Document of The World Bank FOR OFFICIAL USE ONLY Report No: 72322-SS INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR32.5 MILLION (US$50.0 MILLION EQUIVALENT) TO THE REPUBLIC OF SOUTH SUDAN FOR A LOCAL GOVERNANCE AND SERVICE DELIVERY PROJECT February 26, 2013 Urban Development & Services Practice (AFTU1) Country Department AFCE1 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2013) Currency Unit = South Sudanese Pound 1 SSP = US$0.31 US$ = SDR 0.65 1 SDR = US$ 1.54 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYM AFS Annual Financial Statements BP Bank Policy BDC Boma Development Committee CA Coordinating Agency CDD Community-Driven Development CDG County Development Grant CPA Comprehensive Peace Agreement CSO Civil Society Organization CTMC County Transfer Monitoring Committee DA Designated Account DANIDA Danish International Aid Agency ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan EU European Union FBS Fixed Budget Selection FP Facilitating Partner FMA Financial Management Assessment FTI Fast Track Initiative GDP Gross Domestic Product GNI Gross National Income GRM Grievance Redress Mechanisms GRSS Government of the Republic of South Sudan ICB International Competitive Bidding IDA International Development Association IFR Interim Unaudited Financial Report ISP Implementation Support Plan LCS Least Cost Selection LGA Local Government Act LGB Local Government Board LSSAI Local Services Support Aid Instrument MDTF-SS Multi-Donor Trust Fund for South Sudan MoFEP Ministry of Finance and Economic Planning LGSD Local Governance and Service Delivery Project LGSD TF Local Governance and Service Delivery Trust Fund NCB National Competitive Bidding NGO Non-Governmental Organization NSP National Solidarity Program OP Operational Policy ORAF Operational Risk Assessment Framework PCSO Project Coordination and Support Office PDC Payam Development Committee PDG Payam Development Grant PFM Public Financial Management PFMU Project Financial Management Unit PHCC Primary Health Care Center PHCU Primary Health Care Unit PMU Project Management Unit PPA Project Preparation Advance QBS Quality Based Selection QCBS Quality and Cost Based Selection RSS Republic of South Sudan SIDA Swedish International Development Cooperation Agency SIL Specific Investment Loan SMoFEP State Ministry of Finance and Economic Planning SMoLG State Ministry of Local Government SMT Subproject Management Team SST Subproject Supervision Team SSDP South Sudan Development Plan SSP South Sudanese Pound SSS Single-Source Selection STMC State Transfer Monitoring Committee TA Technical Assistance ToR Terms of Reference UNDP United Nations Development Programme WDR World Development Report Regional Vice President: Makhtar Diop Country Director: Bella Deborah Mary Bird Sector Director: Jamal Saghir Sector Manager: Rosemary Mukami Kariuki Task Team Leader: Zara Inga Sarzin SOUTH SUDAN Local Governance and Service Delivery Project TABLE OF CONTENTS Page I.  STRATEGIC CONTEXT .................................................................................................1  A.  Country Context ............................................................................................................ 1  B.  Sectoral and Institutional Context................................................................................. 3  C.  Higher Level Objectives to which the Project Contributes .......................................... 5  II.  PROJECT DEVELOPMENT OBJECTIVES ................................................................6  A.  Project Development Objectives (PDO) ....................................................................... 7  B.  Project Beneficiaries ..................................................................................................... 7  C.  PDO Level Results Indicators ....................................................................................... 8  III.  PROJECT DESCRIPTION ..............................................................................................8  A.  Project Components .................................................................................................... 10  IV.  Project Financing .............................................................................................................14  A.  Lending Instrument ..................................................................................................... 14  B.  Lessons Learned and Reflected in the Project Design ................................................ 15  V.  IMPLEMENTATION .....................................................................................................17  A.  Institutional and Implementation Arrangements ........................................................ 17  B.  Results Monitoring and Evaluation ............................................................................ 18  C.  Sustainability............................................................................................................... 19  VI.  KEY RISKS AND MITIGATION MEASURES ..........................................................19  A.  Risk Ratings Summary Table ..................................................................................... 21  B.  Overall Risk Rating Explanation ................................................................................ 21  VII.  APPRAISAL SUMMARY ..............................................................................................21  A.  Economic and Financial Analyses .............................................................................. 21  B.  Technical ..................................................................................................................... 23  C.  Financial Management ................................................................................................ 24  D.  Procurement ................................................................................................................ 24  E.  Social (including Safeguards) ..................................................................................... 26  F.  Environment (including Safeguards) .......................................................................... 27  Annex 1: Results Framework and Monitoring .........................................................................29  Annex 2: Detailed Project Description .......................................................................................33  Annex 3: Implementation Arrangements ..................................................................................53  Annex 4: Operational Risk Assessment Framework (ORAF) .................................................89  Annex 5: Implementation Support Plan ....................................................................................95  Annex 6: Feedback and Grievance Redress Mechanisms ........................................................99  MAP IBRD 39830 . PAD DATA SHEET South Sudan Local Governance and Service Delivery Project (P127079) PROJECT APPRAISAL DOCUMENT . AFRICA AFTU1 Report No.: PAD339 . Basic Information Project ID Lending Instrument EA Category Team Leader P127079 Specific Investment B - Partial Assessment Zara Inga Sarzin Loan Project Implementation Start Date Project Implementation End Date 28-Mar-2013 30-Jun-2018 Expected Effectiveness Date Expected Closing Date 26-Jul-2013 31-Dec-2018 Joint IFC No Sector Manager Sector Director Country Director Regional Vice President Rosemary Mukami Jamal Saghir Bella Bird Makhtar Diop Kariuki . Borrower: Republic of South Sudan Responsible Agency: Ministry of Finance and Economic Planning Contact: Wani Buyu Title: Undersecretary of Economic Planning Telephone 249955430494 Email: No.: . Project Financing Data(US$M) [ ] Loan [ ] Grant Term: The credit is on standard IDA terms and has a final [X] Credit [ ] Guarantee maturity of forty (40) years including a grace period of ten (10) years For Loans/Credits/Others Total Project Cost (US$M): 98.50 Total Bank Financing 50.00 (US$M): i . Financing Source Amount(US$M) BORROWER/RECIPIENT 0.00 International Development Association (IDA) 50.00 DENMARK, Govt. of 13.50 NETHERLANDS, Govt. of THE (Except for 25.00 MOFA/Min of Dev. Coop NORWAY, Gov. of (except for Ministry of 10.00 Foreign Affairs) Total 98.50 . Expected Disbursements (in USD Million) Fiscal 2014 2015 2016 2017 2018 2019 0000 0000 0000 Year Annual 4.00 7.50 14.00 19.00 5.00 0.50 0.00 0.00 0.00 Cumulati 4.00 11.50 25.50 44.50 49.50 50.00 0.00 0.00 0.00 ve . Project Development Objective(s) To improve local governance and service delivery in participating counties in South Sudan. . Components Component Name Cost (USD Millions) Component 1: Block Grants to Counties and Communities 14.80 Component 2: Community Engagement 12.60 Component 3: Institutional Strengthening 10.90 Component 4: Project Management 11.70 . Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects? . Does the project require any waivers of Bank policies? Yes [ ] No [ X ] Have these been approved by Bank management? Yes [ ] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ] Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] . Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X ii Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X . Legal Covenants Name Recurrent Due Date Frequency Co-Financing 21-Feb-2014 Description of Covenant The Co-Financing Deadline for the effectiveness of the Co-Financing Agreement contemplated in the Preamble to the Financing Agreement shall be February 21, 2014. Name Recurrent Due Date Frequency Environmental and Social Safeguards X Quarterly Description of Covenant The Recipient shall ensure that no activity under the Project or Subprojects involves the Involuntary Resettlement of the local population. Name Recurrent Due Date Frequency Environmental and Social Safeguards X Quarterly Description of Covenant The Recipient shall ensure that no activity under the Project or Subprojects affects Physical Cultural Resources. Name Recurrent Due Date Frequency Environmental and Social Safeguards X Quarterly Description of Covenant The Recipient shall ensure that any construction of wells, new bore holes or other activity potentially involving ground water does not affect adversely its quantity or quality and is confined to existing water delivery schemes. Name Recurrent Due Date Frequency Operations Manual X Quarterly Description of Covenant The Recipient shall make PDGs through MoFEP and LGB to Counties under Participation Agreements, each to be entered into by representatives of the participating County, the relevant State and the Recipient, under terms and conditions which shall have been approved by the Association and reflected in a template Participation Agreement to be included in the Operations Manual. iii . Conditions Name Type Operations Manual Effectiveness Description of Condition The Recipient shall have prepared and adopted the Operations Manual, and the Local Government Public Financial Management Manual (“Local Government PFM Manual�) in accordance with the provisions of Section I.B.1 of Schedule 2 to the Financing Agreement. Name Type Annual Work Plan Effectiveness Description of Condition The Recipient shall have prepared the Annual Work Plan for the first year of Project implementation, in form and substance acceptable to the Association. Name Type Project Management Unit Effectiveness Description of Condition The Recipient shall have established the Project Management Unit with a mandate, staffing and resources acceptable to the Association; and recruited the Project Coordinator as well as financial management, procurement and safeguards specialists to be selected in accordance with the provisions of Section III of Schedule 2 to the Financing Agreement. Name Type Environmental and Social Safeguards Effectiveness Description of Condition The Recipient shall have prepared and adopted the ESMF, in accordance with the provisions of Section I.E.1 of Schedule 2 to the Financing Agreement. Team Composition Bank Staff Name Title Specialization Unit Hassine Hedda Finance Officer Finance Officer CTRLA Marie Claire Li Tin Yue Sr Program Assistant Sr Program Assistant AFTU1 Louise F. Scura Sector Leader Sector Leader AFTSN Louis Helling Consultant Consultant AFTCS Varalakshmi Vemuru Senior Social Senior Social AFTCS Development Specialist Development Specialist Adenike Sherifat Sr Financial Sr Financial AFTME Oyeyiola Management Specialist Management Specialist David T. J. Savage Consultant Consultant AFTU1 Tesfaye Bekalu Wondem Water & Sanitation Water and Sanitation AFTU1 Specialist Specialist iv Siobhan McInerney- Senior Counsel Senior Counsel LEGAM Lankford Tanja Chopra Consultant Consultant LEGJR Zara Inga Sarzin Senior Urban Team Lead AFTU1 Development Specialist Simon B. Chenjerani Senior Procurement Senior Procurement AFTPE Chirwa Specialist Specialist Zishan Faiza Karim Rural Development Rural Development SASDL Specialist Specialist Diego Garrido Martin Monitoring & Evaluation Consultant AFTDE Specialist Suzan Poni Piwang Team Assistant Team Assistant AFMJB Dorothy Morrow Akikoli Team Assistant Team Assistant AFMJB Anjani Kumar Senior Procurement Senior Procurement AFTPE Specialist Specialist Bedilu Amare Reta Environmental Specialist Environmental Specialist AFTN3 Droma Bank Dominic Consultant Consultant AFTU1 Kat Non Bank Staff Name Title Office Phone City . Locations Country First Location Planned Actual Comments Administrative Division South Sudan Upper Nile Upper Nile State X South Sudan Unity State Unity State X South Sudan Western Equatoria Western Equatoria X State South Sudan Western Bahr el Western Bahr el X Ghazal Ghazal State South Sudan Jonglei State Jonglei State X South Sudan Northern Bahr el Northern Bahr el X Ghazal State Ghazal State South Sudan Eastern Equatoria Eastern Equatoria X State South Sudan Warrap Warrap State X South Sudan Central Equatoria Central Equatoria X State v South Sudan Lakes Lakes State X . Institutional Data Sector Board Urban Development . Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits % Co-benefits % Public Administration, Law, and Sub-national government 60 Justice administration Transportation Rural and Inter-Urban 10 Roads and Highways Health and other social services Health 10 Education General education sector 10 Water, sanitation and flood protection General water, sanitation 10 and flood protection sector Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. . Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Social dev/gender/inclusion Participation and civic engagement 25 Urban development Municipal governance and institution 25 building Social dev/gender/inclusion Conflict prevention and post-conflict 25 reconstruction Public sector governance Decentralization 25 Total 100 vi REPUBLIC OF SOUTH SUDAN LOCAL GOVERNANCE AND SERVICE DELIVERY PROJECT I. STRATEGIC CONTEXT A. Country Context 1. The newly independent Republic of South Sudan faces profound development challenges. Emerging from more than two decades of civil war, the Republic of South Sudan (RSS) now embarks on the challenging task of nation building while battling entrenched poverty and some of the worst socio-economic conditions in the world: more than half the population lives on less than US$1 a day; maternal mortality is the highest in the world (2,054 deaths for every 100,000 live births); the infant mortality rate is 102 (per 1,000 live births); 33 percent of under-fives are underweight; only 27 percent of adults above age 15 are literate (50 percent of men and 16 percent of women); less than half of primary school age children enroll in primary school (51 percent of boys and 37 percent of girls) and only 10 percent complete it (compared with primary school completion rates of 62 percent in Sub-Saharan Africa). Despite this widespread poverty, due to natural resource exports the country’s per capita Gross Domestic Product (GDP) and Gross National Income (GNI) figures have been relatively high for the region, estimated at US$1,859 and US$1,513 respectively in 2011 (World Bank, 2013). 2. Coverage of basic infrastructure in South Sudan is grossly inadequate, and extending service coverage is complicated by a highly dispersed, low density population. Decades of conflict and marginalization have prevented any significant investment in infrastructure in South Sudan. The transport system is characterized by low accessibility, poor standards and high costs, and many parts of the country do not have all weather road access. There is acute need for health clinics and classrooms—only 44 percent of households live within five kilometers of a health care facility and there is an average of 134 primary school students per classroom. Access to piped water and stand posts is the lowest in Sub-Saharan Africa, and 38 percent of the population has to walk for more than 30 minutes one way to collect drinking water. Three quarters of the population does not have access to any type of sanitation facility, twice the average level in Africa’s low-income countries. With a population of 8.3 million people in 2008 (Central Bureau of Statistics, 2009) spread over a relatively large territory, South Sudan has a low population density of about 13 people per square kilometer, compared to 36 people per square kilometer for Sub-Saharan Africa, and as a consequence the cost and complexity of expanding coverage of infrastructure and services in South Sudan is very high. 3. South Sudan is highly dependent on oil revenue, yet most households rely on agriculture and livestock for their livelihoods. In 2010 oil revenue accounted for almost 98 percent of public revenues (NBS, 2010), the bulk of the country’s foreign currency earnings and 71 percent of GDP in 2010 (NBS, 2011). Based on estimates of the country’s oil reserves, production is expected to steadily decline until 2035, when it will be negligible. The country’s extreme dependence on oil revenue increases its vulnerability to oil price shocks and disruptions in oil production. Agriculture and pastoralism account for about 15 percent of GDP, on which 1 almost 80 percent of households depend for their main source of livelihood (NBS, 2010). Moreover, food insecurity persists and South Sudan is a net importer of food despite being endowed with abundant fertile arable land. 4. A shutdown of oil production in January 2012 increased pressure on the country’s oil-reliant economy and precipitated the formulation of an austerity budget for FY2012/13 that remains largely unfunded. The failure of the governments of Sudan and South Sudan to reach agreement on the transit fees for South Sudanese oil passing through Sudan led to a shutdown of production in January 2012. As a consequence, inflation soared from 47.8 percent before the shutdown to 79.5 percent in May 2012, subsequently dropping to 60.9 percent in July 2012 (NBS, 2012). In August 2012 the countries reached initial agreement on oil transit fees; however it is anticipated that oil production will not resume for several months and oil revenue will only begin to flow in early 2013. In March 2012, the National Assembly approved an austerity budget for the remainder of FY2011/12 with an envelope of SSP650 million per month, representing about a 25 percent cut in expenditure, and including a 50 percent reduction in operating and capital budgets for most government agencies, but no salary reductions. In September 2012, the National Assembly approved an austerity budget for FY2012/13 with a monthly envelope of SSP550 million, containing further cuts but with limited reductions in salaries and allowances for public sector workers; 54 percent of budget expenditure is expected to be financed through foreign loans and oil and mining concessions (Ministry of Finance and Economic Planning (MoFEP), 2012). Several outstanding issues could hamper a final agreement, in particular the demarcation of borders and maintaining security along them. Since South Sudan gained independence, cross-border conflict has persisted in the disputed areas of Abyei, South Kordofan and the Blue Nile, rebel groups have conducted destabilizing attacks, and state armies on both sides have engaged in fighting. 5. South Sudan faces persistent internal conflicts and complex socio-political dynamics which pose challenges for stabilization and development. Locally originating conflicts arising from competition over and uneven allocation of resources, often play into a history of marginalization and perceived dominance by core elites, which are often seen in ethnic terms. These tensions manifest in border disputes, violent cattle rustling, conflicts among pastoralist groups, and between pastoralists and agriculturists, and have been transformed by the effects of war and the diffusion of modern arms into communities.1 Other conflict stresses that underlie manifestations of disputes at the local level include the changing structures of authority with unclear roles and responsibilities, rapidly changing relationships and realignments along a range of vectors including ethnicity, wealth, age, education, and a widespread perception of patronage and impunity fuelling distrust in government. The quality of local governance in South Sudan is highly heterogonous as a result of diverse historical, cultural and ethnic characteristics, additionally complicated by decades of conflict and social dislocation. Moreover, the nature of ethnic and clan based social organization and the role of traditional authorities varies widely 1 As a consequence of local conflicts around 200,000 people have been displaced annually in 2008, 2009, and 2010. As of the end of August 2011, it was estimated that 3,070 people had been killed in inter-communal and militia- related violence, and 304,400 had been displaced (UNHCR). 2 across South Sudan’s regions. This diversity mitigates against universal institutional models for engaging communities with local authorities to improve local governance. 6. The continued large-scale movement of returnees from countries of asylum, together with the incomplete demobilization and reintegration of various military and paramilitary units, present further challenges. In particular, the reestablishment of livelihoods is a slow and fragile process, and a high proportion of returnees suffer significant food insecurity (WFP, 2010). The 2010 multi-donor evaluation of support to conflict prevention and peace-building activities in South Sudan found that donor supported activities have not contributed significantly to a durable reintegration of returnees due to “a piecemeal approach to assistance with different agencies emphasizing different interventions (e.g. service provision versus protection) and few developing a longer-term and more holistic approach towards reinforcing the absorption capacity of communities� (Netherlands Ministry of Foreign Affairs, 2010). 7. The Government of the Republic of South Sudan (GRSS) is under pressure to meet citizen expectations of an ‘independence dividend’ by delivering tangible results that can improve welfare, build citizen confidence and strengthen state legitimacy—and this must be achieved in the context of weak public sector capacity and governance. Results need to be achieved in areas that reflect citizen priorities, including enhanced security, expanded access to services, improved governance and improved market and livelihood opportunities. Moreover, the success of nation-building measures will depend on delivering results that extend to all citizens, regardless of their location, political affiliations or ethnic identities and which include minority groups, returnees, youth, and women. During the Comprehensive Peace Agreement (CPA) period, efforts were focused largely on humanitarian approaches to expanding services via Non- Governmental Organizations (NGOs), as weak government capacity and financial management systems inhibited donors from providing direct support to government for basic services. The country’s core administrative structures and mechanisms for resource allocation and management are extremely weak and fragile, especially at sub-national levels. These capacity constraints combined with the uncertainty around future public revenue are a significant impediment to providing services quickly and at scale through government systems. However, experience shows that post-conflict countries with weak institutions are the most vulnerable to resumed violence and instability, and are least able to respond to internal and external conflict stresses (World Bank, 2011). Therefore efforts to deliver tangible improvements in services need to be consistent with simultaneous interventions to improve governance and build institutions capable of responding to citizen needs (see Section IV.B). B. Sectoral and Institutional Context 8. Forty years of conflict in South Sudan have weakened the historical remnants of the local government system and undermined reliable local service delivery mechanisms. Nevertheless South Sudan has already made significant progress in defining the legal and policy framework for decentralization and establishing basic local government structures and planning systems. The Transitional Constitution (2011) sets out the basic principles of decentralization and the Local Government Act (LGA, 2009) provides for the devolution of functions to the ten states, 79 county governments and their sub-structures at payam (sub-county) and boma (village cluster) levels. These measures give counties wide ranging, though not fully defined, 3 responsibilities for local planning and primary service delivery. County capacity is highly variable and generally weak. 9. County Councils, which are defined by the LGA as statutory local governments, remain subordinated and highly dependent in their relation to state governments. Since there have been no local elections, and indeed no legislation exists to proceed with these, County Commissioners who exercise political authority are appointed by state governors and senior county administrative officials are assigned to counties by State Ministries of Local Government (SMoLGs) and State Ministries of Finance (SMoFs). There are no elected Legislative Councils to which county authorities are held accountable, although some counties have appointed Legislative Councils. Fiscal resources and budgetary discretion are also concentrated at the state level; in many cases even County Development Grants (CDGs) allocated in the national budget (US$23.6 million in the FY2012/13 budget) are managed by states on behalf of county authorities. While the LGA gives revenue raising powers to local governments, there are no supporting regulations on local government revenue instruments, and at county level there is weak capacity for revenue mobilization and administration. Parallel financing instruments exist, weakening the planning and coordination of local public expenditures by counties. These include the Constituency Development Fund (US$44.9 million in 2011) that is controlled by Members of Parliament (MPs), and external assistance from donors and NGOs. To a significant degree, county governments function as deconcentrated bodies under state authority. 