the Program, but the work is ongoing. This is discussed in more detail in section 3.4b. 37. The Bank was constrained in its choices during preparation by the availability of instruments and an initially modest financial contribution. The Bank does not have an instrument specifically designed to work in an SBS modality (although the Program-for-Results instrument is currently in development). A DPO could have been designed to combine with or to complement the sector support instrument being supported by other DPs, but the initial commitment from the Bank was to provide only US$3 million 22 The 2007 Ghana Joint Assistance Strategy, signed by 16 partners, included a specific commitment by DPs to increase the amount of aid being channeled through budget support. 23 Evidenced by the assertion during PAF formulation that targets on policy adoption are inappropriate as they can only be delivered by senior decision-makers. 13 towards an expected first phase financing pool of US$15 million. The Bank‟s relatively minor financial contribution was therefore intended to leverage the contributions of the other DPs, and an explicit decision was taken during preparation not to formulate a separate policy matrix for the Bank‟s operation. The eventual US$20 million IDA credit for the first operation was not made available until late in preparation. 38. The choice of instrument has allowed GoG to feel that it is being treated as a mature partner with full ownership of the program, but issues of capacity and the policy content of the matrix suggest a weakness to using a DPO alone to provide predictable funding to a multi-faceted sector program. In hindsight, a clearer distinction between the Bank‟s DPO series and other donors‟ SBS would have helped to sharpen the focus on key policy results. Complexity 39. NREG is institutionally complex. The Program encompasses forestry, mining and environment, stretching across two Ministries and three semi-autonomous government agencies, in addition to the Ministry of Finance. The program is supported by 5 DPs, 4 of whom were active in the technical dialogue. The scope of the dialogue leading up to NREG was originally focused on governance of natural resource rents from forestry, mining and fisheries, but environmental management and climate change were added as cross-cutting issues affecting the natural resource sectors. Fisheries was eventually dropped from the NREG program as the Department of Fisheries is housed within the Ministry of Food and Agriculture, which receives policy lending through the World Bank‟s Agricultural Development DPO series. Discussions around the mooted inclusion the oil and gas sector are summarized in section 1.6 above. 40. This complexity brought benefits, but also came with costs. The inclusion of three NRM sectors is felt by both GoG and DPs to have been beneficial in terms of sharing lessons on parallel activities such as revenue management and participation of local communities, and raising the profile of cross-cutting themes, such as environmental management and climate change. The harmonization of the support of 5 DPs around a single program was highly appreciated by GoG, although adding to the burden of coordination, reporting and dialogue for the MDAs. From a DP perspective, transaction costs have been higher due to the need for greater donor coordination. An informal understanding between the DPs on division of labor in supervision support did not function as well as intended. Overlaps in the technical dialogue remained because individual DPs were still accountable for results across all sectors, whilst some specific gaps occurred, such as adoption of clear responsibility for support to a second-phase PSIA study. Conversely, the need to present a coordinated DP position limited agility at times, particularly with respect to the oil and gas sector, where the Bank‟s interest in using NREG to respond to emerging national priorities was greater than that of other development partners. Even within the Bank team, supervision involved both the African Environment and Natural Resources and the Gas, Oil and Mining sector units, and staff from the latter at times felt that they lacked the freedom and resources to engage to the extent for which separate mining operation would have provided. 41. Multi-sector and multi-donor programs do work, but require a lot of effort, efficient working relationships take time to crystallize, and some degree of complementarity is usually required. DPOs routinely work across several sectors. The ICR for PRSCs 1-3 in Ghana, which provided Bank support to the Multi-Donor Budget Support (MDBS) program, discusses similar themes of transaction costs and compromise, and indicates the need for both high investment of staff resources and time for effective working relationships to evolve. Typically however, PRSCs are able to draw on a wealth of other sector- specific operations to support technical dialogue, and do not go into the same level of detail and breadth on sector-specific planning and systems as NREG attempted to do under its SBS approach. This again supports the argument for a greater differentiation of donor support and instruments than occurred under NREG. 14 Technical assistance & related operations 42. The NREG Program involved considerable TA, but the impact has been mixed, and overall, the approach has not been as systematic as was originally envisaged. Development of a complementary TA facility based on a comprehensive needs assessment was discussed during preparation and referenced in the DPO-1 program document24, but was not hard-wired into the design – i.e. no binding commitments and funding sources were established. Many TA activities have taken place, but the systematic approach envisaged at design did not materialize, and the results have been mixed. Some TA has been provided directly by DPs in addition to the budget support, and in other cases, DPs took a very active role in advising GoG on the identification of appropriate expertise, for example:  Robust support on public financial management (PFM) has been provided through periodic visits of a PFM advisor, funded by EKN and much appreciated by MDAs.  Considerable analytical work has been carried out as part of a dialogue on Climate Change supported by NREG. Individual studies were largely implemented by separate DPs25, rather than through NREG or the National Climate Change Committee, leading to some complaints that pooling funds would have allowed for a more comprehensive approach.  An Independent Monitoring and Advisory Team (IMAT), financed by the EU, was mobilized to backstop monitoring against the 2009 PAF, but was not fully welcomed by the MDAs and has not been institutionalized (see section 2.3).  High-quality work on modeling mining revenues was carried out with the assistance of a leading international expert, identified with assistance of the Bank. This helped to ease concerns over laxity in the mining fiscal regime. These instances have sometimes (but not always) been more effective than where TA inputs have been managed by GoG more independently and typically limited to the use of national consultants, for example:  Useful social analysis around conflict and CSR has been conducted in the mining sector, leading to the production of sound voluntary guidelines.  A survey was conducted of the domestic timber market, but the analysis of options for increasing the legal supply of wood for internal consumption was cursory, and led to little implementation since.  SEAs have been produced for key sectors, although translating them into tangible action has been more challenging.  A local TA firm contacted by MoFEP to support the development of sector M&E systems has added only modest value to date. 43. The NREG DPO series has been the Bank’s central instrument for engaging in the forestry, mining and environmental protection sectors over the last three years, although a number of other activities have made some contributions. The Bank has supported some TA activities related to NREG through trust funds, notably the EITI Trust Fund and work on economics of adaptation to climate change using a number of funds. Linkage to other lending operations has been limited. Sustainable land management, fisheries and land administration investment projects have all been worked on natural resource issues outside the scope of those covered by NREG. An oil and gas TA project was prepared in parallel to NREG implementation. It supported some SEA and capacity-building activities within the EPA, and there is growing interest in improving the sharing of lessons with the NREG sectors on e.g., revenue management and civil society engagement issues. Some targets developed under NREG, notably the establishment of the ENRAC, were linked to Multi-Donor Budget Support program to provide additional 24 DPO-1 claimed that “The DPO series will have a signaling effect in helping Ghana mobilize additional resources, which are critical to the successful implementation o f the NREG program. This includes . . . capacity building and technical assistance�, and discussed a technical assistance grant to accompany DPO-2. 25 E.g., the World Bank supported the Economics of Adaptation to Climate Change country case study for Ghana, and DFID has produced a series of policy briefs. 15 incentives for timely completion. Although the process began too late to inform the existing NREG PAF, the strongest overlap in subject area has been with the design of support to Ghana from the Forest Carbon Partnership Facility and the Forest Investment Program. These funds will support planning, capacity and investments to enhance carbon stocks in Ghana‟s forests, are already driving much of the technical dialogue on the forestry sector, and should complement future policy support through any continuation of NREG. Relevance of the risks identified at appraisal and effectiveness of mitigation measures 44. Key risks identified during preparation (see annex 10) were appropriate, but risks associated with weak implementation capacity were overlooked (other than for PFM). Envisaged political, public financial management (PFM) and social risks materialized to some extent. The change of government following the elections in late 2008 and the subsequent reformation of MEST slowed down some aspects of implementation. Weak PFM systems were in part responsible for delays in release of funds to MDAs and their effective absorption, and reforms aimed at increasing revenue collection from the commercial forestry sector have in some cases been resisted by the timber industry in Ghana. None of these issues has been overwhelming, however, and in the case of the PFM, TA has been effective in identifying remedial actions and gradually strengthening performance. In hindsight, more attention could have been given to risks to broader implementation performance, including capacity constraints on program execution, defining and monitoring against clear policy targets, and addressing emergent sector issues. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: M&E design 45. The M&E framework for NREG was weak. At the heart of the problem was an overly extensive Program Assessment Framework (PAF) that substituted for under-developed sector planning systems and did not provide sufficient focus on key results. The PAF included a set of policy objectives, targets, outcome indicators and means of verification that were jointly identified and revised with the Government on an annual basis. Though it was agreed that the PAF should be limited in size and comprise only the most crucial objectives and targets of the three sectors, the DPO-1 matrix ended up including 24 program / policy objectives, and more than 60 targets for each of the first 3 years. From the outset, the PAF was used not only to capture key policy reforms and outcomes, but a much wider set of activities and intermediate steps. MDAs familiar with investment projects used the PAF to plan NREG-related activities and justify their claim on resources to MoFEP. Many PAF targets were therefore output-oriented, which led to issues of subjectivity in the subsequent performance assessments – i.e. outputs were produced, but there were sometimes disagreements between GoG and DPs over the acceptable level of quality (see annex 3). 46. Commitment to GoG ownership hindered rationalization of the PAF. As mentioned above, the decision was taken during preparation avoid using a separate policy matrix for the DPO, but instead to work with the PAF resulting from broader SBS goals and a highly GoG-led process. During preparation of DPO- 2, an M&E specialist from the Bank was mobilized to support streamlining the PAF, resulting in a modest decrease in the number of policy objectives to 16 and annual targets to 35. Three and 5-year outcome indicators were also included for each of the 16 policy objectives. Despite agreement of the TCC on the need to streamline, the push to achieve this within a short-term Bank mission jarred with the established GoG-led approaches and the process left some disgruntlement on the side of the MDAs. 47. World Bank disbursement triggers did attract greater focus, but the PDO indicators linked to them were flawed. Selection of 6 annual triggers did provide more focus, as evidenced by the higher performance against triggers in comparison to other annual PAF targets. Three-year outcomes linked to the 6 triggers were established during preparation of DPO-2 as Key Outcome (effectively PDO) Indicators for the DPO series. Of the 12 indicators identified, however, 5 are actually outputs (such as the design of 16 survey tools, application of fiscal models or preparation of an investment plan), mostly copied directly from annual targets, rather than representing downstream outcomes. Those that are genuinely outcome-oriented, typically did not have established baselines even by DPO-2, and some presented attribution issues, such as the target to increase timber revenues by 15 percent. Each of the 3-year outcomes from which the PDO indicators were drawn was also linked to a number of PAF targets, which explains some of the disconnects identified in section 2.1 between the achievement of triggers and PDO indicators. M&E implementation 48. The need to develop sector M&E systems has been accepted, but implementation progress has been slow. At least since 2009, and with the support of a new country-based Bank M&E specialist, development of comprehensive M&E systems for each of the NREG agencies has been on the agenda. Recognition by the MDAs of the need for comprehensive sector M&E systems is in itself a significant achievement that is unlikely to have been pursued under earlier project-based lending. Credible efforts have already been made in this direction, including the establishment of Planning, Monitoring & Evaluation Units, and the FC commissioned its own study on M&E design. Unfortunately the MDAs were let down by weak performance of a consultancy intended to support all three. After agreement on the TOR and some delays, a local team was engaged by MoFEP during the first half of 2011, but their value-added has been limited as they have focused on the design of a needlessly elaborate information system, rather than establishing appropriate indicators and monitoring protocols for each of the agencies. 49. An attempt to establish an Independent Monitoring and Advisory Team (IMAT) to reduce the burden and increase transparency of the PAF assessment was not successfully adopted. To systematize the PAF assessment, it was originally proposed that the government would establish, at first for the NREG triggers and ultimately for all targets, a methodological data sheet (clarifying responsibilities, data collection methods, means of verifications, etc.), but this was not carried through26. For the 2009 PAF assessment, a small group of international and national consultants was recruited as the IMAT to carry out an independent assessment. The intention was to reduce the transaction burden of the annual PAF assessments on MDAs, MoFEP and DPs, whilst providing a more objective and transparent process, and M&E TA support to the MDAs more generally. Nevertheless, the MDAs received it unenthusiastically as more of a policing than a support function, due to an accident to one of the IMAT members the forestry sector was not covered, and a joint GoG-DP performance assessment was still required. The exercise was not repeated for the 2010 assessment. 