10. The overall policy framework for local governance continues to evolve as GRSS pursues policy and fiscal measures to underscore its commitment to strengthening local service delivery. While these policies will further define and clarify the policy framework for local governance and service delivery, they will not materially change the core responsibilities of county governments to engage communities, undertake a local planning process and deliver basic public infrastructure and services, and the consequent necessity to improve institutional and governance capacities in these areas. Four key initiatives, which are described in the government’s Letter of Development Policy, are relevant in this respect: (a) A detailed decentralization policy, being prepared under the leadership of the Office of the President, that will further clarify the detailed functional and fiscal assignments of each level of government and seek to resolve ambiguities around the role of the states with respect to local government. (b) Service Delivery Frameworks for key local services have been prepared, which clarify the institutional and financing frameworks for local services, focusing on health, education and water sectors, and incorporating a transition plan to address weaknesses in systems, capacities, incentives and accountability that impede service delivery. (c) A Local Services Support Aid Instrument (LSSAI) is being developed to provide a mechanism for development partners to support the delivery of local services and community-driven development (CDD) through the intergovernmental fiscal transfer system. The intention is to address “a long-lasting problem by moving away from the costly and unsustainable systems used today, in which aid is managed by donors directly or transferred to NGOs which manage funds and deliver services; towards putting the mandated government structures and systems at the center of service 4 delivery, gradually building stronger [government] institutions and service delivery systems� (MoFEP, 2011). In addition to windows for providing recurrent budget resources for provision of primary health and education services, LSSAI includes a window for community-driven infrastructure that would complement the existing CDG. The proposed project will support this third window of LSSAI. (d) Existing resource allocations to counties are being protected in the FY2012/13 austerity budget. Government has demonstrated its commitment to the preservation of the county transfer program by limiting cuts to 30 percent, compared to 39 percent for the general block grant to states and 75 percent across other capital programs. 11. There is a lack of sufficient financing for local public infrastructure and a lack of conducive incentives for state and county governments to use available resources to improve services. County governments budgeted to spend approximately US$125.5 million in 2011, which amounted to nine percent of self-financed direct government expenditure, but only around US$16.78 per capita. Nearly half of this budgeted expenditure was for salaries (49.9 percent), with the remainder for capital items (38.4 percent) and very limited allocations towards operations (9.4 percent). In aggregate, approximately 20 percent of this was financed by own revenues available to counties, particularly a local customs duty on goods entering their jurisdictions. No counties reported any capital expenditure in excess of budgeted receipts from the CDG, suggesting that own revenues are largely financing operating and salary costs and that existing scope for discretionary expenditures is extremely restricted. These observations suggest that despite the significant policy uncertainties facing counties a significant financing gap exists. Incentives and capacities of counties need to be strengthened to ensure that planning and governance processes promote responsiveness to community priorities. C. Higher Level Objectives to which the Project Contributes 12. The proposed project contributes to the priorities articulated in the GRSS South Sudan Development Plan (SSDP) and Aid Strategy. The government’s medium term strategic development plan, the SSDP, highlights the importance of nation building underpinned by “the development of inclusive government structures and political processes, service delivery, and […] targeting the benefits of economic development as broadly as possible to tackle the existing social and geographical inequalities�. The SSDP also underlines the fundamental importance of good governance for nation building and effective service delivery, noting that “governance lies at the heart of both nation-building and the implementation of policies and programmes in all pillars�. The SSDP sets out a framework for the management of development assistance and the priorities for aid in the context of the decentralized state system provided for in the Transitional Constitution, whereby “services to the public are delivered not by GoSS, but by state, county and ‘payam’ governments, who are held responsible for the availability and quality of these services by the people�. In addition, the Aid Strategy emphasizes the need to improve aid effectiveness by funding local service delivery through government systems, and supporting counties with primary responsibility for managing the delivery of local services. 13. Government has further articulated three imperatives for a national local governance and service delivery program that would support its broader nation-building and peace- building goals, namely: (a) delivering improvements in local services that meet community 5 needs and reduce poverty; (b) developing effective government institutions, based on more sustainable models of service delivery and partnerships, by transitioning from what has been a largely humanitarian approach to service delivery during the CPA period; and (c) addressing drivers and manifestations of local level conflicts. The proposed project will pursue these imperatives by focusing on strengthening participation and expanding local service delivery in the context of a sustained focus on strengthening the systems and structures of local government, emphasizing the key role of local government in community-level planning and service delivery. To build the confidence of citizens in the responsiveness and accountability of government, the project will use a CDD approach whereby communities are actively engaged in the planning, prioritization, execution and oversight of local development activities. 14. GRSS outlined three overarching principles for the detailed design of the project that also support the New Deal for Engagement in Fragile States to be piloted in seven countries, including South Sudan. Specifically, that the Local Governance and Service Delivery Project (LGSD) should: (a) “be nation-wide, to treat all areas of South Sudan fairly; (b) be executed through state and county governments, so that it (i) creates long term sustainable results by building the capacity of local governments to manage service delivery, and (ii) builds the credibility and legitimacy of the local governments as they will be seen to be delivering services to our people; and (c) have a CDD approach as a central feature of the service delivery component to strengthen community engagement and confidence in local governments.� Government has emphasized the coherence of these principles with those of the New Deal for Engagement in Fragile States endorsed by the g7+ group of 19 fragile and conflict-affected countries, development partners, and international organizations. In particular the commitment to focus on: supporting inclusive country-led and country-owned transitions out of fragility and to build mutual trust by accepting risks of engagement during transition; using and strengthening country systems; and building capacities of the state. 15. LGSD is envisaged as a flagship in the Bank’s two year Interim Strategy Note (ISN), which is informed by the Bank’s 2011 strategy in Africa, Africa’s Future and the World Bank’s Support to It, the 2011 World Development Report (WDR): Conflict, Security, and Development, the SSDP and the New Deal. Recognizing that the most successful transitions out of violence and instability are rooted in the creation of legitimate institutions, the ISN notes that the central challenge for South Sudan will be to lay the foundations for effective and accountable institutions that will use the country’s own resources to respond to its citizens’ needs. The ISN responds by prioritizing interventions that have a foundational and/or transformational impact, are guided by government priorities, aligned with the activities and focus of development partners, and responsive to emerging needs. LGSD is therefore positioned as a ‘flagship’ in the forthcoming ISN period and beyond given its focus on building local institutions to establish the authority and capability of the state to deliver services, represent local constituencies and resolve local conflicts. The project will contribute to Cluster 1 of the ISN that focuses on building capable institutions for effective and accountable governance and local service delivery. II. PROJECT DEVELOPMENT OBJECTIVES 16. LGSD aims to support improvements in local governance and service delivery by strengthening community engagement and local government capacities in the planning, implementation and oversight of local development activities. The project responds to the 6 unique imperatives in South Sudan—the need to deliver early benefits to communities in the context of weak government capacity while at the same time strengthening government institutions and legitimacy—by combining features of traditional local government and CDD operations. The project design provides substantial flexibility to deal with the potential risks inherent in the operating environment in South Sudan. 17. The project will be the first phase in an anticipated longer term engagement by the Bank and development partners in support of the local governance system in South Sudan. The WDR highlights the significant time required to transform institutions even under the most favorable conditions: “Creating the legitimate institutions that can prevent repeated violence is, in plain language, slow. It takes a generation. Even the fastest-transforming countries have taken between 15 and 30 years to raise their institutional performance from that of a fragile state today—Haiti, say—to that of a functioning institutionalized state, such as Ghana� (World Bank, 2011). In this context, the project is best understood as the initial phase of a longer term (10-15 year plus) engagement by the Bank and development partners on local governance and service delivery in South Sudan, aiming to establish responsive, effective, sustainably resourced, and accountable local institutions across the entire country. 18. In addition to its immediate results, the project aims to catalyze the establishment of a national system for decentralized governance and service delivery which would be supported by subsequent government and donor financing. The project will concentrate its efforts on building sustainable capacities for the planning, management and oversight of local development activities, providing grant financing in an initial 40 counties. Once LGSD has been established and consolidated, subsequent IDA-financed projects would aim to extend LGSD’s core community-driven investment planning and management systems across all 79 counties, broaden capacity building interventions to other key local government competencies as defined in the LGA such as recurrent budget management and local revenue enhancement, as well as continue the development of national systems for local governance institutional strengthening. The success of LGSD will serve as a foundation for a more comprehensive approach to supporting continuing decentralization and intergovernmental fiscal reforms through future, broader IDA support to decentralized governance and local development in South Sudan. A. Project Development Objectives (PDO) 19. The project development objective is to improve local governance and service delivery in participating counties in South Sudan. B. Project Beneficiaries 20. Project beneficiaries include communities in targeted counties that will benefit from: (a) improvements in local governance and accountability; (b) investments in local infrastructure financed under the project and consequently the improvement of local services; and (c) increased opportunities to provide labor and services for construction. Specific efforts will be made to ensure the inclusiveness of these benefits to women, youth and frequently marginalized groups such as ethnic minorities, displaced people and returnees. The project’s institutional beneficiaries include county governments (and their sub-units at payam level), SMoLGs and SMoFs, and at the national level, MoFEP and the Local Government Board (LGB). 