50. The 3-year outcome indicators, including the DPO series PDO indicators, have not received appropriate attention. With GoG focused on a 5-year NREG lifespan, the 3-year outcome targets were inserted into the PAF essentially in relation to the Bank‟s financing schedule, but have not received effective follow-up since 2008. There was no systematic attempt to report against the indicators at the end of DPO-3, nor were they updated during DPO-3 preparation, despite the fact that many of the corresponding PAF targets had changed. As a result, several of the indicators were no longer realistic in comparison to the PAF targets expected by the end of DPO-3. Resulting disconnects between the PDO indicators and the DPO series triggers were detailed under section 2.1. M&E utilization 51. Use of M&E data has been limited by its availability. Information on the attainment of triggers and broader PAF targets has been used as a basis for disbursement by the Bank and other DPs, respectively. Assessing the contribution that PAF target have made to overall progress within the NREG sectors is harder due to weaknesses in the outcome indicators and sector M&E systems. Weak sector M&E also made it 26 The NREG mid-term review report, September 2010 17 difficult to monitor implementation in a more detailed or real-time manner. For example, information on EIA processing performance by the EPA was available in 2011 to verify if the 2010 target and outcome indicator was met, but was not available in time to adjust performance ahead of the milestone. 2.4 Expected Next Phase/Follow-up Operation (if any): 52. GoG’s 5-year NREG Program was predicated on the need for predictable, and coordinated medium-term donor support. NREG DPs are mostly continuing support, but with some degree of re- configuration. EKN, EU and AFD have undertaken to support the Program for the full 5 years (up to 2012), whereas the World Bank (and DFID) committed to provide support for the first three years and then assess progress, with a view to determining the best course for further support. The indication in the NREG Program Documents was that the Bank would be likely to continue support at least for the remainder of the original 5-year program, but that the NREG Mid-Term Review, conducted in July 2010) and the World Bank ICR process itself would be critical to confirming and shaping that intent. 53. Following the MTR and ICR process, an active dialogue is currently underway on preparation of a second phase of NREG support from the World Bank. This is expected to involve a further programmatic DPO series (likely 2 operations). The design will draw on the lessons learnt from the previous NREG series (see Section 6) through: (i) focusing on a smaller number of key reforms, complementary to broader investments supported by other DPs, and to FCPF and FIP activities in the forestry sector; and (ii) including a linked TA operation to strengthen policy analysis and stakeholder consultation. Focal areas for the DPO and TA operations will be: i. Forestry: (i) establish enabling environment for increased private sector, farmers and community involvement in forest management, (ii) enhance forest monitoring capacity. ii. Mining: (i) strengthen revenue forecasting; (ii) improve environmental management of small scale mining activities; (iii) encourage and monitor local procurement of goods and services by the mining industry. iii. Climate Change: (i) strengthen institutional structures for mainstreaming climate change; and (ii) strengthen capacity to design bankable projects and assess climate financing. iv. Environmental Management: (i) establish Strategic Environmental Assessment as a mandatory environmental management tool for government sectors; and (ii) enhance capacity to manage and monitor environmental impacts of large infrastructure development. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy): 54. The development of the NREG PAF was strongly government-led, and drew heavily on joint analysis supported by the DPs. The operation is therefore generally considered to be well-aligned with national priorities, although some DPs put particular emphasis on specific activities (e.g. the VPA, which was strongly supported by the EU), and some key policy areas (e.g. increasing government plantations) were not emphasized as they were more investment- than policy-focused. The 2009-2010 IMAT review also concluded that NREG activities were aligned with sector policies, whilst recommending the inclusion of more institutional development targets, as well as attention to environmental management in the mining sector. Many of the recommendations made in the CEA were incorporated into the NREG PAF, although some differences exist:  The CEA had a strong emphasis on competitive bidding for timber and wildlife management concessions, whilst the PAF focused on improving stumpage fee collection, perhaps as a more achievable target. 18  The CEA focused on community-based natural resource management concepts and the scaling up of Ghana‟s Community Resource Management Areas. DPO-1 included assessment of existing groups for collaborative forest management (NGOs, CBOs, Protected Areas Management Advisory Boards), but subsequent targets focussed on local Forest Forums and dissemination, rather than active community management.  Increasing the supply of legal timber on the domestic market was not recommended in the CEA.  In the case of the mining sector, most of the CEA‟s recommendations are found in the NREG program, but additional activities are included in the PAF, such as the development of corporate social responsibility guidelines and the creation of the Multi-agency Revenue Task Force.  Environmental protection activities, including establishment of an inter-ministerial coordination body and the need for a sustainable funding, were taken from the CEA‟s cross-cutting recommendations, but climate change strategy and institutionalizing SEA reflect recent priorities.  The CEA also covered land resources and fisheries, but these were not reflected in PAF due to the desire to limit the number of sectors involved. 55. The NREG PDO statement is relevant to policy priorities over the last three years, but was very broad, and could have provided more focus, particularly in regard to tackling informal forestry and mining activities. Illegal timber harvesting and artisanal and small-scale mining (ASM – particularly unregulated gold-mining known locally as galamsey) were already well-recognized at preparation. Unregulated chainsaw operators are estimated to cut up to 70 percent of the trees harvested in Ghana, supplying almost all timber for domestic consumption, and galamsey is estimated to employ several times the formal gold-mining industry workforce. Nevertheless, whilst “forest law enforcement� is mentioned in the PDO, the emphasis of the PDO indicators and triggers was on ensuring legality of timber supplied by the formal sector, and informal mining is not explicitly mentioned in the PDO at all. The approach was to build momentum by tackling more tractable issues first27, and PAF targets related to illegal forestry and mining emphasized putting in place viable alternatives as part of the approach to “social issues�, rather than law enforcement. These alternatives, specifically legal sources of domestic wood supply and areas for establishing regulated ASM cooperatives, have proved hard to identify, however, and the ongoing impact of the informal sector urges a more explicit and comprehensive strategy. 56. Overall design of the Program was relevant to the objectives, but specific design issues are apparent. Whilst the use of a DPO was appropriate to the systemic issues that NREG was aiming to address, tying it into a single instrument with an SBS approach that emphasized predictable inputs to the annual budget cycle constrained the ability to condition triggers on ambitious reforms, particularly in contentious and complex sectors such as mining and forestry. In addition, the absence of a separate TA facility weakened the consistency of ongoing policy analysis that was needed to elaborate incomplete sector strategies and respond to emerging priorities. Whilst triggers were realistic and generally relevant, there were specific disconnects with the PDO indicators (as detailed in section 2.1) which compromised the realism of achieving certain indicators by the end of DPO-3. There was also a disconnect between the forestry PDOs and the related PDO indicators and triggers. No PDO indicators or triggers clearly addressed “social issues in forest . . . communities� and the only indicators or triggers related to “forest law enforcement� were restricted to verification of the formal sector and increasing legal domestic timber supply. For mining and environment, the PDO indicators and triggers were largely based on outputs, rather than defining unambiguous outcomes related to the development objectives. 27 In forestry, it was hoped the establishment of robust FLEGT mechanisms in the formal, export industry under the VPA would eventually pave the way for extension to domestic timber supply chains. 19 3.2 Achievement of Program Development Objectives (including brief discussion of causal linkages between policy actions supported by the operation and outcomes): 57. Of the 6 PDO indicators (encompassing 12 targets) three are rated as partially achieved and three as mostly achieved, but weaknesses in the results framework are more to blame than poor implementation performance. As noted above and discussed under sections 2.1 and 2.3, there are numerous disconnects between the triggers to which GoG committed under legal agreements, and the PDO indicators, which were retrofitted in late 2008 and then largely neglected. In particular, the failure to update unrealistic indicators during preparation of DPO-3 means that it would be unreasonable to judge implementation performance solely on the basis of targets that were unachievable under the agreed program of actions. 58. Achievements in relation to the PDOs have been substantial to the extent that these were translated into clear triggers and targets: (i) Ensure predictable and sustainable financing for the forestry and wildlife sectors and effective forest law enforcement. An emphasis on financial autonomy for FC around the time of NREG preparation has since diminished as Government has increased funding. In practice, the indicators and targets related to “predictable and sustainable financing� focussed on increasing gross forest revenue to Government, and in those terms there has been some success through improving revenue collection performance, updating national park fees, and significant growth in plantations (which will increase long-term revenues). Fundamental reforms to timber fees were largely blocked by industry lobbying, however, and the greatest determinant of revenues remains the volume of legally harvested timber, which has recently been in sharp decline, especially for high value wild hardwoods. FC has demonstrated its ability to advance implementation of a complex international FLEGT agreement, forest reserve boundaries have been demarcated, and a significant reduction in the incidence of wildfires has been achieved in northern Ghana, following implementation of the FC‟s fire management program to protect savanna forests. Achievements in these areas of forest law are at risk of being overshadowed by uncontrolled informal harvesting, however, which remains unaffected by efforts to increase legal supplies of domestic timber, and will also require attention to issues of tree tenure, reliance on wood fuel and strengthened law enforcement. (ii) Improve mining sector revenue collection, management, and transparency. Very commendable achievements have been made under this objective. Creation and effective operation of the multi-agency Mining Revenue Task Force has clarified that fiscal performance is better than the average for international comparators, and has led to a process of both simplifying and strengthening of the fiscal regime. Current proposals for the 2012 budget would result in significantly higher revenues and a more progressive regime. Ghana has been validated as EITI compliant in the minerals sector, and is pioneering application of EITI methodologies to local revenue-sharing arrangements. MC has also developed guidelines for use of mining revenues by District Assemblies, although its ability to influence the behaviour of both Districts and traditional authorities is limited. (iii) Address social issues in forest and mining communities. Greatly increased attention and discussion has been focused on conflict and human rights issues in the minerals sector, bringing together Government, mining companies and CSOs. Social Responsibility Guidelines for mining companies have been developed and disseminated, and monitoring tools developed. Although instances of conflict persist, the trend is believed to be positive, and should be subject to more systematic monitoring in future. Key social issues for forest communities have been less clearly elaborated under NREG, but establishment of district-level Forest Fora has provided for more regular consultation between forest managers and local communities. (iv) Mainstream environment into economic growth through Strategic Environmental Assessment, Environmental Impact Assessment, and development of a climate change 20 strategy. Ghana‟s SEA model has been extended to a number of sectors, including the nascent oil and gas sector, and to routine local government planning. SEA activities have resulted in more transparent and participatory planning, training of more than 100 central Government and more than 440 district officials, more funding for environmental activities in sector plans, SEA tools being incorporated into NDPC planning guidelines, and mainstreaming of environment in government planning as evidenced by (i) strengthening of line agency and district environmental units and new budget lines for environmental activities, and (ii) environmental issues incorporated into medium-term development plans of all 170 District Assemblies and into 10 sector policies / plans. The EPA is now giving training to other African countries on mainstreaming environment into their planning system. Sectoral EIA guidelines have been developed and EIA service delivery and monitoring has been improved through new on-line systems. Awareness of and activity on climate change has greatly increased. An overall climate change management framework has been developed as a step towards a comprehensive investment plan, and several key sectors, including agriculture, forestry, transport and energy are moving ahead with their own climate strategies. 3.3 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs): Rating: Moderately Satisfactory 59. NREG was designed to broaden reform within the NRE sectors beyond what could be achieved through inclusion of one or two targets under the PRSC operations, and it has achieved that goal. Achievements have been significant, especially viewed in the context of previous NRE sector initiatives. Donors have been engaged in supporting the NREG sectors for many years in Ghana, often with disappointing outcomes. Implementation of new sector-based approaches and instruments has been a learning process and design weaknesses have become apparent, but more has been achieved though NREG than in several previous projects in terms of specific reforms, and strengthening the institutional platform for continued action (see section 3.4b). Performance against the stated PDO indicators and broader demonstration of outcomes on the ground has been compromised by weakness of the M&E framework. Realism is also required in comparing to what could realistically have been achieved within 3 years, with relatively modest funding, and in the face of long term negative resource trends driven by complex factors. Nevertheless, it has produced a step change in the dialogue and government ownership within areas, such as improved revenue management and transparency, and systematic application of SEA. 3.4 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above): (a) Poverty Impacts, Gender Aspects, and Social Development 60. The Stakeholder & Risk Analysis, conducted during the latter stages of Program preparation as the first stage of a PSIA, made a number of recommendations for reducing social risks in the NRM sectors, many of which were pursued by NREG, e.g.: establishing an inter-sectoral coordination mechanism at Cabinet level; simplifying EIA processes and strengthening related consultation requirements; developing a policy on corporate social responsibility; encouraging private investment in forestry; and strengthening the role of communities in forest management. One area in which NREG activities were identified as potentially increasing social risks was regulation of informal forestry and mining activities. To date, however, activities undertaken have emphasized carrots rather than sticks, primarily attempting to identify alternative sources of legal timber for the domestic market and areas where artisanal mining can be accommodated. The Stakeholder & Risk Analysis concluded that risk of social 21 conflict was at the heart of the NRM sectors, as a result of discretion in decision-making due to weak regulatory frameworks and of unclear policies on access and compensation. Conflict has been most evident in the minerals sector, in the recent past. Activities during the NREG program have begun to lay a foundation for dealing with these issues. CHRAJ conducted an assessment of human rights issues in the sector, and a social conflict monitoring tool has been developed. 61. There are some indications that exploitation of Ghana’s natural resources has brought social development benefits, but a solid information base for assessing NREG’s impact on poverty and gender issues is only starting to be assembled. A recent (and preliminary) re-assessment of the costs of environmental degradation in Ghana suggested that increased extraction mineral wealth in the 5 years to 2009 was compensated by increased investments in human capacity28. A focused PSIA of policy reform in the minerals sector is now underway with support from the Bank PSIA Trust Fund, but the results were not available in time for inclusion within the ICR. On conflict issues, work remains to be done to strengthen resolution / redress mechanisms, and to institutionalize regular monitoring of levels, locations and causes in order to assess the impact of NREG reforms aimed at reducing it, such as development of social responsibility guidelines, improved transparency around local revenue-sharing, and development of local content policies. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development): 62. Technical capacity within Government has been enhanced through the NREG program, particularly in cross-sectoral areas. MC has gained considerably more understanding of social and revenue management issues through NREG activities, helping to broaden its focus away from simply promoting mining investments. FC has developed capacity to implement wood-tracking and FLEGT systems, as well as to strengthen consultation processes with CSOs and local communities. EPA has improved its capacity to process and track EIA application through its on-line register, and more than 500 government officials have been trained in the use of SEA tools. MoFEP has gained a better understanding of objectives and activities within the NREG sectors, and is forming a Natural Resources, Environment and Climate Change unit, which should further strengthen technical engagement in areas such as management of natural resource revenues and climate finance. A comprehensive capacity needs assessment for the NREG sectors was never carried out, however, and hiring restrictions continue to place constraints on the manpower available to MDAs. 63. Institutional strengthening was the focus of the NREG Mid-Term Review (MTR). Considerable progress has been made through NREG in comparison to earlier donor projects in the NRE sectors which gave limited attention to broader sector management issues. The MTR employed an EU conceptual framework for sector budget support based around 5 pillars, namely sector policy, budget and PFM systems, sector coordination, institutions & capacity, and M&E. Key findings are summarized in annex 11. Work remains to be done in this area in order to establish a fully effective sector program, but awareness and willingness to act have been transformed.  Sector policy: Attention has been given to sector policies under NREG, for instance through review of the Forest & Wildlife Policy, and revision of the Minerals Sector Policy. Key priorities and strategies would benefit from further clarification, however, in response to evolving issues. Numerous NRE objectives have been stated in a range of high level policy documents, and the challenge is to: (i) condense these into a single coherent set of high-level objectives for each sector; and (ii) fill the missing middle between high-level sector objectives and activity plans with a set of clear strategic goals. Policy documents are currently being developed which should address this, 28 IDL Group (2011) Capacity Building for the Assessment and Monitoring of the Cost of Environmental Degradation in Ghana 22 including a number of strategic plans and a revised Forestry Development Master Plan. The EPA‟s draft (2011) Strategic Plan already provides a good model.  M&E: M&E systems remain weak within the NREG sectors, lacking of a stable set of high-level and strategic indicators, but development of sound sector M&E systems is firmly on the agenda. The Department of Forestry has been working on a set of sector objectives and has started reporting against quantitative annual performance targets, and EPA has set out a sound results framework in their draft Strategic Plan, although linkage to high-level objectives and indicators should be approved. Agreement has been reached that each of the three key agencies should: (i) incorporate clear output indicators in annual Medium-term Expenditure Frameworks (MTEFs29), and (ii) develop sector results frameworks which link a coherent set of high-level and strategic objectives to SMART30 indicators and targets.  Budget planning & financial reporting: The quality and comprehensiveness of financial reporting within the NREG MDAs has been gradually improving following periodic targeted TA inputs, resulting in adoption of up-to-date government MTEF and financial statement formats, and recognition of the gains in the NREG sectors in Government Public Expenditure Assessments. Work remains to be done to improve inclusivity and credibility of budgeting (particularly reducing under-spending) and establishing integrated technical and financial reporting.  Coordination: The Technical Coordination Committee has generally functioned well. Establishment of the ENRAC has been delayed, but it is now operational and expected to provide a key platform for defining sector policy going forward. Vertical linkages between MoFEP (and also NDPC) and the three NRE agencies have been significantly strengthened. EPA, in particular, believes this has been instrumental to mainstreaming environment, particularly in the roll-out of SEA tools. Although contentious issues remain between the NREG MDAs over issues such as mining within Forest Reserves, dialogue and understanding has increased.  Civil society engagement: Consultation processes and transparency have increased through a number of activities (see section 2.2 and annex 9). Local CSOs are now more actively engaged in the ENR sectors, and are learning to work more effectively with media.  Human capacity: NREG MDAs have established human capacity goals (albeit constrained by government restrictions on hiring new staff), and capacity has been built in specific areas via NREG, e.g. on PFM, on revenue modelling in the minerals sector, etc. A systematic assessment of capacity requirements would be beneficial, however.  Ownership: There is consensus that the NREG Program has been game-changing in increasing government ownership of donor support. From the DPs‟ perspective, challenges remain in terms of improving the substance and comprehensiveness of sector dialogue, but expected improvements in sector strategies, M&E and reporting will help immensely. (c) Other Unintended Outcomes and Impacts (positive and negative): N/A 3.5 Summary of Findings of Stakeholder Workshops: 64. Since the start of the NREG Program, annual Environment and Natural Resources Sector Summits have been convened, which provide a platform for the NREG MDAs to present and discuss achievements in the presence of CSOs and media. With support from Kasa, CSOs have held their own meetings ahead of these summits to elaborate a shared position on sector activities. In general, the CSOs raise a lot of issues and criticisms of specific activities, particularly within the forestry and mining sectors. They also re-affirm the need to strengthen and further formalize their own role and community engagement in sector management 29 A Government budgeting tool. 30 Specific, Measurable, Attainable, Relevant & Time-bound 23 activities. But they are very supportive of NREG in general, consistently urging extension of the program to other natural resource sectors. Annex 2 summarizes discussions from the 2011 Summit. 4. Assessment of Risk to Development Outcome Rating: Moderate 65. Ownership of the NREG program is strong, reforms are largely incremental, and there is little risk that the main achievements will be reversed – e.g. on the implementation of the VPA, mining revenue scrutiny through the work of the Task Force and EITI, and promotion of SEA as a key tool for mainstreaming of environmental concerns. Ongoing financial support to the sectors by EKN and EU until 2013, and planned additional support from the Bank slightly beyond that should guarantee continuation. There is more risk to those areas which have been subject to studies and policy dialogue, but where the process of reform is still at an early stage – e.g. increasing the supply of legal timber to the domestic market, managing ASM and social conflict in mining sector. Here, ongoing policy engagement and technical support is also needed to ensure design of workable interventions and maintain momentum. 5. Assessment of Bank and Borrower Performance 66. On the side of both the Bank and Borrower, a huge amount of hard work and dedication was put into the NREG Program, and has resulted in significant achievements. Where achievements have not matched initial expectations, it has been largely due to the adjustment to a new modality of support and related structural issues that were not fully addressed, rather than to a lack of effort or commitment. 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry: Rating: Moderately unsatisfactory 67. Overall, the Bank preparation team produced a valiant effort to convene both DPs and government agencies and construct a complex and coordinated program responding closely to the findings of the CEA. The Bank is regarded by both Government and DPs as having played a critical role in the development of the NREG Program and much of the analytical work that under-pinned it, motivating and coordinating other development partners, and providing much of the drive and international experience for the development of a sector support program. Mobilization of a PHRD grant during the preparation phase also started to lay a systematic basis for addressing broad sector management and governance issues, including on PFM, stakeholder analysis, etc. 68. A number of issues were identified and discussed, but not fully resolved, during preparation, including provision for systematic TA support, institutional strengthening and a complementary civil society facility. The PAF was also overly extensive and output-focused, with poorly defined outcome objectives and indicators. The selection of triggers left some disconnect with the PDOs related to forestry, and insufficient focus on the informal mining and forestry, or on environmental impacts of mining. To the extent that these issues were not sufficiently addressed during supervision, some responsibility is also shared with the design of a combined DPO-SBS instrument which reduced subsequent flexibility. 69. The performance of the Bank preparation team must be viewed in context of the limitations on independent action, and the novelty of the approach. When the Bank joined NREG preparation, it was a minor financial contributor looking to influence, rather than direct the approach taken by other DPs, who 24 under an SBS modality had a slightly different set of priorities. Even after the Bank contribution was increased, freedom of action was constrained, as evidenced by the appeal other DPs made directly to the World Bank Board to block the inclusion of oil and gas sector issues in NREG. Sector DPOs, especially for natural resources and environmental management, were a relatively new instrument in Africa, as was the approach of combining one with a multi-donor SBS program. Programmatic DPO series were considered very flexible instruments, and therefore assumed to provide for adaptive management during implementation. Also, at the time of preparation, the template for results frameworks under DPOs was less clearly developed and standardized than at present. (b) Quality of Supervision: Rating: Moderately unsatisfactory 70. The supervision team inherited a complex program structure including multiple sectors and a broad technical agenda, but managed to deliver DPOs in both of the two years following DPO-1. Delivery of DPO-2 and -3 to schedule was a considerable achievement, helping to maintain momentum and belief in the NREG process, and contrasting with the typical experience of slippages in sector programmatic DPO series, including in the case of both the other environment / natural resource DPOs in the Africa Region, in Gabon & Cameroon. 71. The processing requirements for these annual operations imposed a burden, however, particularly given the need to coordinate across multiple sectors and donors. In a reversal of its perception as a galvanizing force during preparation, the Bank was now seen as difficult to deal with due to the heavy process requirements of preparing new operations each year. These requirements constrained the annual Program cycle, whilst also diminishing the quality of technical interactions around the policy content. GoG technical staff complained that Bank technical engagement was limited, and which led to divergence in expectations over the form in which triggers should be met. DPs also felt that there was less Bank engagement in joint decision-making in comparison with the preparation phase. 