7 C. PDO Level Results Indicators 21. Key results will include: (a) more inclusive and participatory local planning, implementation and accountability processes that also address local drivers of conflict; (b) improved county government functionality and capabilities through ‘learning by doing’; (c) a more predictable and transparent system of transfers to county governments for investment subprojects; and (d) expanded access to services in counties covered by the project. 22. At the PDO level, results would be measured by the following indicators: (a) Intended beneficiaries that are aware of project information and project supported investments (percentage); (b) Participating payams with functioning Payam Development Committees (percentage); (c) Subprojects or investments for which arrangements for community engagement in post-project sustainability and/or operations and maintenance are established (percentage); (d) Counties remaining eligible in subsequent year for the Payam Development Grant (percentage); and (e) Financed subprojects functioning and delivering services to communities one year after completion (percentage). III. PROJECT DESCRIPTION 23. LGSD will support a simple process for the planning, implementation and oversight of small- scale public infrastructure subprojects corresponding to community priorities. Key elements of this ‘Local Development Investment Cycle’ are set out in Table 1 below. Table 1: Local Development Investment Cycle Planning  A campaign to disseminate information about the program.  A simple social and conflict mapping in participating payams.  Establishment (or validation) of representative and inclusive Boma Development Committees (BDCs) and Payam Development Committees (PDCs).  Orientation of PDC members and Payam Administrators to roles and responsibilities for the planning, implementation and oversight of community- driven local development activities.  A facilitated and inclusive local planning process in each participating payam involving citizens (through their BDCs and PDCs) and local government representatives to define local development priorities (Payam Action Plan), and to identify eligible investment subprojects.  A simple technical appraisal of subprojects including environmental and social safeguards screening and the preparation of subproject specifications and budgets.  Preparation of County Development Plans and County Annual Budgets which incorporate Payam Action Plans. Implementation  Disbursement of the Payam Development Grant (PDG) to counties in two equal releases.  Procurement of contractors, or the delegation of non-procurement activities to communities, for the implementation of subprojects. 8  Supervision of subproject implementation by county authorities and communities.  Handover of subprojects to communities. Oversight  Reporting by counties on physical and financial progress and disclosure of this information to communities and Civil Society Organizations (CSOs).  Annual Project Financial Audit and County Performance Audit and disclosure of audit results.  Independent feedback and grievance redress system. 24. LGSD will support this process through four inter-related components: (a) Component 1 (Block Grants to Counties for Payam Development) will finance the Payam Development Grant (PDG), which is intended to: (a) incentivize community engagement in the planning and oversight of local development activities; (b) support county capacity building through ‘learning by doing’ by providing resources to undertake the implementation of subprojects identified by communities; and (c) support the expansion of community access to service facilities. The detailed design of the PDG including its eligibility requirements, allocation formula, investment menu, funds flow modalities and fiduciary controls are described below. (b) Component 2 (Community Engagement) will support the engagement of citizens in the planning, implementation and oversight of local development activities at boma, payam and county levels. The component will support GRSS to contract Facilitating Partners (FPs) to carry out information dissemination activities, undertake the facilitation of the planning process at boma and payam levels in an inclusive and conflict sensitive way, support communities to effectively participate in county planning processes, and support community involvement in the management and oversight of subproject implementation. These activities are described in detail below. (c) Component 3 (Institutional Strengthening) supports capacity building for local governments to: assume their responsibilities in the planning, implementation and oversight of local development activities including planning, budgeting, procurement, technical (engineering), environmental and social safeguards management, financial management, monitoring and evaluation functions; and to comply with the PDG rules and reporting requirements. The full package of capacity building activities, focusing on on-the-job coaching and mentoring from mobile technical support teams, is detailed below. (d) Component 4 (Project Management) provides support to MoFEP, LGB and SMoLGs to manage and report on project implementation, and to effectively support and monitor the performance and outputs of the PDG and associated technical assistance (TA) at community and county levels. The full scope of activities to be financed is detailed below. 25. Coverage and phasing. LGSD will gradually be extended to cover 40 of South Sudan’s 79 county governments with all components during the five years of its initial phase as indicated in Table 2 below. These counties, selected to balance minimum conditions for project implementation with concerns for geographical and social equity, will be distributed across a 9 gradually increasing number of states; beginning with four during the first year and covering all ten states by year three. Beyond the targeted focus of community engagement facilitation and the project-financed PDG, subject to resource availability, staff from counties not yet receiving the PDG may participate in basic institutional strengthening activities relevant to the planning and management of the government-funded CDG. In order to accelerate PDG disbursement once IDA and bilateral funds become available and ensure visible project impacts during the first year of implementation, as well as field-test and refine the community engagement methodology, a SIDA-financed Fast Track Initiative (FTI) has been established to begin the community engagement and planning process in eight counties in four states. Additional counties will be selected annually in each participating state based on criteria including: degree of coverage in their respective state (i.e. population), accessibility and security status, similar ongoing assistance from other donor-financed programs, and basic administrative capacity. Existing and emerging urban councils will be excluded from receiving the PDG. Additionally, any new counties that are created through re-demarcation of county boundaries during project implementation will not participate in the project. Each year a list of eligible counties will be defined by national government, prioritizing counties with a basic minimum level of organizational capacity necessary for the transfer of funds and the provision of capacity assistance. On this basis, state governments will select counties each year for participation from this list based on criteria outlined in the Operations Manual. Table 2: Intended Coverage and Phasing Financial year 2013/14 2014/15 2015/16 2016/17 Total States participating in PDG disbursement 4 4 7 10 10 Counties benefitting from PDG disbursement 8 12 30 40 40 A. Project Components 26. Component 1: Block grants to counties for payam development (US$14.8 million IDA and US$15.2 million from the LGSD TF). The objective of this component is to incentivize citizen engagement and county capacity development by providing grants through the intergovernmental fiscal transfer system to finance community-driven basic infrastructure investments. The project will support a new Payam Development Grant (PDG), which will complement the existing CDG (funded by GRSS and focusing on county government prioritized infrastructure investment). The PDG will provide dedicated resources within county budgets that respond to payam level priorities for small infrastructure investments. Counties will be the formal budgeting, procurement and accounting authority for the PDG. County eligibility for the PDG will require the opening of a dedicated bank account for the receipt of the PDG, deployment of key staff to assume project activities, and signature of a Participation Agreement. In subsequent years counties will also have to demonstrate adequate utilization of the PDG, satisfy regular reporting requirements and achieve a ‘clean’ audit report for the prior budget year. Allocations to participating counties will be made on an annual basis through a population weighted formula from a national resource envelope. By establishing clear criteria for eligibility of both counties (based on administrative rigor and engagement with communities) and subprojects (based on their responsiveness to community demand), the PDG will also contribute to institutionalizing precedents for sound and responsive county management of the CDG and other resources. The PDG will be transferred directly in two releases from a special Designated 10 Account (DA) at national level to dedicated bank accounts at county level, subject to compliance with prior reporting requirements and evidence of adequate expenditure performance. Payams within each participating county will benefit from the grant in alternate years, on a two year cycle. Existing and emerging urban councils will be excluded from receiving the grant. 27. PDG subprojects will be selected and overseen by PDCs based on an inclusive participatory planning process that will be supported under Component 2. Subprojects will be drawn from an indicative investment menu to be updated annually based on community demand and reflected in Payam Action Plans, County Development Plans and County Budgets. The PDG menu includes mainly public goods such as social and economic infrastructure; it may also include ‘club goods’ benefiting local associations where justified.2 In order to ensure recurrent budget coverage, improvements to existing schools and health facilities may be funded with the PDG, but unstaffed new facilities will not be eligible. Facilities with essential staff that are currently being run from temporary or substandard structures will be eligible. County governments will be permitted to reserve a maximum of US$5,000 from their annual PDG allocation to cover their own administrative and logistical expenses related to grant planning, management and monitoring. Counties will be responsible for implementing and reporting on PDG financed subprojects, and will be supported to do so under Component 3. Counties may employ one of two modalities for subproject execution: conventional public sector investment management; or community execution. All subprojects will be managed in compliance with IDA safeguard and procurement policies. Compliance with project rules and procedures will be assessed annually, through a simple County Performance Audit supported under Component 4, which will determine eligibility for the PDG in subsequent years. 28. Component 2: Community engagement (US$12.6 million IDA and US$12.8 from the LGSD TF). The component aims to facilitate and strengthen the engagement of communities in the planning, implementation and oversight of local development activities, with a particular focus on vulnerable social groups (including women, youth, disabled, displaced, returnees, and minority ethnic groups) and their access to social and economic infrastructure. Activities supported under this component will include: (a) a carefully designed communication campaign to disseminate the key features of the project and the processes to ensure citizen voice and oversight as well as government accountability; (b) a social and conflict analysis to map the social, ethnic and demographic composition of bomas and payams, leadership structures and inter as well as intra-community tensions; (c) a facilitated inclusive process to establish or validate representative BDCs and PDCs consistent with the government’s Participatory Planning and Budgeting Guide for Local Governments in Southern Sudan3; (d) a facilitated planning process involving BDCs, PDCs and government representatives to identify priority infrastructure investments for financing under the annual grant envelope, and to determine the selection and phasing of subprojects for subsequent years; (e) the participation of communities in the management and oversight of local public infrastructure investments specifically but not 2 Eligibility criteria for club goods (i.e. semi-public collective assets) will be the number of beneficiary households (at least 15-20), nature and equity of resulting benefits, contribution of the investment to enhancing returns from ongoing social or economic activities, and a clear consensus and prioritization during the Boma and Payam planning process. 3 Membership guidelines that require representatives of women, youth and vulnerable groups (disabled, displaced, returnees as applicable) in addition to the traditional chiefs, will be followed. 