72. Efforts were made to address outstanding design issues, but with limited results. Given the complex operating environment and resistance to major changes, it is likely that there would have been a trade-off between effecting more fundamental changes and adhering to the anticipated disbursement schedule. The Bank-led process to streamline the PAF required significant effort was spent during preparation of DPO-2, and led to substantial, if incremental improvements, but was poorly received by MDAs, as it was felt to be at odds with government-led processes. Efforts to improve broader M&E systems also received a sluggish response. Support on sector planning and budgeting systems came mostly from the Netherlands Embassy, as did the direct support to civil society. Although perfectly appropriate in the context of donor division of labor, this generated an impression in some quarters that the Bank was insufficiently focused on the civil society aspects of NREG. Potentially, more effort could have been made by the Bank to improve provision of TA, M&E, and the overall focus on and clarity of objectives, but considering the time and political capital required, any fundamental changes would probably have meant delaying the schedule of operations. The amount of staff time spent on NREG during DPO-3 preparation dropped significantly31 in comparison to previous years, perhaps because pushing for major changes seemed less appropriate just prior to the end of the agreed period of support and to the scheduled MTR and ICR reviews. 73. Following approval of DPO-1, the documentation of the management of NREG is fairly sparse. The Program was supervised from the country office and Aide Memoires and ISRs essentially reflected the 31 35 staff weeks in FY10 as opposed to nearly 60 during FY09 and slightly less than 100 during the original preparation of the Program in FY07/08. 25 achievement of triggers and processing of new operations, rather than chronicling substantive sector and technical discussions related to the Program32. (c) Justification of Rating for Overall Bank Performance: Rating: Moderately unsatisfactory 74. NREG was a valuable, ambitious and in some respects experimental undertaking, for which Bank leadership was both critical and highly appreciated. The new approach brought significant benefits in terms of specific policy achievements and advancing broader sector management and governance issues, but it also represented a high risk strategy in the context of a multi-sectoral operation with weak existing sector systems. Inevitably weaknesses became apparent in the design. These were identified relatively early, but the complexity of the Program, working across 5 MDAs, plus MoFEP, with 4 DPs in addition to the Bank, and under a modality that emphasized government leadership, made it difficult to effect timely changes, particularly in the short window between effectiveness of one operation and preparation of the next. Ultimately, supervision prioritized adherence to the expected disbursement schedule and letting the initial years run their course, over pushing hard for profound early changes. It also stressed maintaining Bank support and engagement in the joint sector program, as opposed to focusing efforts on the much smaller number of triggers. That approach has achieved significant results, and allowed GoG to learn from their own experience, but it also permitted certain weaknesses to persist. 5.2 Borrower Performance (a) Justification of Rating for Overall Borrower Performance33: Rating: Moderately satisfactory 75. GoG maintained a high degree of engagement and activity across a very broad multi-sectoral agenda, with strong involvement from MoFEP and NPDC in sector activities. Progress has been impressive in a number of important areas, such as the implementation of the VPA, analysis of mining revenues, the application of SEA tools to government planning, and the establishment of more efficient and monitorable on-line processing systems for EIAs. In other areas, progress has been slower, including the management of ASM activities, providing a sustainable supply of timber to the domestic market and revising revenue structures for the timber industry. Strong engagement at the technical level, was not always matched at the senior policy level, which limited progress on the most contentious issues. The lack of well-defined policy priorities contributed to the difficulty of securing high-level attention, but establishment of ENRAC should provide a strong foundation for future engagement. Strong leadership from MoFEP was instrumental to achievements, but staffing constraints also limited MoFEP‟s ability to effectively manage centralized TA activities under the PHRD and later in support of M&E strengthening, which retarded the development of sector management systems. 76. Issues that arose should be seen in the context of the novelty of the instrument to NREG MDAs accustomed to an investment projects, and the need to adjust to new modalities. The change to sector budget support involves much more freedom in the use of funds, but less structured support for design and 32 A December 5 2008 Aide Memoire summarized discussions on PFM and streamlining the PAF in November 2008, but AMs since initial preparation have reflected little technical (as opposed procedural) detail. 33 Although the NREG implementing agencies are distinct, they include all the key MDAs responsible for implementation in the targeted areas, obviating the need for separate assessment of the performance of government in addition to the implementing agencies. 26 management of activities, broader requirements on reporting and sharing of sector information, and higher- level accountability than is the case for a narrowly focused set of project activities:  The onus is on the implementing agency to determine and put in place the additional staff, TA, etc. to absorb the additional funding and associated transaction costs. Lagging budget performance of NREG MDAs exposed the limitations of the human resources made available, but efficiency of the working arrangements has been improved over time, and the number of activities expected at the start was probably unrealistic.  During PAF assessments, DPs expressed frustration at the MDAs‟ focus on delivery of outputs, rather than discussing their content in the context of broader sector goals. This suggests the need for a attitudinal shift from reporting on a limited set of activities to comprehensive sector dialogue, and also for understanding the distinction between triggers and MoVs.  Complaints from GoG officers at the technical level that they are unable to guarantee high-level policy approvals are understandable, but not ultimately acceptable within the context of a DPO. 77. Sector management and work processes have improved. Sectors in Ghana with established sector budget support operations, such as health and education, have also taken time to adjust to new ways of doing business. Although ultimately the responsibility lies with government to deliver, DPs need to support the transition through clarity on requirements. Progress in NREG has likely been constrained by the lack of precision on strengthening of sector systems, and the overly extensive and output-focused PAF. The lack of attention given to defining a limited set of priority outcome objectives diluted the focus of implementers and decision-makers34. This is particularly the case in Ghana, where rapid development and enthusiasm for innovation already tax attentions. GoG is keen to vigorously engage on many innovative programs, such as FLEGT, EITI, climate change, SEA, etc., but staff and leadership attention is limited, making the need to focus on priority deliverables all the more critical. Stronger existing sector strategies would have avoided many problems, and this gap should have received more attention from the outset. 6. Lessons Learned 78. The transition from financing individual projects to sector budget support (SBS) rejuvenated ownership, and revolutionized multi-agency dialogue. Although difficult to quantify, the adoption of an SBS program based around a government-led target-setting process resulted in a much greater sense of ownership, empowerment and enthusiasm amongst the implementing MDA than previous, discrete project investments. It also engendered a far more active dialogue between the sector MDAs, and more substantive engagement with both MoFEP and NDPC. Particularly in the case of the environment, this engagement was considered crucial to improving the understanding of environmental and climate change issues, and to mainstreaming environment through e.g. development of SEA tools for government planning. It has also allowed effective collaboration on financial performance, particularly in regard to the work of the Revenue Management Task Force in the mineral sector. 79. A sector support program should be conditioned on solid sector planning, monitoring and reporting. Fundamental building blocks of a sector budget support program were not in place within the implementing MDAs at the start of NREG, particularly clear and comprehensive strategies, resource planning and M&E systems. As a result, there have been weaknesses in budget realism and execution. More fundamentally, a lack of clarity in overall program goals and appropriate indicators compromised demonstration of results. Weaknesses were both understandable and clearly identified at the outset, and have been subject to considerable incremental improvement over the three years of the Program. Nevertheless, general assurances to improve these systems in the Framework Memorandum should have been hard-wired through clear milestones and conditionality, to ensure basic pre-requisites of an effective sector program were in place in more timely fashion. 34 And also made it harder to evaluate the progress that was made. 27 80. The NREG Progress Assessment Framework (PAF) was too broad and output-focused during the first three years; a policy matrix should focus on a small number of strategic and highly consequential reforms to avoid losing the wood for the trees. The NREG PAF included a large number of targets (initially 66, later reduced to around 40), many of which were based on outputs that were more investment- than policy-focused, or yielded opaque policy outcomes (i.e., draft policy documents of indeterminate status). This tended to obscure the dialogue on key policy reforms and outcomes. More time was spent tracking and assessing a myriad of small activities and outputs, than on identifying strategic priorities and analyzing the political economy or engaging senior decision-makers around critical reforms. Bank disbursements were based on a more selective set of 6 annual triggers, which attracted greater-than- average attention and levels of achievement. But the triggers were not qualitatively different from the far larger number of PAF targets from which they were drawn, and upon which most efforts were concentrated. The size of the PAF was recognized as a weakness from the outset, but once the precedent was set, major changes were hard to effect. Ultimately, reforming the PAF was very difficult without first strengthening sector strategies and planning tools (such as MTEFs and multi-year results frameworks). Ideally, the PAF would have been drawn from these, but instead partially substituted for them. 81. Development policy lending has limitations when used as the primary vehicle of support to a sector program, and may be more effective when complementing other instruments. NREG was worked in two parallel arenas – policy reform (the primary focus of DPOs) and strengthening sector management systems (the primary focus of SBS). These should be complementary, but delivery through a single instrument may have complicated both. The SBS modality emphasized broad engagement in sector activities rather than focusing on select policy issues, whereas use of a World Bank DPO template as the key program document encouraged the use of the PAF as a primary planning tool and de-emphasized specific investments in sector systems, such as M&E and TA. A broad sector program, addressing challenges in institutional capacity as well as policy reform, may be better supported by a DPO in conjunction with other types of instruments. In practice, sector DPOs, such as the forestry and environment DPO in Cameroon, are often supported by an additional TA facility. Structured TA support would have been especially important in NREG as the initial analytical work established a policy agenda, but not the detailed reforms needed to pursue it. 82. Working across three sectors (forestry, mining and environment including climate change), involving 5 MDAs and MoFEP, and harmonizing inputs of 5 DPs, multiplied transaction costs. Structures should have been put in place to manage this complexity. Given the context at preparation, shortly after the Accra Declaration and with only a modest initial contribution from the Bank, NREG probably could not have gone ahead except as a multi-donor program. The multi-sector approach provided sufficient gravitas to the program to attract strong engagement from both MoFEP and DPs, and also strengthened cross-sector learning and cooperation. But multiple sectors and donors greatly increased transaction, and the Bank found its freedom of action constrained. A more structured division of labor between DPs would have increased efficiency, and could have been achieved through:  A formal agreement between the DPs on areas of technical leadership and additional TA inputs (such as support for a PSIA);  Differentiation of disbursement triggers between DPs in line with areas of technical focus; and/or  Donor coordination based on unity of purpose rather than unity of process, i.e., designing a range of instruments coordinated around a single sector dialogue, rather than consolidating all inputs into one instrument. One possibility would have been for the other NREG DPs to support a core SBS program based around institutional strengthening and TA, whilst the WB DPOs focused specifically on identifying critical policy reforms, and on high-level engagement around them. PRSC series regularly combine many sectors and 28 donors in annual operations35, but tend to be able to draw on policy dialogue supported by a range of separate sector activities, and do not get into the level of detail of sector implementation as the NREG SBS. 83. The complexity of the policy agenda in the NREG sectors required more time and flexibility in timing to implement ambitious reforms. The NREG policy environment is complex and demanded ongoing policy analysis and adaptive management, for instance to address the serious challenges posed by diffuse, informal sector activities in Ghana. However, NREG was envisaged as an SBS program with annual disbursements providing a predictable budget supplement to each of the implementing MDAs. Annual DPOs left less than 6 months between disbursal of one operation to delivery of prior actions for the next, and practically no window to assess outcomes from the preceding set of actions. The imperative to adhere to annual budget cycles constricted the space in which to address systemic issues (e.g., to strengthen strategy, M&E or provision of TA), and created pressure to retreat from ambitious targets, rather than to pursue contentious policy reforms36. Flexibility on the timing of targets should not have had a severe impact on the implementation of work plans given that spending by the NREG MDAs has lagged behind budgets and available funds. It has also been the case for many other sector DPOs, particularly in the NRE sectors37. The CEA noted that “DPs are supporting a reform process that is not linear, and engagement mechanisms must be flexible, responsive, and capable of being scaled up or down as appropriate.� Locking all disbursements into the same, rigid schedule hindered a graduated and flexible response to performance. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing Agencies: 84. Borrower comments (see annex 3) reflect appreciation for sector-based support and pride in achievements, but also reveal some of the frustrations and difficulties in the dialogue around the use of the new instrument, particularly in terms of results requirements that diverge from those of investment operations. The flexibility and additional autonomy of budget support are welcomed, but there is still an expectation that funding should be provided up front, and that activities and outputs are sufficient measures of progress. Such frustrations would have been reduced by: (i) clearer sector strategies, providing for mutual understanding of the expected linkage between activities and results from the outset, and distinct from the PAF so that changes to PAF milestones would not be seen as changes to the sector program itself; (ii) a smaller set of targets, which could be more reliably delivered, rather than setting numerous annual targets, at least some of which would inevitably slip; and (iii) more results-oriented phrasing of targets to avoid confounding the means of verification (e.g., a report) with the target (i.e., an unambiguous measure of progress towards a specified goal as evidenced in the report). Issues raised on donor coordination and flow of funds also reflect teething problems of introducing a new approach. (b) Cofinanciers: N/A 35 And also involve huge transaction costs and time to develop effective working relations – e.g. see the ICR for PRSCs 1-3 in Ghana. 36 For instance, 2 successive triggers on development and implementation of a Financial Framework for the FC were assessed as achieved on the basis of financial reports, despite proposals for revising forestry fees being largely blocked. 37 The multi-sectoral Gabon NRM DPO achieved concrete targets across diverse sectors, after considerable delays to the release of the 2nd tranche that reflected the need for time to overcome resistance to reforms. Experience with sector policy lending across many countries suggests that initial time-lines for ambitious reform programs are typically over- optimistic. 29 ANNEXES Annex 1. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Name Title Unit Specialty Lending (preparation of original Program under P102971) Jean Christophe Carret Senior Environmental Economist AFTEN Task Team Leader Paola Agostini Senior Economist AFTEN Environment & NRM Edward Dwumfour Senior Environmental Specialist AFTEN Environment & NRM Allison Berg Senior Operations Officer COPCO Mining & operations Boubacar Bocoum Senior Mining Specialist COPCO Mining & EITI Caroline M. Kende-Robb Lead Social Development Specialist SDV Social development Jan Bojo Lead Environmental Economist ENV Environmental economics Carlos Cavalcanti Senior Economist AFTP4 Macroeconomic assessment Manush Hristov Senior Counsel LEGAF Country lawyer Rajiv Sondhi Senior Finance Officer LOAFC Loan officer John Nyaga Senior Financial Management Specialist AFTFM PFM Christine Kimes Senior Operations Officer AFTRL Results Robert Wallace DeGraft-Hanson Financial Management Specialist AFTFM PFM Sandra Bulls Program Assistant AFTEN Team support (HQ) Victoria Ahlonkoba Bruce-Goga Program Assistant AFTEN Team support (CO) 38 Supervision/ICR (including completion of preparation of P113173 & P118188) John W. Fraser Stewart Senior Natural Resources Management AFTEN Task Team Leader Specialist Peter Kristensen Sector Leader AFTEN Climate change, oil & gas SEA Alyson Kleine Operations Analyst WBICC Operations Kristina Svensson Operations Officer SEGOM Mining Carolyn Winter Senior Social Development Specialist AFTCS Social development 38 Supervision of the current and preparation of the next annual operation were essentially conducted together once the program was underway. 30 Franke Hendrik Toornstra Adviser AFTDE Policy matrix revision David John Santley Sr. Petroleum Specialist SEGOM Oil & gas SEA Sunil Mathrani Sr. Energy Specialist AFTEG Climate change / energy Smile Kwawukume Sr. Public Sector Specialist AFTPR Governance Anders Jensen Monitoring & Evaluation Specialist AFTDE M&E Sebastien Dessus Lead Economist AFTP4 Macroeconomic assessment Ferdinand Tsri Apronti Procurement Specialist AFTFM PFM Virginie Vaselopulos Program Assistant AFTEN Team support (HQ) Jayne Kwengwere Program Assistant AFTEN Team support (HQ) Ernestina Aboah-Ndow Program Assistant AFCW1 Team support (CO) Rose Abena Amapadu Program Assistant AFCWI Team support (CO) Stephen Ling Natural Resources Management AFTEN ICR Specialist (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage No. of Staff Weeks US$ Thousands (including travel and consultant costs) P102971 Lending FY07 34 160.49 FY08 63 316.77 TOTAL: 97 477.26 P102971 Supervision FY08 0 13.79 FY09 19 107.79 TOTAL 19 121.68 P113172 Lending FY09 39 187.58 TOTAL: 39 187.58 P118188 Lending FY10 35 172.13 TOTAL: 35 172.13 P118188 Supervision FY11 23 90.90 TOTAL 23 90.90 31 Annex 2. Stakeholder Workshop Report and Results The 3rd Environment and Natural Resources Stakeholder Summit was held in July 2011, involving 112 participants representing GoG (including the Ministers of Lands & Natural Resources and of Environment, Science & Technology, and the CEOs of FC, MC & EPA), traditional authorities, more than a dozen NGO representatives, several DPs, and a small number of private sector organizations. The Summits largely present an opportunity for the NREG MDAs to present annual progress for discussion, but the 2011 Summit also included presentations from representatives of chainsaw operators and the National Association of Small-scale Miners, who stressed the importance and their willingness to work together to find comprehensive approaches to informal forestry and mining activities that recognized the reality that these activities are well-established, economically important, and do not focus simply on a law enforcement response. As in previous years, a communiqué was presented from a parallel civil society review of the sectors, which was supported by Kasa and involved more than a hundred CSO representatives. The following notes summarize main points presented in the civil society review and/or discussed during the Summit in response to the GoG presentations. A number of GoG activities were particularly commended:  The formation of the Environment and Natural Resources Advisory Committee (ENRAC) to bring together key ministers for senior policy coordination and guidance.  FC‟s attempts to increase the involvement of CSOs, especially in the VPA process and in the review and formulation of a new Forest and Wildlife Policy.  The establishment of the AKOBEN system by EPA for environmental rating and public disclosure of large private sector developments, including mining operations.  The general effectiveness of the NREG Program for highlighting issues and promoting policy reform, transparency and engagement was recognized in the request that additional sectors be included under the Program, including fisheries and land degradation / desertification issues. However, more efforts were urged in a number of areas. To further promote civil society participation and transparency, the following were proposed:  An NREG communication and media strategy, including more frequent programs on key issues, establishment of a media resource center, and an awards program to recognise quality journalism on NRE issues.  Disclosure of environmental audits of mines.  Strengthened representation of CSOs on the FC Board.  Publication of a list of timber rights holders and status of their financial obligations.  Clearer reporting back on activities and achievement in relation to the agreements of previous Summits.  Increased participation of the private sector in the Summits and in consultation structures more generally. In relation to specific policy issues, the following were proposed:  Minerals – MC‟s mission statement should emphasize promotion of local investment and linkages to local economies, rather than simply providing a more attractive environment for 32 external investment. Mining should not be allowed in forest reserves. New mining developments should be subject to free prior informed consent of local communities, comprehensive cost-benefit analysis, and the principle of polluter pays.  Forestry – More should be done to promote establishment and operation of Community Resource Management Areas, and SMEs in the forestry sector. More should be done to increase the legal supply of timber for the domestic market. Gender analysis should be included in review of the Forest and Wildlife Policy.  Environment – Development of the comprehensive Climate Change Policy Framework should be accelerated, and emphasis should be given to local adaptation needs. Application of the AKOBEN scheme should be extended to additional projects and developments, including in the state sector. 33 Annex 3. Summary of Borrower’s Comments on Draft ICR The document has been well written and the issues well articulated, including both the programme design and the implementation. We generally agree with most of the challenges mentioned, especially those faced by GOG, and certainly that the programme was complex. We would question why the Borrower performance rating is only moderately satisfactory instead of satisfactory, given that triggers of all the 3 DPOs were met. We would like to highlight a number of issues which presented particular challenges from the Government perspective:  Donor dialogue. Donor coordination and harmonization was not strong enough, which produced heavy transactions cost, and sometimes parallel discussions on the same topics. Development partners (DPs) also wanted numerous changes in the focus and objectives of the programme.  Differing expectations of MoVs. Even where the means of verification (MoV) for a target was provided, DPs in certain instances rated the performance as “partially achieved�. For example if an MOV states “Report of Exploration� it means that we have to produce a report on mineral exploration work being carried out in the area. It does not necessarily mean that the exploration should have been finished as it is a complex process.  Impatience for results. Reform processes take time, and the activities conducted under NREG were designed to lead to longer-term outcomes. Hence the suggestion by some DPs that they are not seeing results is too premature at this stage. For example, to address the explosion of illegal mining activities in Ghana due to the unprecedented rise in gold prices, a quick fix could be following by simply using security agencies to flush out illegal miners to, but this is not a sustainable method of solving the problem as it will simply push them elsewhere, or they will return after a short time, and in the meantime conflict with formal mines and authorities is increased. It is not realistic to see instantaneous results in dealing with the illegal small scale mining problem.  Delays in release of funds. DPs generally released funds late in each fiscal year for which the activities were supposed to take place, with the result that there were constraints on funding and some activities and targets were then deferred to the next year. The time taken to process internal applications for release of funds to the implementing agencies was also part of the problem. Having noted some problems, however, we also want to emphasis that on balance, NREG has been a very positive development. Sector Budget Support has proven for us to be the most efficient method of DP support, and the programme has been very useful in resourcing the NREG sectors to address most of their challenges. Financing of the sectors have also increased tremendously from the 2008 levels through both DP and GoG contributions. Furthermore, intersectoral collaboration amongst the NREG agencies is stronger than ever before. We particularly want to highlight the following specific achievements in each of the sectors: 34 1) Environment  Strategic Environmental Assessment (SEA) is emerging as a major tool for developing and analyzing Government policies, plans and programmes (PPPs) to ensure that they adequately mainstream sustainability. Decision-makers have increasing confidence that SEA enhances sustainability of policy and planning frameworks. SEA activities have resulted in more transparent and participatory planning, training of more than 100 central Government and more than 440 district officials, more funding for environmental activities in sector plans, SEA tools being incorporated into NDPC planning guidelines, and mainstreaming of environment in government planning as evidenced by (i) strengthening of line agency and district environmental units and new budget lines for environmental activities, and (ii) environmental issues incorporated into medium-term development plans of all 170 District Assemblies and into 10 sector policies / plans. The EPA is now giving training to other African countries on how Ghana achieved so much success in mainstreaming environment into their planning system.  Online EIA registration has helped shorten the EIA process and strengthen decentralization of the EIA system in Ghana. It has also helped EPA improve its record keeping of projects which have followed the EIA process. 2) Forestry Notwithstanding the challenges encountered during implementation, the NREG programme has significantly improved the business processes within the forestry sector including the following:  Revision of Forest and Wildlife Policy  Improved systems for securing forest boundaries  Increased revenue collection rates and improved disbursement mechanisms  Enhanced dialogued processes between major stakeholders (private sector, civil society organizations, resource owners and forest fringe communities) 3) Minerals There is now better collaboration between sectors, evidenced by the joint work of EPA and MC to strengthen environmental guidelines for the mining sector. Substantial progress has been made towards a solution to unregulated mining by identifying areas to be set aside for formalized small- scale mining under organized cooperatives. Under the NREG programme, about 61 areas which had been blocked out countrywide for demarcation to small scale miners are now under a process of being explored. So far 7 of these areas are under exploration and 8 more will be added next year subject to availability of funds. However, robust processes take time, and progress in both these areas will not be reflected in immediate major changes on the ground. Also, in an attempt to reduce social conflict in mining communities, fiscal models have been developed and are being applied to the mining companies to monitor mineral revenues that mining companies pay to Government. The model has been applied to various mines in the country. In addition, Guidelines for use of mineral royalties at the local level have been developed. Similarly, Guidelines for Corporate Social Responsibility by Mining Companies in Mining Communities have been developed and sensitization of the various Districts and Municipal Assemblies as well as all stakeholders is on-going. 35 Annex 4. Comments of Cofinanciers and Other Partners/Stakeholders Development Partner feedback on the findings of the ICR was not received in time for inclusion. The DP Sector Leader (representative from EKN; joint head of the GoG-DP Sector Working Group) provided some factual updates in response to the draft document, but due to pre-occupation with Durban Climate Change meetings, and then the end-of-year holidays, formal comments on the conclusions of the ICR was not provided before the end of Decemember 2011. 