11 limited to Subproject Supervision Teams for county executed subprojects and Subproject Management Teams for community executed subprojects, to ensure that they are implemented in accordance with agreed plans, that infrastructure and service delivery meet established standards, and that access to benefits corresponds to agreed development plans; and (f) a feedback and grievance mechanism established to provide multiple channels and modalities accessible to community members especially those from vulnerable groups, and to ensure the integrity and responsiveness of decision-making and resource management by PDCs, FPs, and county and project staff. 29. Through this facilitated local planning and prioritization process, communities will take into consideration: available resources and service deficits at the boma and payam levels; the particular needs of women, youth, displaced and vulnerable groups; the drivers and manifestations of local conflict; and the potential for subprojects to promote greater equity or mitigate potential conflict. The payam planning process and resulting Payam Action Plan will be integrated into the County Development Plan, which in turn would provide the framework for activities by state government, NGOs and other donor agencies operating in a particular county so that their activities support the implementation of community priorities. 30. LGSD will contract a Coordinating Agency (CA) at national level that will be responsible for ensuring harmonization of the community engagement approach across states, oversight of the implementation process, quality assurance, and troubleshooting. NGOs and similar organizations will be contracted as FPs in each state to implement community engagement activities. FPs will be selected based on their prior field operations, capacity to operate at scale and in partnership, and deep knowledge of local social and institutional dynamics in the state where they will support project implementation. Also important will be their ability to identify and build capacity of local resource persons, partner with local NGOs and build grassroots capacity to take over facilitation functions over time. 31. In the event of restrictions in mobility owing to local level conflict or a potential public sector fiscal crisis, which might severely constrain the ability of counties to competently and accountably manage the local development investment cycle, the project could be restructured to enable FPs to take on the responsibilities normally allocated to counties by assisting in the management of PDG resources and by providing additional assistance to communities for subproject management and execution. 32. Component 3: Institutional Strengthening (US$10.9 million IDA, US$11.1 million from the LGSD TF). The objective of this component is to increase the capacity of county governments to fulfill the roles and functions required to effectively implement the local development investment cycle. This component operates in conjunction with the provision of PDG resources in Component 1 and community engagement activities in Component 2. Institutional strengthening of county governments, and of state governments in their roles to support and supervise them, will contribute to improving local governance. Training will prioritize PDG recipient counties, although, within resource constraints, staff from other counties may be eligible to participate. Priority areas for institutional strengthening include those capacities supporting a responsive, effective and transparent local development investment cycle, focusing on the following dimensions: (a) participatory local development planning and budgeting; (b) financial management; (c) procurement; (d) technical (engineering) aspects of 12 local infrastructure planning and implementation; (e) monitoring and reporting; f) environmental and social safeguards management; (g) social accountability; and (h) communication and information dissemination. 33. The project will employ a ‘learning by doing’ approach through which the provision of short- term, practical training will be linked to on-the-job technical guidance. State level ‘capacity building platforms’ linked to relevant SMoLGs and SMoFs will be reinforced by TA based in state capitals. Financial and logistical support for training and follow-up field visits by TA providers and state ministry staff will be provided by Project Coordination and Support Offices (PCSO) at state level. Institutional strengthening may also include job-related equipment for county offices to enable county staff to effectively undertake the methodologies promoted by the project. As prioritized by government, public sector training and capacity development will include appropriate content in such cross-cutting themes as: transparency and accountability for good local governance; gender equity; conflict prevention and mitigation; and HIV/AIDS awareness and prevention. Governance related capacity development will employ a broader approach, involving county staff, civil society including community and traditional structures, and local representative bodies such as Legislative Councils (where they have been installed) and/or County Development Committees. Implementation of governance capacity strengthening will be undertaken in partnership with the CA and FPs, along with specialized NGOs/CSOs with expertise relevant to improving communication and accountability between governing authorities and citizens. 34. Component 4: Project Management (US$11.7 million IDA including PPA refinancing of US$2.6 million, and US$9.4 million from the LGSD TF). This component will support: (a) the management of the project, including technical, financial management, procurement, social and environment safeguards management, monitoring and evaluation; (b) spot checks and annual County Performance Audits of county grant management and individual subprojects as well as annual Project Financial Audits; (c) implementation of a grant monitoring system, project monitoring system as well as project evaluations based on data collection at mid-term and completion; and (d) implementation, in collaboration with the CA, of a feedback and grievance redress mechanism related to all project activities. Recognizing that various elements of the project (grant allocation and access, planning and budgeting, procurement, institutional strengthening, safeguards, social accountability mechanisms, communications and information dissemination) could elicit feedback from participants or become a focus for local disputes, the feedback and grievance redress mechanism will be integrated into the design of each component, and described fully in the Operations Manual. 35. The component will finance the staffing of a dedicated Project Management Unit (PMU) at central level and state PCSOs linked to SMoLGs, and provide necessary equipment and operational budgets to finance their operating costs. The PMU, supported by the PCSOs, will implement and manage a Project Monitoring System to collect and present data at county, state and national levels on project activities, outputs and outcomes. Additional evaluation studies as agreed between GRSS and the Bank will also be commissioned and managed by the PMU. The PMU will also contract for annual County Performance Audits of county management of the PDG and annual Project Financial Audits of project accounts which meet IDA fiduciary standards. 13 36. The project provides flexibility to allow for ongoing implementation in the case of substantially deteriorating social, environmental, political or economic conditions. Where deteriorating conditions are limited to a small number of states and counties, decisions to pause, suspend or move operations could be accommodated within the project’s planned coverage and phasing strategy. Further, in the most inaccessible and high risk counties, implementation arrangements would leverage the logistical and administrative infrastructure provided by UN County Support Bases to enable technical assistance and supervision at county level. However, in situations where a large region of the country is severely affected by widespread and sustained insecurity or fiscal illiquidity preventing numerous states or counties from implementing PDG- financed subprojects, contingency measures could be triggered through a project restructuring. Under these arrangements, FPs could play a more direct role in PDG resource management in order to continue local development investments using community management modalities for subproject execution. This would maintain engagement with and support for communities in dire circumstances until local governance conditions return to meet minimum standards of functionality and stability. The specific entry and exit triggers for these arrangements will be detailed in the Operations Manual. A decision to activate contingency mechanisms through a project restructuring would be based on a review of conditions by the Project Steering Committee and a request by GRSS with concurrence by the Bank. IV. PROJECT FINANCING A. Lending Instrument 37. The lending instrument chosen for Bank support is a Specific Investment Loan (SIL). An Emergency Recovery Loan was not considered appropriate given the project’s emphasis on longer term institution building and projected disbursement profile. As a new member with a 2011 GNI/capita Atlas Method of US$1,220, RSS will be classified as a regular IDA borrower and will receive regular IDA credits. Project Cost and Financing 38. Table 3 provides a breakdown of project costs by component. The costs below include a Project Preparation Advance (PPA) (No. Q842-0-RSS) of US$2.6 million to finance consultancy services, training and workshops and operating costs to ensure readiness for implementation, managed by MoFEP. 39. Denmark, the Kingdom of the Netherlands and Norway have indicated that their contributions to the project will be DKK85 million (approximately US$13.5 million), EUR30 million (approximately US$25 million) and US$10 million respectively. It is anticipated that bilateral agencies will complete their internal approval processes, and that the trust fund administration agreements will have been executed well before the scheduled effectiveness date of the project. SIDA has indicated it will contribute SK50 (approximately US$7.5 million) as has the European Union (EU), although the latter has not yet provided an indicative amount. It is likely that these funding commitments will become firm during project implementation. Any such forthcoming contributions from SIDA or the EU would be processed through Additional Financing. Such additional financing would enable the scaling up of project activities through more aggressive phasing or greater coverage, increased depth and scope of institutional 14 strengthening and community engagement activities, increased size of the PDG, and additional Bank executed TA activities. Table 3: Project Cost and Financing Expected Expected IDA Project Cost IDA Share of Donor Donor Share Project Components Financing (US$) Project Costs Financing of Project (US$) (US$) Costs 1. Block Grants to Counties for Payam Development 30,000,000 14,827,946 49.4 15,172,054 50.6 2. Community Engagement 22,000,000 10,873,827 49.4 11,126,173 50.6 3. Institutional Strengthening 19,000,000 9,391,032 49.4 9,608,968 50.6 4. Project Management 16,000,000 7,908,238 49.4 8,901,762 50.6 PPA 2,600,000 2,600,000 100.0 0 0 Total Baseline Costs Physical contingencies 89,600,000 45,601,043 50.9 43,998,957 49.1 Price contingencies (Component 2, 3 and 4) 8,900,000 4,398,957 49.4 4,501,043 50.6 Total Project Costs 98,500,000 50,000,000 50.8 48,500,000 49.2 Interest During Implementation 0 Front-End Fees 0 Total Financing Required 98,500,000 50,000,000 50.8 48,500,000 49.2 40. Donors will provide joint co-financing for the project. All donor funds will be channeled through a Bank-administered Local Governance and Service Delivery Trust Fund (LGSD TF) which will include windows for both recipient executed and Bank executed activities, and will provide sufficient flexibility to enable additional contributions during project implementation through Additional Financing. The project’s annual work plans and budgets would indicate the percentage of IDA and LGSD TF resources financing recipient executed activities and could be adjusted annually based on the timing of commitments and available funds in the trust fund. It is anticipated that the LGSD TF and co-financing agreement will be in place before project effectiveness, however the co-financing deadline for the effectiveness of the co-financing agreement is February 21, 2014. With respect to the section on the withdrawal of the proceeds of the financing in the Financing Agreement, 100 percent of expenditures to be financed represents IDA’s share of project costs; when the co-financing agreement is executed, the percentages of expenditures to be financed will be adjusted accordingly. B. Lessons Learned and Reflected in the Project Design 41. The 2011 WDR highlights important lessons for LGSD. The WDR notes that although tangible results are needed in the short term, these need to be compatible with rather than undermine longer-term institution-building. Solutions that do not involve transforming institutions may postpone rather than solve problems, as countries that fail to build legitimate institutions risk entering a vicious circle of repeated violence. Many of the conflict stresses in fragile countries relate to the failure of institutions to make all ethnic, religious, or social groups feel equally served by the actions of the state. Moreover, when protracted, humanitarian assistance confronts a dilemma because it can undermine confidence in state efforts to rebuild trust with citizens, and the fragmentation of international aid efforts also acts against the provision of institutional support at sufficient scale. In addition to avoiding the negative effects of parallel systems, aid through the budget enables mechanisms of political decision-making on 15 priorities and tradeoffs, leverages the development of PFM and accountability systems, and creates a tool for coordinating international assistance. 