36 Annex 5. List of Key Supporting Documents Official Bank documents Project documents – Program Documents & Legal Agreements for NREG DPOs 1-3 Formal records – Aide Memoires, minutes of Concept & ROC review meetings for NREG DPOs 1-3 ISRs for NREG DPOs 1&2 (not completed for DPO-3) NREG PHRD GRM ICRs for Ghana: Natural Resources Management Project and Ghana: Poverty Reduction Support Credit (1-3) Background analytical and policy documents (including PHRD studies) Ambale, D. (2008) Support to Civil Society to Increase Accountability in Natural Resource Governance EKN (2006) Ghana Environment Sector Study ODI (2007) Budget Support, Aid instrument and Environment Ghana Case Study Sync Consultant Ltd (2008) NREG Stakeholder & Risk Analysis World Bank, AFD, RNE, DFID (2007) Ghana Country Environmental Analysis Analytical and policy documents produced during NREG Development Management Consultants (2010) Monitoring and Evaluation (M&E) Situation of Ministry of Lands and Natural Resources, Forestry Commission, Minerals Commission and the Ministry of Environment, Science & Technology and the Environmental Protection Agency (EPA) EPA (2011) Draft Strategic Plan EPA & NDPC (2010) SEA of Oil and Gas Sector FC (2011) Draft Forest and Wildlife Policy FC (2011) The Wood Tracking System in Ghana: evaluation of the pilot project FC & Forestry Research Institute of Ghana (2009) Ghana Domestic Timber Market Study Ghana Extractive Industries Transparency Initiative (2007) 1st Report on Aggregation / Reconciliation of Mining Benefits in Ghana Ghana Extractive Industries Transparency Initiative (2008) 2nd Report on Aggregation / Reconciliation of Mining Benefits in Ghana Ghana Extractive Industries Transparency Initiative (2008) 3rd Report on Aggregation / Reconciliation of Mining Benefits in Ghana GoG (2009) Statement of Policies on NRE (27 May 2009) GoG-EU (2009) Voluntary Partnership Agreement [on import of timber products into the EU] Kron (2011) Development of Sectoral Monitoring and Evaluation (M&E) System for NREG MDAs MEST (2010) Ghana Goes for Green Growth [National Climate Change Framework] MC (2010) Development of CSR Guidelines for Mining Companies MC (2010) Draft National Mining Policy of Ghana MLNR (2009) Draft Strategic Plan for the Mining Sector (2010 – 2020) MoFEP (2009) Public Expenditure Financial Accountability report van der Linde, M. (2009) Report of the Financial Management Support Mission November 2009 van der Linde, M. (2010) Report of the Financial Management Support Mission March 2010 37 van der Linde, M. (2010) Report of the Financial Management Support Mission September 2010 External reviews and commentary FC (2011) Environment & Natural Resources Summit 2011 Ghana Anti-Corruption Coalition (2010) Pilot Review of Six World Bank Assisted Projects in Ghana IDEG, ODI & ECORYS (2010) The NREG mid-term review report IDL (2010) Validation of the Extractive Industries Transparency Initiative in Ghana IMAT (2010) Monitoring Report No.1 Kasa (2011) Civil Society Organizations (CSOs) Annual Review of the Natural Resource and Environment Sector MC (2010) Environment & Natural Resources Summit 2010 Nordic Consulting Group (2011) Final evaluation of Kasa Vaa, J. (2010) Lessons Learned from NREG SBS [Note circulated to DPs by EU team member] 38 Annex 6. Full text of PDO indicators and triggers. NREG’s Key Outcome Indicators Program Development Objectives (a) Ensure predictable and 1) Strengthen institutions and governance as evidenced by: (a) sustainable financing for the 10 percent increase in legal wood supply to domestic markets; forest and wildlife sectors and and (b) first FLEGT license issued. effective forest law 2) Sustainably finance and promote investment in forestry enforcement sector as evidenced by: (a) Timber Revenues increased by 15 percent; and (b) plantation forest area increased by 15 percent, through increased private investment. (b) Improve mining sector 3) Improve mining sector revenue collection, management, and revenue collection, transparency as evidenced by: (a) fiscal model applied to three management, and transparency mines, resulting in improved overview of revenues due to the Government of Ghana and a reduction of the “revenue gap�; (b) up to date data on mining incomes, royalties and local revenues and their distribution published at the district level; and (c) survey tool to track perception of use of mining revenues at district and municipal level designed, and at least one survey undertaken. (c) Address social issues in 4) Reduce social conflict issues in mining communities and forest and mining communities improve support to small-scale miners (SSM) as evidenced by (a) design of a survey tool and carrying out of at least one survey, (b) SSM established through three co-operatives in mining areas with improved performance. (d) Mainstream environment 5) Promote investment in climate change adaptation and into economic growth through mitigation as evidenced by the preparation of one long-term Strategic Environmental investment plan. Assessment (SEA), 6) Strengthen national environmental impact assessment Environmental Impact system through: (a) updated legislative instrument on Strategic Assessment (EIA), and Environmental Assessment, including sector guidelines for oil, development of a climate mining, forestry, energy, transport sectors and consultation and change strategy disclosure procedures for environmental assessment; and (b) 60 percent of EIA applications processed within the prescribed time frame and with the requested consultation and disclosure procedures. 39 First Operation in a Programmatic Series Prior actions from Legal Agreement – The Recipient has: Status Forestry made satisfactory progress in the negotiations with the European Achieved. Union on a voluntary partnership agreement concerning the “Forest Law Enforcement, Governance and Trade� initiative, and has defined the elements of such agreement by December 2007 submitted to the Cabinet a financial framework to ensure Achieved. predictable and sustainable funding for the Recipient‟s Forestry Commission Mining prepared, through the Recipient‟s Minerals Commission, a Achieved. proposal for new guidelines on social responsibility in mining activities, which takes into account inter alia experiences with alternative livelihood programs and community development schemes in the mining sector, for consultation with relevant stakeholders prepared, through the Minerals Commission, and in consultation Achieved. with relevant stakeholders: (a) a draft mining policy document to govern the Recipient‟s strategic directions in the mining sector over the short, medium and long term; and (b) draft regulations on royalty, compensation, health and safety and service companies, following the adoption of the Minerals and Mining Act of 2006 (Act 703) Environmental protection completed strategic environmental assessments in the energy and Achieved. transport sectors carried out an appraisal of the environmental impact assessment Achieved. service delivery processes, and prepared revised environmental impact assessment guidelines for the general construction, health, mining, agriculture, energy, tourism, manufacturing and services and transport sectors Second Operation Prior actions from Legal Agreement – The Recipient has: Status Forestry signed a voluntary partnership agreement with the European Achieved. Community concerning forest law enforcement, governance and trade, and submitted the said agreement to the Recipient‟s Parliament for ratification implemented the Cabinet-approved financial framework for the Achieved. Implementation Recipient‟s Forestry Commission in a manner satisfactory to the judged satisfactory by Association DPs, although the financial report used as the MoV noted ongoing performance issues. Mining undertaken consultations with mining communities, civil society Achieved. and mining companies on the content of guidelines on social responsibility in mining activities, and published a summary of the 40 consultations (a) established a multi-agency mining revenue task force including Achieved. but not limited to the Recipient‟s Minerals Commission, the Ministry of Lands and Natural Resources, the Internal Revenue Service and the Customs, Excise and Preventive Service; (b) adopted, through the said task force, an action plan to enhance mining sector revenue collection; and (c) piloted a fiscal model for one mine Environmental protection prepared a draft national climate change adaptation strategy Achieved. prepared a strategic environmental assessment of the tourism Achieved. sector, and conducted a review of the experience with strategic environmental assessments of different sectors completed to date Third Operation Prior actions from Legal Agreement – The Recipient has: Status Forestry commenced a pilot program of wood tracking systems to verify Achieved. the origin of timber with at least three commercial companies that are involved in the harvesting, processing and export of timber, as a means of implementing the Voluntary Partnership Agreement established procedures to improve transparency of disbursement of Achieved. forestry revenue Mining prepared and issued satisfactory guidelines on social responsibility Achieved. Guidelines are for mining activities non-binding. commenced the implementation of the Mining Revenue Task Achieved. Force action plan to improve mining sector revenue collection, management and transparency, including: (a) completion of a collaborative pilot audit by the Recipient‟s Minerals Commission, the Internal Revenue Service and other relevant departments of at least one mine; and (b) application of a fiscal model to three mines Environmental Protection39 submitted a draft Strategic Environmental Assessment of the oil Achieved. sector, satisfactory to the Association, and issued guidelines for environmentally responsible management of oil sector 39 As noted above, the second DPO-3 prior action on the submission of the climate change adaptation strategy to Cabinet was dropped owing to Government‟s new comprehensive approach to climate change. 41 Annex 7. NREG Program Matrices SECTOR MATRICES INDICATING TARGETS 2007-2010 & 3-YR OUTCOMES Forestry Matrix Program / Policy Objectives Targets 200740 Targets 200841 Target 200942 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) F1. Institutional Clearly defined Baseline survey conducted on Monitor the percentage change Improved law enforcement in Strengthening and indicators for monitoring percentage of „legal‟ timber in of „legal‟ timber in domestic the Forestry Sector: Governance levels of legality based domestic market market in reference to baseline on GOG definition of legality -10% increase in Legal Wood supply to the domestic market. Conduct study to Policy option for Policy options and Implementation of approved propose policy options domestic market wood implementation plan for option piloted to address the domestic supply approved by domestic wood supply approved - 1 FLEGT License issued wood demand MLFM by MLFM VPA negotiations VPA agreement Piloting of Wood Tracking 1st FLEGT License issued between GoG and EU between GOG and EU initiated with 3 companies concerning Forest signed and submitted Law Enforcement for Parliamentary Governance and ratification process Trade launched and elements of agreement New wood tracking and clearly defined by verification system pilot December 2007 tested for 3 companies F2. Secure Natural Ecosystems Strategy for reducing Three key Wildfire strategy fully Continue implementation of Improved forest health: for the benefit of all segments fire incidence recommendations of implemented Wildfire Strategy - Incidence of wildfires reduced of society developed Strategy Document by 40% implemented - Presence of keystone species in Baseline for fire Protected Areas increased by incidence completed Fire incidence in 3% transition zone reduced by 20% 40 DPO1 Prior Actions are in bold. 41 DPO2 Triggers and in bold and performance indicators in italics. 42 DPO2 Triggers and in bold. 42 Program / Policy Objectives Targets 200740 Targets 200841 Target 200942 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) Boundaries assessed for Survey, demarcate and Develop (10) Review (5) and Continue the development, 10 forest reserves and re-pillar boundaries of implement (5) Management review and implement 30 GSBAs and additional 10 Forest plans for forest reserves and Management Plans for forest gazettment of Kyabobo Reserves, and 1 Protected Areas (PAs) reserves National Park initiated Protected Area Complete integrated Implement management management plans plans for the 30 GSBAs (IMPs) for 10 reserves Develop IMPs for On Forest reserves, Protected areas, savannah and areas rich in biodiversity Options for future financing of SRMC developed 1. F3. Sustainably Finance and Financial framework Implement approved Legislation related to financial Approved legislation related to Predictable and diversified Promote Investment in for secure and FC framework framework approved financial framework sources of funding for Forestry Forestry Sector predictable financing implemented Commission secured: for the FC submitted - Actual Timber Revenues to Cabinet against potential Timber Revenues increased by 15 % Potentials for accessing carbon Proposals for accessing Carbon due to better collection of credit schemes assessed financing developed fees and royalties Concept note for Proposal for value-added Strategy for tertiary wood Implementation of two priority encouraging value- processing developed processing developed and areas in strategy initiated - Eco-Tourism revenues added processing and endorsed by MLFM approved increased by 10% drafted - Process of payment for Land lease and benefit Land lease and benefit Land lease and Benefit Sharing Land lease and Benefit Sharing environmental services (PES) sharing agreement sharing agreement signed Agreements with 10 investors Agreements signed and initiated submitted and discussed with additional 10 signed and monitored monitored with an additional 10 in Cabinet investors investors Increased Private Sector investment framework in Forest and Wildlife Sector: -Carbon financing proposal prepared -Export of Tertiary Processing Wood increased by 5%. - Plantation Forest Area increased by 15%, through increased Private investment 2. F4. Strengthen Monitoring & Assessment of WD Assessment of FSD and M&E System for Forestry M&E System for Forestry Evidence-based management 43 Program / Policy Objectives Targets 200740 Targets 200841 Target 200942 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) Evaluation / Information M&E system conducted TIDD M&E system Commission and MLFM Commission and MLFM decision making system put in Communication Technology completed approved. developed place: Systems -Data from M&E system being Assessment of MLFM Comprehensive Database Data communication linkage for generated on a monthly basis, and FC M&E systems Management System designed Forestry Commission districts disclosed and submitted to Assessment of existing conducted and Parks implemented policy and decision-makers databases for FC HQ completed Assessment of databases held by all FC Divisions completed Data communication linkage requirements between districts, regions and HQ identified ICT policy and standards developed for MLFM and FC F5. Promote equitable Continue reviewing Implement benefit Conduct a survey ( work to be Develop framework for Data on revenue collection and resource access rights and existing benefit sharing sharing agreement on contracted to an entity with the promoting community distribution fully and actively benefits for all segments of schemes to allow modified taungya in 7 requisite technical expertise and involvement in resource access disclosed to local communities society equitable benefit flows forest districts be undertaken with NGO rights and benefits (transparency): engagement) to assess current level of awareness at community - 40% of local communities level on resource access rights actively informed on revenue and benefits collection and distribution. Dissemination of bi-annual Continue dissemination of Revenue Disbursement information based on agreed Active participation of Reports within 30 days of timelines communities in decision-making *publication by Forestry regarding resource management: Commission - 25 Forest Fora functional in forest districts Initiate the 10 regional and 1 10 Regional and 1 National Modalities developed for establishment of forest national forest forum are Forest Forum adequately