42. LGSD responds to the WDR framework by focusing on building credible, legitimate and accountable institutions to avoid entering a cycle of repeated violence, and supporting sustainable models of partnership and service delivery. The project therefore aims to improve local governance and service delivery by using and strengthening government systems, enhanced by substantial technical assistance to counties (Component 3) and facilitation support to communities leveraging the presence of NGOs with an existing field presence (Component 2). This support is more extensive than in other contexts reflecting the challenging operating environment in South Sudan. 43. The design reflects the lessons learned from the Multi-Donor Trust Fund for South Sudan (MDTF-SS) and various evaluations of donor and NGO support in South Sudan. In particular, the importance of: (a) establishing simple, realistic objectives in terms of the scale of service delivery that can be achieved, and that recognize capacity limits of recipient institutions and the availability and willingness of contractors and suppliers; (b) supporting state systems and capacity building by embedding project implementation units in government structures so that management skills are built—while initially slower to implement these can build stability in the long term and are therefore preferred; (c) balancing the need for quick and early results with institutional capacity-building through a phased approach—if projects are designed appropriately they can start with a small-scale initiative and then be expanded upon with additional financing; (d) more frequent external audits, extensive transparency mechanisms such as publication of information on budget transfers and major contracts, and community and civil society oversight of project progress; and (e) the need for a clear evaluative framework that allows for continuous adjustment to address difficulties and respond to opportunities (World Bank, 2012). 44. The Bank has gathered substantial international experience from local governance and CDD programs, including operations in fragile and conflict-affected states (World Bank, 2011). Lessons learned include:  Strong government ownership is critical during start-up and in convincing donors to provide financing to avoid shortfalls and enable an expansion of coverage.  Performance based contracting of service providers for technical assistance and of NGO partners for facilitation lends itself to a rapid scaling up of project outreach.  Arrangements can transform relations between government and NGOs from separation and mutual wariness to collaboration around a shared set of goals.  The importance of ensuring that efforts to demonstrate rapid results in the short term are appropriately matched with investments in institutional development, that provide for sustainable and cost-effective delivery of development interventions in the medium and longer term.  Early consultation with NGOs that have extensive country experience contributes to a sound project design, and establishes buy-in among NGOs that are later contracted to facilitate field implementation.  Maintaining engineering quality of civil works requires a broader effort to build capacity for small and medium contractors, coupled with a certification process to establish a list 16 of pre-qualified contractors, and possibly also incentives to attract engineers and contractors from neighboring countries.  The costs of NGO facilitation decrease significantly over time as a proportion of the overall project costs; also contract costs of the facilitating NGOs are not just administration and overheads, but include the costs of delivering the governance outcomes of the project, namely inclusive and representative PDCs with capacity to plan, selectively implement, and provide oversight of local development activities.  Realism with regard to expectations of rapid delivery of disbursements for subprojects is critical. The initial phase of community mobilization and subproject identification and preparation is likely to take several months, and it is only after this that actual subproject disbursements take off. However, when this stage is reached, the funding requirements for subprojects can reach a substantial level, as has been the case with the National Solidarity Program (NSP) in Afghanistan where monthly block grant disbursements have exceeded US$10 million.  Monitoring and evaluation arrangements need to be in place from the start of the operation.  Operating in high risk areas may require tailored procedures for facilitation and supervision. Modified procedures need to support the project objectives so that basic goals in terms of inclusive and representative local governance or subproject quality are not compromised. V. IMPLEMENTATION A. Institutional and Implementation Arrangements 45. Project preparation has focused intensively on capacity issues. Institutional and fiduciary capacity assessments have concluded that there are adequate systems and capacities at national, state and local levels, and that implementation risks can be mitigated to acceptable levels. 46. LGSD will be implemented on behalf of GRSS by MoFEP in collaboration with LGB. In keeping with their institutional mandates, MoFEP will have responsibility for resource management and reporting and LGB for the technical content of support to local governments and for the monitoring of county performance, with the exception of decentralized Public Financial Management (PFM) procedures for which MoFEP will retain responsibility. 47. At the national level, the project will be overseen by two bodies chaired by MoFEP: a Project Steering Committee to provide policy and strategic guidance, oversight, accountability and coordination; and a Project Management Committee to propose policy and strategic options to the Project Steering Committee for approval and to provide operational and technical guidance, oversight, accountability and coordination to project managers and project implementers. At state level, the project will be overseen by State Project Management Committees, chaired by the respective SMoLG, responsible for ensuring integration of project plans and activities with state government plans and the accountability and compliance of state and county officials with procedures for the use of project resources. LGSD will be integrated into the government’s LSSAI coordination mechanisms through the high level Quarterly Government-Donor Forum and at the operational level via the LSSAI Technical Task Force. 17 48. Overall project management arrangements comprise the PMU and state PCSOs. Each will be staffed by contracted personnel, will draft and implement project plans in coordination with national and state ministries, and manage project resources. Component 1 will be implemented by the PMU in close collaboration with MoFEP, and within the budget framework and procedures of GRSS. Component 2 will be implemented by NGOs or similar agencies contracted by the PMU, including a national CA to oversee participatory methodologies and FPs in each state to undertake field operations for community mobilization and organization supporting local planning and accountability. Component 3 will support the contracting, guidance and supervision of TA providers to work with state ministries and the PCSOs to provide training and on-the-job mentoring for county officials, with operational resources provided by the PCSOs. Component 4 will provide the human, logistical, and financial resources for project management, monitoring, and accountability at national and state levels, and to meet specific technical assistance needs identified during implementation. Responsibility to implement the project’s feedback and grievance redress mechanism will be a core PMU/PCSO function with contributions from the CA and FPs. B. Results Monitoring and Evaluation 49. A Project Monitoring System will be established by the PMU during the first year of implementation and installed in each state PCSO. Data on activities and outputs will be provided in routine (monthly and quarterly) reports prepared and submitted to PCSOs by participating counties and state ministries as well as by FPs for Component 2 and TA providers for Component 3. PCSOs will crosscheck and enter data into the Project Monitoring System for consolidation and review at central level. Annual reports will also include current outcomes by county and state for each project component. The Project Monitoring System will provide data to assess progress on indicators in the project’s Results Framework. 50. In addition to the project’s internal information systems, participatory monitoring and public information systems will be employed. Communities and PDCs will be engaged in monitoring the use of PDG resources and subproject execution, as well as broader implementation of the County Development Plan by local authorities. Notice boards where available, information boards, local meetings, churches and mosques, and the vernacular radio will be used for community-level information dissemination. Web pages will be used to disseminate project related information for public access and review at the national and state level, including grant execution and subproject monitoring data, reports and project-sponsored studies. These additional modalities to provide greater information and ensure transparency as a contribution to project monitoring and accountability will be financed using project resources. 51. Given the South Sudan context and the risks related to conflict, the Project Monitoring System will pay special attention to emerging local disputes and grievances. The feedback and grievance mechanism will record information related to potential conflicts arising from the selection, implementation and oversight of subprojects. In addition, a Bank-executed monitoring mechanism will enable in-depth empirical understanding of the impact of subprojects on conflicts and associated conflict management mechanisms. This will not only allow the project to take swift action on potential conflicts but will also allow future assessment of the overall impact of the project on conflict at the different implementation levels. 18 C. Sustainability 52. Policy sustainability: The strong commitment of government and their active leadership of the project preparation process indicate strong prospects for policy sustainability. This reinforces recent policy statements, such as the Juba Resolution on Strengthening Implementation of the Decentralization Framework (June 2012), budgetary commitments to the CDG, and efforts to develop service delivery frameworks for water, education and health sectors. Clearly significant policy gaps and inconsistencies remain, and will persist for some time given the infancy of the decentralization framework and the challenges facing South Sudan. The primary policy challenge is that of ensuring the sequenced and coherent implementation of the decentralization program. The project intends to further deepen and strengthen the processes already underway and should play a significant role in consolidating the progress that has already been made, in particular, through strengthening county capacity and local level demand for decentralization by counties and communities. 53. Fiscal sustainability: The relative protection afforded to the CDG in the recent austerity budget signals the intent by government to prioritize the strengthening of county governments within a decentralized framework. Moreover, government has indicated its intention to increase the size of the CDG and contribute to the financing of the PDG in future phases of the program. However, moves to enhance the generation of non-oil revenue through a program of tax reforms may have the unintended consequence of removing tax instruments that are currently available to counties. Although, some of these instruments, particularly the local customs duty on goods entering a local jurisdiction, are generally regarded as inappropriate sub-national taxes and should ultimately be eliminated in any event. It is likely that, over time, the revenue enhancement program will enable the introduction of more appropriate local tax instruments that will strengthen the fiscal sustainability of counties. 