integration of Forest Fora into fora in all 10 regions in operational resourced and functional District Assembly Structures Ghana Assess existing groups Consultation with key for collaborative forest stakeholders on how to management (NGOs, roll out district for a CBOs, PAMABs) beyond current 17 districts 44 Program / Policy Objectives Targets 200740 Targets 200841 Target 200942 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) Increase the number of CRM groups by 5% 45 Mining Matrix Program / Policy Objectives Targets 2007 Targets 2008 Target 2009 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) and level of achievement M1. Institutional Establish HRD plan for Continue training for mining Continue Training and 10% Mineral licensing: strengthening in the mining mining sector agencies sector agencies based on short (increase over 2009) of medium sector (MC, GSD, Inspectorate term HRD plan. to long term Human Resource - Processing time for 40% of the Division MLFM) and Development Plan implemented. mineral licenses in compliance start training based on with the requirements of the this plan minerals and Mining Act (Act 703). Study Possibility of Monitoring of compliance: Establishment of the Unit at Minerals Commission to deal - 45% of planned compliance with Social (and environmental) missions undertaken for issues. operational mines, 30% of planned compliance missions undertaken to exploration sites M2. Reduced social conflict Proposal for social Consultations with Guidelines on social Implementation of guidelines Monitoring social conflicts and issues in mining communities responsibility mining communities/ responsibility for mining with annual tracking establishment of small scale and improve support to small guidelines, including civil society and mining activities prepared mechanisms to include social miners cooperatives: scale miners (SSM) e.g., ALPs, community companies on content conflicts development schemes, of social responsibility - Survey tool to track perception prepared by MC for guidelines and of social conflicts in mining consultation with summary of communities designed, and at relevant stakeholders consultations published least one (first) survey undertaken Review areas suitable Carry out exploration Continue to carry further Implement Programs to improve SSM established through three for SSM work to prove viability of exploration activities to find two performance of small scale (3) co-operatives in mining areas for SSM (2) new areas for SSM. miners in existing co-operatives areas with improved and establish two (2) new co- performance operatives in viable areas (on the basis that suitable areas are found in 2009 for the co-ops) - again dependent on outcome of exploration activity M3. Improve mining sector Relevant agencies of a Multi-agency Mining Mining Revenue Task Force Mining Revenue Task Force Generation and use of mining revenue collection, multi-agency Mining Revenue Task Force action plan under action plan under revenues: management, and Revenue Task Force (including MC, MLFM, implementation, including implementation, including transparency (including MC, IRS, IRS, CEPS, etc.) collaborative pilot audit (by collaborative audit (by - Fiscal model applied to three MLFM, CEPS, etc.) established and action Minerals Commission, IRS, Minerals Commission, IRS, (3) mines, resulting in improved identified, with the aim plan to enhance mining and others) and application of and others) of one more mine. overview of revenues due to of enhancing sector revenue “fiscal� model to one mine in Fiscal model applied to one (1) GOG and a reduction of the collaboration and collection adopted by addition to 2008. additional mine. "revenue gap" (difference revenue collection the Task Force; pilot of between paid amounts and fiscal model for one amounts actually due) 46 Program / Policy Objectives Targets 2007 Targets 2008 Target 2009 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) and level of achievement mine set up First EITI report Second EITI report Fourth (covering 2006) & Fifth Sixth EITI report (covering - Up to date data on mining published by EITI publicly available on (covering 2007) EITI reports 2008, and also including incomes, royalties, and local Secretariat, in liaison GEITI web site published by EITI Secretariat information on royalty payments revenues and their distribution with MC (MOFEP), in liaison with at local level) published by EITI published at the district level Minerals Commission. Secretariat (MOFEP) in liaison with Minerals Commission Draft guidelines on use Guidelines on use of mineral Implementation, monitoring and - Survey tool to track perception of mineral royalties by royalties by District and evaluation of use of mineral of use of mineral revenues at District/ Municipal Municipal Assemblies finalized royalties by District and district and municipal level Assemblies under Municipal Assemblies (using designed, and at least one (first) preparation annual tracking mechanisms, survey undertaken linked to annual tracking mechanism under M2) M4. Enhanced policy and Mining Policy Mining Policy Document Draft Mining Regulations, MDF Mining Policy, Mining Reporting by mining companies, regulatory framework and Document prepared transmitted to Cabinet Bill, finalized for presentation Regulations (ie (a)Draft and financing of Minerals effective coordination among by MC in consultation and under to Parliament. Mining Policy Minerals (Royalties) Commission: key government agencies to with relevant implementation ready for presentation to Cabinet Regulations, 2009, (b)Draft improve the performance of stakeholders to govern Mines (Support Services) - 60% of the mining companies Package of regulations Regulations, 2009, (c)Draft submitted their quarterly reports the mining sector GoG’s strategic submitted to Attorney Mines (Compensation & on time directions in the sector General for review over the short, Resettlement) Regulations, medium, and long- 2009, (d)Draft Minerals and - MDF Bill submitted to term Mining Regulations, 2009,(e) Parliament by GOG (NB. In follow-up to 2006 Draft Mining Regulations, 2009 Passage of bill beyond scope of Mining Act, draft (f) Draft Explosives (Mining & Minerals Commission) regulations on royalty, Civil) Regulations and MDF Bill compensation, health submitted to parliament by and safety, and service Government (NB Passage of companies under these Bills into Law beyond preparation by MC scope of Minerals Commission) MSSP EIA/SEA Review of final MSSP EIA Monitor compliance with new EIA compliance: finalized and SEA reports to establish baseline on EIA procedures - Minerals - Reduction of 40 % of incorporated into compliance Commission in conjunction with documented incidences of non- international review of EPA compliance with EIA SEA experience in Ghana, with EPA Workshop held to improve coordination among key institutions having responsibility for the mining sector M5. Enhance international Adherence to Kimberly Continued adherence to Register of small scale diamond Register of small scale diamond International and regional and regional cooperation certification scheme Kimberley certification miners. 10% more than in 2008 miners. 5% more than in 2009 cooperation: 47 Program / Policy Objectives Targets 2007 Targets 2008 Target 2009 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) and level of achievement scheme - Compliance with KPCS 48 Environmental Matrix Program / Policy Objectives Targets 2007 Targets 2008 Target 2009 Targets 2010 EXPECTED OUTCOMES 2010 (End of 3 years) and level of achievement E1. Cross-sector natural resource Draft framework for the Collection of relevant Draft SDAP and Action plan SDAP finalized and Review of national polices and environmental management process of developing a data and information, and formulated and reflected in approved by Cabinet, from a sustainable and partnerships in Sustainable Development stakeholder consultations Ghana‟s long-term development perspective: environmental management Action Plan (SDAP) to prepare the SDAP development plan - Formalized SEA review of all new policies in place Draft framework for a Cabinet paper on a Inter-ministerial forum Inter-ministerial forum formal inter-ministerial preferred option, and established meetings held on SDAP, forum on environment and alternatives, for an inter- climate change and sustainable development ministerial forum and environmental management level of representation, of the oil industry. taking into account existing bodies and committees. E2. Strategic Planning for Gain insights in financial Insight in financial flows Ministry‟s and EPA‟s Institutional functions of Organization and function of Environmental Institutions situation and constraints to and systems, and reflected functions and financing Ministry and EPA approved national environment secure funding for EPA in strategic plan and mechanisms on environment by Head of Civil Service institutions: annual plan to enable reviewed; (Management Services - New functional delivery of core EPA Division relationships and resource functions. mechanisms submitted to Review of fee and levies Parliament for Ministry of system. Environment, Science & Initiate consultations for Technology and EPA Statement on ministerial Strategic plan improved to Strategic plan endorsed by developing a strategic plan functions on environment, reflect functions of EPA and the EPA board and Minister. for MLGRDE, and action plan with budget the ministry. evaluation / updating of on environment portfolio strategic plan for EPA. in MLGRDE. Updated strategic plan for EPA, including functions, HR and training plan based on existing strategic plan and GESS and linked to SDAP process E3. National environmental Task force established, Study on the costs of Cost of environmental National environment monitoring and reporting relevant sectors identified, environmental degradation degradation calculated for the monitoring and reporting: and inter-sectoral working done. forestry sector- - Environmental M&E system paper on assessment in place and operational. method, indicators and targets to reduce costs of environmental 49 degradation building on initial study PHRD grant. ToR to develop an Agreed set of key national SDAP indicators developed. Agreement on the SDAP / environmental data-base environmental indicators environmental indicators and and key indicators and plan for data monitoring system. (consistent with national collection for sectors and development. priorities) issues identified in SDAP. Ghana Environment Outlook for 2008 prepared E4. Decentralized environmental Decentralization of EIA 30% of districts have Additional 20% of districts EPA regional and district management review process; capacity built in SEA tools (above base year) have offices strengthened to Implementation and and mainstreamed into capacity built in SEA tools undertake SEA and EIAs training on new sector District Medium Term and mainstreamed into guidelines; Development Plans (DMTPs) DMTPs Simplified EIA quality EIA procedures decentralised check in region. to the ten (10) regional and three (3)district EPA offices Pilot of Online EIA Pilot of Online EA registrations in four(4) registrations in four Regions additional (4)regions and one (1) district office E5 Climate change Elements of an inter- Develop a draft national Adaptation climate change Mitigation climate change Investment in climate sectoral climate change climate change strategy, strategy submitted to Cabinet strategy approved by Cabinet change adaptation and adaptation and mitigation linked to some pilot mitigation integrated into strategy in preparation adaptation and national budget and planning mitigation measures. processes: - Long-term investment plan prepared E6 National environmental SEAs in 2 sectors key for SEAs in one additional SEA on oil sector is Based on guidelines National environmental assessment system growth: energy and sector (shelter or impact assessment system: produced, which produced in 2007-2009, transport. tourism). includes guidelines for preparation of an - Updated legislative Mechanisms agreed to Review of SEA environmentally institutional framework instrument on Strategic ensure that experiences to date Environmental Assessment, responsible management (including resource recommendations are (including social issues, including sector guidelines implemented of oil sector requirements for consultation process and for oil, mining, forestry, environmentally complementarity wih energy, transport sectors and 8 sector guidelines EIA), in and with responsible management consultation and disclosure finalised different sectors (incl. in the oil, transport, procedures for mining mining, construction, environmental assessment. health, tourism, agriculture, manufacturing - 60% of EIA applications sectors) processed within the prescribed time frame and 50 Stock-taking of EIA 50% of EIA applications 50 % of EIA applications 60% of EIA applications with the requested delivery processed within processed within the processed within the consultation and disclosure Baseline on EIA prescribed time frame prescribed time frame prescribed time frame procedures. applications processed including required including required within prescribed time consultation and disclosure consultation and disclosure frame procedures. procedures. 51 Annex 8. DPO1 Program Matrix targets for 2007 & 2008 that were not carried through (as opposed to re-worked) into the revised DPO2/3 Program Matrix Original Program / Policy Targets 2007 Targets 2008 Progress against 2008 Targets by end Objectives of DPO1 FORESTRY To strengthen institutional Draft TORs for policy and Review of Master Plan for Forest ToR for the drafting of an updated Forest capacity to implement Forestry Development and Wildlife Sector completed and Wildlife Sector Master Plan were policy Master Plan (MP) review prepared and consultants identified; their prepared and submitted for engagement was awaiting the availability discussion at Ministerial of funds. level Restructuring plan for WD Top 2 priorities of restructuring The implementation of restructuring drafted and submitted for plan implemented actions in the Wildlife Division was also approval within MLFM delayed due to the late release of NREG funds. To ensure effective law Initiate review and draft Draft Wildlife Bill submitted to Ratification of the VPA, and a Draft enforcement New Forest and Wildlife Cabinet Wildlife Bill, have been placed on "fast Laws and Regulations for track" by the new Government‟s stakeholder consultation administration. To ensure equitable socio - Stumpage collection rate of Stumpage collection rate for 2008 economic benefits for all current and outstanding Collection rate increased to 75% increased substantially to 90%. segments of Society from debts increased to 68% forest resource management To attract investment in Organise international Submission of the conclusions Completion of the targets on sector the forest and wildlife investment forum to and recommendation of investments were somewhat delayed. sector identify investment investment forum report for The Investment Forum Report will be potential in the sector Ministerial approval and reviewed, and priorities identified for identification of priority areas for further action. implementation. Investment opportunities Monitor Implementation of Completion of the targets on sector marketed and tenders for concession agreements investments were somewhat delayed. concessions launched Tender documents for two additional investment portfolios developed To ensure a predictable Approved Parliamentary Approved district forestry budgets [not reported] and sustainable financing Budget allocation from are timely transferred by FC. of the forest sector MoFEP to FC is timely released MINING To improve information Establishment of upgraded Implement recommendations for The Ghana Mining Portal availability and sector IMS under way, with improvement of IMS (http://www.ghanamining.org/ ) was promotion support of MSSP, updated. Improvements to the mining Initiate digitization of old maps, including: reports, and data sector information management system - intranet network; continued, with further digitization of old - external web site; Adapt cadastre to 2006 Minerals maps, reports, and data. Minerals - database and Mining Act Commission also pursued modernization of the mineral cadastre (rights/licensing system), through a consultant engaged to 52 Framework for review of draft regulations on adapting cadastre to IMS established the 2006 Mining and Mining Act To address social issues in Initiate the process to improve ToRs for consultancies on mine closure mining communities mine closure and post-closure policies and the use of royalties by including equitable policies prepared by government district/municipal assemblies were distribution of mining and consultations launched drafted, and subjected to validation at revenues stakeholders‟ workshops Survey to establish baseline data A questionnaire for a baseline survey on regarding social conflicts in social conflicts has been drafted. mining communities designed in consultation with stakeholders To improve support to Studies for reclamation of 5 Initiate tender process for works ToRs and tender documents have been small-scale miners (SSM) areas degraded by small contract(s) for reclamation of 1-2 prepared for works contracts for the scale mining completed degraded areas. rehabilitation of two sites degraded by SSM. Integration of mining into Interim studies, supported Conduct market survey of salt Consultants‟ reports on market economy and by MSSP, on potential for produced in Ghana assessments for salt and Kaolin clay have diversification of mineral development of clay and been prepared. Assess potential of one industrial production base pegmatites mineral (e.g., clay, pegmatities) Mapping for base metals and other minerals for 1 area Improve mining sector Initiative [sic] consultations with [not reported] revenue collection, stakeholders on cost/benefit management, and analysis of mining transparency Enhance international and Design action plan in line with 1 [not reported] regional cooperation existing international or regional [mining] agreement/ or partnership and begin implementation ENVIRONMENTAL PROTECTION To improve cross-sectoral EPA coordinates CSIF finalized; Revise and update A workshop on sustainable land environmental development of inter- land planning and soil management was held, with the management sectoral strategic conservation ordinance and its TerrAfrica program and the National investment framework amended act ; Sustainable Land Management (CSIF) for SLM. Initiate pilots on sustainable land- Committee. A draft Country SLM use plans using SEA guidelines Investment Framework (CSIF) and a (District level) road map for developing pilots on SLM using SEA guidelines has been developed, with the objective of mainstreaming and scaling up SLM in Ghana. Effective decentralized Use of SEA / NDPC Further use of NDPC SEA [not reported] environmental guidelines at District level guidelines at District level, management for medium-term Development of land-use pilots development plans using SEA guidelines (see SLM). 24 District mid-term 25 more Districts assisted by EPA [not reported] development plans in using SEA guidelines developed using SEA guidelines with assistance from EPA 53 Agreement on plan for 25% of Districts have NRE Training on SEAs given to 24 districts. setting up of Natural departments established by the Natural Resource & Environment (NRE) Resources Environmental Local Government Service, and departments have yet to be established by (NRE) Departments in capacitated by training on NRE the Local Government service. There has decentralized local management and use of SEA been some work with District Works government. guidelines. Departments. This now needs to be revisited in light of the separation of the EPA from the old MLGRDE. Strengthening functional Consultations on Continued consultations on Consultations on a national dialogue partnerships and establishment of national establishment of national dialogue forum were held, and will be built on in participation in dialogue forum, including a forum, including a broad range of 2009. environmental broad range of inter-sectoral stakeholders. management stakeholders. Definition of mechanisms for involvement of CSOs in SDAP (including private sector, academia, NGOs, media, traditional authorities), partly based on proposed review of SEAs. 54 Annex 9. Participation and Demand For Good Governance mechanisms in the NRE sectors Ghana is seen as a leader in promoting good governance within West Africa, and has relatively strong formal institutions, such as parliament, local government, the judiciary and the press. Activities under NREG have reached beond these basic building blocks for engaging with broader society around natural resources issues. Across NRE sectors:  Ghana is now EITI compliant. Much revenue information is already available for the mining sector, and EITI is being extended to the oil & gas and forestry sectors. EITI has also shown that strong multi-stakeholder collaboration between government, CSOs and private sector is possible and can lead to strong outcomes.  A lot of dialogue on NREG issues with a range of stakeholders is already happening. Most GoG agencies in the NREG sector already have some consultation mechanisms for sharing information and discussing ideas with civil society and the private sector.  KASA civil society funding mechanism. Although only a short-term (18-month) pilot, Kasa has already yielded lots of valuable lessons on the best way to support CSOs in this sector. It has helped to solidify some coalitions of CSOs in the sectors such as mining, forestry, water, etc… Innovations that have worked well in particular sectors:  Forest Fora have engaged forestry officers more pro-actively with local communities, and have worked closely with the Forest Watch Coalition on processes like the VPA.  EPA has developed the AKOBEN rating and disclosure system “to motivate companies to improve their performance� in terms of compliance with environmental laws and regulations. AKOBEN explicitly recognizes the importance of public awareness in incentivizing environmental performance.  The Commission on Human Rights and Administrative Justice (CHRAJ) has taken an active interest in conflict issues in the mining sector, carrying out an independent investigation of allegations of human rights abuse and conflict. The challenge now is to follow up on their report‟s findings more systematically, including through the legal system in some cases.  The Minerals Commission is building knowledge and capacity to better respond to social issues in the mining sector. They commissioned a baseline study of conflicts in the mining communities, and have developed guidelines for Social Responsibility of large mining companies and for use of mining revenues by District Assemblies. They have also formed two District Mining Committees as a pilot platform for increased local consultation (drawing in part on the Forest Forum model). They have also recruited a senior social specialist to lead this work. 55 Annex 10. Six main risks identified at the appraisal of DPO-1 � Political risks – the main risks are the that natural resources and environmental governance are highly political and contested; moreover, the December 2008 Ghanaian presidential and parliamentary election might impact the policy reforms and lead to an increased level of spending � Risks of a weak public finance management – the main risk associated with weak PFM are (i) low capacity of sector ministries, departments, and agencies to prepare comprehensive works plans that are costed, (ii) low budget ceilings given to line ministries to accommodate the additional financing requirement for the NREG program, (iii) delays in the release of funds � Economic risks - Changes in the global economy or disruptions in the domestic economic may lead to a slow down in growth; an increase in non-concessional borrowing could result into debt distress � Environmental risks – Unintended negative environmental effects may include attracting investment into the forest and wildlife sector, diversification of the mineral production, integration of mining into the economy, and technical focus on environment that neglects capacity to deliver on social and environmental realities at local level. Also increase revenue to the sector and boosting employment, this could induce greater rates of extraction � Social risks – the three main risks comprise (i) the blockage of reforms by elites and powerful interest groups, (ii) negatively impact on the vulnerable groups and increase gender differences due to the NREG intervention and (iii) a limited participation of citizens due to insufficient benefits accruing to local communities and an increase of social conflict, at last in the initial stage, as a result of distributional asymmetries becoming publicly visible � Risk of Misperception – the Bank‟s involvement could be misperceived as only aiming to increase revenues from extractive industries with little concern for social or environmental impact 56 Annex 11. Key findings of the NREG Mid-Term Review (August 2010) on sector management systems  A sector policy should be updated and clarified beyond the broad objectives laid out in the Letters of Development Policy. The 2009 Statement of Policies on Natural Resources and Environment, provides a good start, but was largely donor-driven, and should be more focused and specific. Medium-term strategies for each of the NREG sub-sectors are also needed to link policy objectives to specific targets that will inform annual plans. There is also need for more stability in the planning process to avoid of multiple incompletely implemented plans and strategies. Currently, a National Environment Policy is being drafted, and the FC intends to begin work on a vision for the forestry sector.  The budget management capacity of the NREG agencies was weak at the outset of NREG, lacking medium term budget frameworks, annual work plans linked to consolidated budgets, and adequate reporting systems. The Framework Memorandum gave insufficient focus to PFM within the NREG agencies. Absorption of funds during the initial years has been low, but with technical assistance from EKN, budget management improved during DPO-2 and DPO-3: (i) an annual public finance action plan for 2009 and 2010 was drafted for strengthening financial programming and financial management; (ii) NREG activities were mainstreamed into the Annual Budget and the MTEF (2010-2012); and (iii) budget comprehensiveness improved with reporting by the FC and EPA on all funding sources.  The Technical Coordinating Committee has been generally effective for sector coordination at the senior technical level, but the establishment of the ENRAC has been delayed, and involvement of civil society, especially the private sector, is not fully institutionalized.  Lack of clarity on the respective roles of the NREG agencies vs their line ministries is one of the biggest institutional weaknesses. In the case of the EPA, clarification of roles has been a target within the PAF, but delivery was delayed and the draft National Environment Policy makes no mention of MEST. General capacity constraints are also an issue, more within MC and EPA, than FC. During preparation, there was considerable discussion around TA provision, but it was decided not to develop a parallel TA operation to avoid diluting government ownership. A planned comprehensive assessment of sectoral TA needs never took place, and whilst GoG have used NREG funding on TA, including senior international experts in the case of mining revenues, there is a general perception amongst DPs and some acceptance within GoG that the quantity and quality of TA has not been ideal, and the quality of outputs has suffered as a result.  There has been limited progress on the establishment of routine sector M&E systems to date, but an initial scoping assessment has been conducted, and the need for such systems, linked to sector strategies, is accepted within each of the three NREG agencies. 57 W lt a 3° 2° 1° 0° 1° Vo hi Re t a Vo te d Kulungugu l BURKINA FA S O Mogonori Bawku 11° Kamsorio Hamale Gbal Gwallu Kayoro Paga 11° Bongo Zebilla Tumu Navrongo Pina UPPER Zuarungu Binaba BENIN Jeffisi Bolgatanga EAST TOGO Lawra Hian Sandema Tongo Datoko REGION Nakpanduri Jirapa Sabuli Naga Si si Gambaga li Gbele Prod. Fumbisi Game Res. Nadawli Walewale Gbangdaa UPPER WEST n Wenchiki Yawgu PROTECTED AREAS w REGION l pa Nasia FOREST RESERVES Fe Ku lin Cherepon Wa Mankarigu Janga RIVERS Dorimon SELECTED CITIES/TOWNS Whit 10° Karaga Gushiegu Bulenga Tanina Diari REGION CAPITALS e Vo Wechiau NATIONAL CAPITAL lt a Yepalsi Saboba REGION BOUNDARIES Nawuni Savelugu Mole INTERNATIONAL BOUNDARIES National Tijo Tuna Park Tolon Yendi Nyankpala Sambu Tamale This map was produced by the Zabzugu Sawla Sabari Map Design Unit of The World Bank. Larabanga NORTHERN REGION The boundaries, colors, denominations and any other information shown on this Chache Busunu Gbung O ti map do not imply, on the part of The D a ka World Bank Group, any judgment on the Damongo Fufulsu Nakpali legal status of any territory, or any Bole Juo endorsement or acceptance of such 9° Sorri Seripe Mankpan Wangasi-Turu boundaries. Bimbila Woribogu Mpana Nakpayili CÔTE Bl ac kV Salaga Jombo Gbulumpe D´IVOIRE ol Bui Kpandae ta Kimabui Kyabobo National Chibrungo National Park Park Makongo Teselima Nkwanta Bui Yeji Zongo-Markyeri New Longoro Kintampo Buafri Brewaniase Dambai 8° Abease 8° Nsawkaw Ohiamankyene REGION Jema Dodo BRONG-AHAFO Boabeng-Fiema Kwadwokurom Kete-Krachi Wenchi Monkey Sanctuary Atebubu Kwame Danso Asukawkaw u Baantama Ahamasu REGION Pr La New Drobo Tuobodum Techiman Nkoranza ke Kotuo Namasua Se ne Kadjebi Hiawoanwu Digya TOGO Vo National Park Jasikan Ejura lta VOL T A Akontaanim Sunyani Kute Af ra Baaglo Dormaa-Ahenkro Teekyere m Kogyae m Hohoe Gambia No.2 Bekyem Abofoo Strict osu Mampong Ob Kwadwonkromkurom Kenyasi Reserve Odonkawkrom Golokuati 7° Kwakwanya No.1 Tepa ASHANTI Bofombiri Kpandu 7° Day Ofinso Agona Game Reserve i Siekabenkuram Effiduase Goaso Mankranso Barekese Kpedze Shia Yamatwa Agogo Kumasi Ejisu Anfoeta Aduamoa Nkawie Kwahu Tafo New-Debiso Nyinahin Owabi Konongo Juaso Obo Ho Adwumadiem Ramsar Mpraeso O f in Amua Boso Bia South Ateso Manso Site Kuntanase Dominase Kpetoe Tributaries Benchema Bibiani Nkwanta Obogu Akoasi EASTERN Asesewa Abutia- Bekwai Begoro Kloe Buaka Ntronan Krokosue Juabeso Sefwi Anhwiaso REGION Abirem Sekasua Kalakpa Game rim Shi Amoya Bodi Awaaso Bodwesango REGION Senchi Reserve Wute Bi Obuasi Ajuafo Oterkpolu Sefwi Diaso New Akokoaso Kibi Odumasi Krobo Dadeeso Akatsi Bekwai Adubiase Kade Adansi Koforidua Somanya Adidome Denu Akwantonbra Jabo Aflao Akrofuom Battor Sogakofe 6° Akropong Anyako 6° Dwokwaa Edubia Oda Shai Hills WESTERN Dunkwa Asaman Akim Achiasi Asamankese Dodowa GPR Keta Enchi Asankranguaa Swedru Akplabanya Pra Adaiso Ada Anyanui Atobiase Nsawam REGION Agyempama Foso Akoroso GREATER ACCRA CENTRAL Ta n o Amasaman Ataase Prampram Insu Twifo Praso Esikuma Kwanyaku Tema Samreboe Asin Atandaso Bogoso Huni Kakum RR Swedru ACCRA Nini-Suhien Prestea Valley Tumfokuro Bortianor National Ajumaku National Bandae Park REGION Senya Bereku Park Esaaman Dunkwa Apam Winneba a Tarkwa obr Elubo Ankasa Dwokwa GPR Nsuta Heman Ank Abrem Saltpond Akra Alenda Daboasi Cape Coast Jewi Whorf Half Ayiem Elmina 5° Assini 5° Eikwe Apataim Sekondi-Takoradi GHANA Axim Prince´s Agona Junction Takoradi THIRD NATURAL RESOURCE AND Town Akwidaa ENVIRONMENTAL GOVERNANCE PROGRAM Gulf of Guinea 0 20 40 60 80 KILOMETERS IBRD 37675 MARCH 2010 3° 2° 1° 0° 1°