54. Service delivery and physical asset sustainability: The project development objective reflects the longer-term relationship between enhanced county institutional capacity and accountability and improved local service delivery. The focus of this relation is a participatory local development investment cycle, covering planning, implementation and oversight. With regard to the sustainability of the local infrastructure assets that will be financed by the PDG, the approach taken provides for a menu of eligible subprojects with limited or fully-funded recurrent costs. Moreover, community participation in the planning, implementation and oversight of subproject investments will enhance their ownership and engagement in operations and maintenance of facilities; and FPs will support the orientation of user groups (school management committees, water point committees etc.) to their roles and responsibilities. The PDG rules and the Local Government PFM Manual will also introduce a basic accounting framework for county assets that will provide the foundation for the development of a simple system of asset management in the longer term. VI. KEY RISKS AND MITIGATION MEASURES 55. Project risks that are assessed as high include: (a) stakeholder risks, in particular the risk that state governments object to the project design or phasing or the government’s decentralization policy deviates substantially from the intentions expressed in the Letter of Development Policy; (b) capacity of implementing agencies including availability of staff, processes and systems to 19 support project implementation; (c) governance risks, in particular the clarity of implementing agencies responsibilities and the adequacy of oversight processes; (d) elite capture of resources and decision making, and marginalization of vulnerable groups and their needs; (e) risks relating to project delivery and contract management including the capacity of the local private sector leading to unsuccessful procurement processes or poorly-executed works; (f) fiscal risks including emerging uncertainties regarding government oil revenues and possible reductions in public sector spending that may destabilize funding to counties, and weaken the predictability of the intergovernmental fiscal framework; (g) the risk that insecurity undermines project outcomes; and (h) fiduciary risks due to weak financial management systems, low capacity to prepare budgets that set out physical and financial targets in sufficient detail to monitor subsequent performance and to properly report on funds utilization. The overall risk rating is assessed to be high for implementation. 56. The project design anticipates the likelihood that the project will have unintended effects that may aggravate existing social conflicts, and takes into consideration the above-mentioned risks. Detailed risk mitigation measures are outlined in the Operational Risk Assessment Framework (ORAF) and include: (a) a continuous process of engagement and consultations with state governments and other key stakeholders to involve them in the preparation process and to strengthen the consensus on the rationale for and the guiding principles for the project design and phasing; (b) provision of long-term TA and capacity building in core local government competencies, while at the same time increasing resources for ‘learning by doing’; (c) providing for information dissemination on project investments and benefits, guidelines for social and conflict analysis, process for constituting community institutions with representative membership for women, youth and vulnerable groups and sensitive facilitation; (d) establishing eligibility requirements for the grant to ensure basic administrative capacities are in place in participating counties (including deployment of key staff); (e) the development of an Operations Manual and a simple Local Government PFM Manual, community engagement methodologies, and standard technical designs, bills of quantities and simple bidding documents for local infrastructure; (f) risks of diversion of funds managed through dedicated bank accounts, strengthened fiduciary controls and enhanced social accountability mechanisms; and (g) establishing feedback and grievance redress mechanism for the project covering all project components to respond to feedback, disputes and grievances emerging from or encountered during project implementation. 57. To mitigate financial management risks, the project will: (a) leverage the current Project Financial Management Unit (PFMU) in MoFEP to ensure the PMU sets up a strong financial management system in the early period of implementation; (b) engage a qualified Financial Management Specialist in the PMU, qualified Project Accountants in each participating PCSO, and government accounts officers (Controller of Accounts) assigned at the county level; (c) support the Audit Chamber to undertake an audit of project activities with support from an external audit agent; and (d) require the PMU to provide quarterly financial management reports to ensure close supervision and monitoring of budgets. The Bank will provide continuous assistance to ensure that project staff are able to prepare adequate budgets, monitor progress and make adjustments when necessary. 58. To address systemic country risks associated with insecurity and the uncertainty of government revenues, it was agreed to build sufficient flexibility into the design of the project components to enable implementation protocols to be adjusted while the project is restructured. 20 These provisions will be consistent with the project design and will be elaborated in the Operations Manual. Moreover, arrangements for phasing counties into the project will take into account current UN security assessments and state government security committee recommendations to avoid counties with high levels of insecurity. A. Risk Ratings Summary Table Stakeholder Risk Rating Implementing Agency Risk - Capacity High - Governance High Project Risk - Design Moderate - Social and Environmental Moderate - Program and Donor Moderate - Delivery Monitoring and Sustainability High - Fiscal High - Insecurity High Overall Implementation Risk High B. Overall Risk Rating Explanation 59. Substantial risks posed by the challenging operational environment, continued insecurity, weak institutional capacity and coordination mechanisms (as experienced during the implementation of the MDTF-SS supported projects) have been systematically addressed through project preparation activities, and will guide institutional arrangements for project implementation and coordination, direct support through project components, supervision and oversight and clear reporting and accountability mechanisms. VII. APPRAISAL SUMMARY A. Economic and Financial Analyses 60. LGSD will provide PDGs to a total of 40 counties over the life of the project, totaling US$30 million. It is estimated that participating counties will receive, on average a total amount equivalent to US$26.05 per capita over the project period, rising from US$5.85 per person per year to US$7.19 by project completion. The annual allocation to a county will average US$319,583 per year over the life of the project, ranging from US$287,500 to US$352,500 a year depending on population size. A county participating from year 1 of the grant will receive $1.28 million over the life of the project. The grant will increase total county revenues by a per capita average of about 39 percent, and would increase total intergovernmental fiscal revenues by 47 percent per capita. The nominal amounts remain small and are unlikely to overwhelm the absorptive capacity of the counties. Rather, counties would be in a better position to deliver critical local public infrastructure and services. 21 61. The project seeks to strengthen local governance and CDD, leading to increased resources available to address service and infrastructure deficits, better allocation of resources to address local needs, and improved operational efficiencies. While these benefits are expected to be significant, they are not easy to quantify. 62. The PDG will finance local infrastructure, for which benefits are more easily identified. However, unlike traditional investment operations, the actual investment composition under the PDG cannot be determined a priori since the choice of investments will result from a participatory local planning process and the selection of subprojects from an investment menu. This menu includes both public infrastructure and club goods, set out in Table 4 below. Table 4: Indicative Investment Menu for the PDG Type Sector Items** Local Public Water Construction or repair of (non-motorized) hand-pumps, tanks, dug wells, Infrastructure boreholes and haffirs. Boreholes will be improvements or changes to existing water schemes. Sanitation Provision or repair of latrines for public use or in primary health care or education facilities. Storm water Repair of flood protection infrastructure (drainage, guttering, dykes etc.). Roads Rehabilitation of local roads (using labor based methods only). Construction or rehabilitation of foot paths, culverts and bridges. Health* Construction, repair or extension of existing Primary Health Care Center (PHCC) or Primary Health Care Unit (PHCU) where health worker is already present. Purchase of furniture or equipment for existing PHCC or PHCU. Education* Construction, repair or extension of existing primary schools where teacher is already present. Purchase of furniture or equipment for existing primary schools. Economic Markets Construction or repair of public market places. Infrastructure Livestock Construction or repair of livestock dips. Irrigation Repair of small-scale community irrigation schemes, subject to approval of technical design. * These subprojects are restricted to instances where relevant personnel are already in place, given the significance of the associated operating costs and the complexities of intergovernmental budget coordination in delivering a new facility. ** To be revised annually based on community demand during the preceding planning cycle. 63. Counties will not be required to undertake economic analyses of their small-scale infrastructure projects. The local investment planning process will include participatory assessment of needs and expected benefits, though these are unlikely to be quantified. Examples of subproject benefits include: (a) For road subprojects: (i) increased mobility round the year; (ii) improved access to transportation; (iii) improved access to markets, schools, and health care facilities; and (iv) encouragement to communities to begin small-scale micro-businesses. (b) For water subprojects: (i) availability of clean, potable water; (ii) reduced time and costs of accessing water; (iii) reduced morbidity especially among children; 22 (iv) reduced health care expenditures; and (v) reduced time away from livelihood activities due to illness. 64. Previous Bank-financed operations in neighboring and similar countries demonstrate satisfactory economic rates of return for investments similar to what would be anticipated under LGSD, across those sectors outlined in the table above. In addition, similar projects have reported own revenue improvements over time as the credibility and capacity of local governments grows. In addition, emerging evidence from projects similar to LGSD suggests that there are potential efficiency gains that can be derived from implementing decentralization reforms including the reduction of transaction costs associated with the delivery of local public goods and services due to: (a) improved predictability and reliability of transfers from central government to local government; (b) improved PFM at sub-national level resulting in improved budget credibility and management, and reporting and accounting; and (c) strengthened budgeting process and improved responsiveness of sub-national service delivery to citizens’ concerns, resulting in a more efficient allocation of resources based on needs, requests and strategic importance. 65. In the absence of hard data on economic rates of return and economic costs and benefits of local investments, the project seeks to strengthen MoFEP’s capacity for monitoring the cost- effectiveness of local investments by conducting a cost-effectiveness review of a representative sample of subprojects as part of the annual procurement and financial management reviews. B. Technical 66. The project will support a local development investment cycle (see Table 1) that builds on best practice in South Sudan and elsewhere, taking into consideration the specific operating conditions at the sub-national level. Subprojects to be financed with the PDG (selected from an indicative investment menu) will be of standard technical complexity. For each type of subproject, standard technical designs and bills of quantity will be included in the Operations Manual together with the procedures for a simple environmental and social screening, preparation of subproject technical specifications and budgets, procurement and contract management, and construction supervision. For works of medium to high technical complexity, counties will be responsible for finalizing the technical specifications and procuring the services of small private contractors typically based in the state capitals. For technically simple subprojects requiring mainly unskilled labor and locally available materials (e.g. dug wells, livestock dips etc.) counties will delegate the construction to communities’ Subproject Management Teams, that will be supported with technical assistance from FPs and county staff. 67. Under Component 3, counties will be supported with safeguards management, technical (engineering) and procurement training and on-the-job coaching to improve the quality of technical preparation, procurement, construction supervision and contract management. Moreover, under Component 2 the project will strengthen processes for community participation in project planning, implementation and oversight; and high levels of community awareness of subprojects, together with improved reporting by counties on their expenditure activities, are expected to lead to improved technical quality of subprojects. There is also extensive international evidence to show that when investments are identified through community participation processes, there are strong incentives for improved operation and maintenance. 23 C. Financial Management 68. Financial management for the project (financed by IDA and the LGSD TF) will be carried out by the PMU which will engage a professionally qualified Financial Management Specialist and also include an assigned government accountant to ensure the transfer of skills and knowledge. In the start-up phase of the project, this will be supported by the Recipient’s PFMU within MoFEP, which was established under the MDTF-SS. At the state level, financial management for the project will be carried out by PCSOs which will include a Project Accountant. At the county level, government accountants (Controller of Accounts) will be assigned as accounts officers for the project, supported with the Local Government PFM Manual and Operations Manual which includes guidelines on project financial management and training on financial management under Component 3. 69. Component 1 will be implemented at the county level with support from the PMU/PCSOs in close collaboration with MoFEP. This will follow the same budget framework and procedures for the CDG. Component 2 will be implemented by FPs contracted by the PMU with a CA at national level with oversight responsibility for the FPs. Component 3 will be implemented by TA providers contracted by the PMU. PMU/PCSOs will be responsible for Component 4. 70. The project will support the Audit Chamber to engage an External Audit Agent to carry out the Project Financial Audit and to provide an independent opinion on the reliability of the financial statements produced for the project, the systems and internal controls used by the project and the eligibility of expenditures incurred. The annual Project Financial Audit will be carried out in accordance with international standards. The project will also support an annual County Performance Audit. 71. In view of the decentralized nature of the project with many implementing entities and the weak capacity of counties, the financial management residual risk is assessed as Substantial. D. Procurement 72. In South Sudan, public procurement is governed by the Interim Public Procurement Regulations, 2006. These regulations do not apply to local governments. Government is preparing a new Procurement Law which is at draft bill stage and expected to be enacted within the life of the project. The draft bill designates MoFEP as the only procuring entity and all other government ministries, departments and agencies including local governments would have to apply to be designated as procuring entities by MoFEP. The implication is that once the law comes into force unless designated, local government will not have the mandate to carry out procurement. Extensive discussions were held with government and options were offered by the Bank team to refine the law for practical implementation. Government has made commitments in their Letter of Development Policy to address these concerns and create a procurement framework within which the project would be implemented. 73. GRSS has prepared a draft Local Government PFM Manual for use by local governments and communities. The Bank will review the draft manual for acceptability for use in LGSD, and the manual will be finalized and adopted before project effectiveness. The manual is intended to operationalize the proposed Procurement Law so that policies and procedures in the Local 24 Government PFM Manual don’t have to change once the law is enacted. For the manual to take legal effect, it will have to be officially issued by MoFEP. The Local Government PFM Manual will guide public procurement at county and community levels and any inconsistencies with Bank procurement guidelines will be addressed within the Operations Manual. 74. Procurement for the proposed project will be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works and Non Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers� dated January 2011, “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers� dated January 2011 and the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants�, dated October 15, 2006 and revised in January 2011. National Competitive Bidding (NCB) shall be in accordance with procedures acceptable to the Bank. These guidelines will be reflected in the project’s Operations Manual and the Local Government PFM Manual. 75. Procurement under the project will be carried out at four levels namely at central level by a PMU with a dedicated Procurement Specialist and an Engineering and Contract Management Officer to be contracted; at state level by State Coordinators supported by PCSO staff, at county level by the county administration, and community level by the Subproject Management Team. Procurable items will include goods, works and consultant services at PMU level, individual consultants, office equipment and small works at state level, small works and goods at county level, and goods and hiring of skilled or unskilled labor at community level. 76. An assessment of the procurement capacity of county administrations suggests that the procurement system at county level is very weak with no dedicated procurement staff. A review of procurement activities undertaken for the CDG indicates that no proper procurement procedures have been followed, and there is frequent use of direct contracting. Record keeping was also observed to be weak. No capacity assessment was undertaken for communities since beneficiary communities will only be known when identified through participatory processes described under Component 2. However, the Operations Manual will provide guidance on systems and procedures to be followed by county governments for county-executed subprojects and by the communities for community managed subprojects. 77. Bank procurement experience in South Sudan has shown that: (a) significant delays are experienced in procurement processing, taking on average one year, with significant part of the time spent on preparation of tender specifications, Terms of Reference (ToRs) and evaluation; (b) presence of staff on the ground is important to facilitate progress as government capacity is weak; and (c) market for goods is nascent, cost of goods and services is high and there is a six month window of opportunity within which most of the country is accessible. These experiences have been factored in the design of procurement arrangements. 78. The overall procurement risk for the project is considered High. In order to mitigate the risks identified in the fiduciary assessment, an action plan has been prepared in consultation with MoFEP and LGB and is included in Annex 3. 25 E. Social (including Safeguards) 79. South Sudanese society is extremely diverse in terms of ethnicity, social structures, livelihoods, land ownership, languages and symbols. War, trauma and displacement have reshaped social structures—hereditary (clans, lineages, families), territorial entities, age systems, and the role and powers of traditional authorities—and this is an ongoing process. South Sudan also has extremely poor social indicators with dramatic gender disparities. The project seeks to facilitate and strengthen the engagement of communities in the planning, implementation and accountability of local investment activities with a particular focus on women, youth, displaced and vulnerable groups and their access to social and economic infrastructure. It is expected that the planning and deliberation process, in prioritizing local infrastructure at the boma and payam levels, will contribute to strengthening the social fabric, and through quick and visible results, establish the legitimacy and credibility of county governments to provide much needed public infrastructure to communities. 80. Given the propensity for internal conflicts and the underlying conflict drivers the project seeks to understand the social and ethnic composition of communities as well as the conflict flashpoints. A vulnerability-based and conflict sensitive approach underpins the planning and decision making process in the project thereby ensuring both majority and minority ethnic and social groups identify and engage on their developmental needs and priorities. The project also supports the establishment of government mandated BDCs and PDCs in an open and democratic manner with representation from women, youth, elders, traditional chief and vulnerable groups including disabled, displaced and returnees. This process will be facilitated by NGOs and similar organizations, with field operations experience and deep knowledge of local social and institutional dynamics. 81. Key elements in enhancing engagement of all key stakeholders in the project include clearly defined project processes, roles and responsibilities, transparency and accountability arrangements, and periodic monitoring. These will be documented in the Operations Manual, which will inform strategic communications for both internal and external stakeholders. The Operations Manual will include Community Engagement Guidelines that will inform the local development investment cycle and the associated information campaigns at village, boma, payam and county levels. Transparency of project interventions for a payam will be ensured through regular communication of schedules for key meetings, payam budget allocations, approved subprojects, implementation contracts and names of contractors. Information dissemination will be through local meetings, information boards, church and mosques, traditional chiefs and vernacular radio. Subproject Supervision Teams with five nominated members representing women (a minimum of two), youth and elders will provide oversight to contractor implemented subprojects. A community nominated five-member Subproject Management Team also comprising women (a minimum of two), youth and elders will implement technically simple subprojects on behalf of communities. An accessible and responsive feedback and grievance redress mechanism will register and address community suggestions and concerns. Beneficiary assessments are proposed at mid-term and end of project. 82. GRSS has prepared a draft Environmental and Social Management Framework (ESMF), which was disclosed on January 22, 2013in compliance with OP4.01. This draft will be consulted, finalized and disclosed in country and the Bank's InfoShop by project effectiveness. 26 Where required, additional safeguards instruments will be prepared during project implementation. In the context of South Sudan, where land is predominantly held under customary land tenure arrangements and where population pressure on land is very low (13 persons per sq. km), access to land for construction of new facilities will be obtained either: (a) through documented voluntary community donations of land arrived at through local consultation; or (b) by using available government land that is free of encroachments, squatters or other encumbrances, and has been authorized for project use by the authorities. Any subproject requiring land acquisition under eminent domain, which would trigger OP 4.12 on Involuntary Settlement, would be on a ‘negative list’ for implementation. 83. OP/BP 4.10 on Indigenous Peoples has also been triggered and is applicable to this project, as analysis by Bank and other experts confirms that the majority or all people in the project area meet the definition of Indigenous Peoples under the policy. Per the requirements of OP/BP 4.10, when Indigenous Peoples are the sole or the overwhelming majority of direct project beneficiaries, the elements of an Indigenous Peoples Plan (IPP) should be included in the overall project design, and therefore a separate IPP is not required. The project approach and implementation process embeds the basic principles of OP 4.10 of a free, prior, and informed consultation leading to broad community support for the project through its emphasis on identifying and reaching the most vulnerable social groups including ethnic/tribal/kinship minority groups, ensuring their representation in community organizations, due consideration to their needs and priorities, ensuring equitable benefits and an accessible feedback and grievance redress mechanism. F. Environment (including Safeguards) 84. The project is categorized as environmental Category B-Partial Assessment. Interventions under Component 1 are designed to improve local public and economic infrastructure, including the construction and repair of water points (boreholes and hand dug wells), haffirs, flood protection structures, local roads, primary health care centers, primary schools, sanitation programs, public market places, livestock dips and small-scale irrigation schemes. Subprojects are expected to generate limited and localized adverse environmental impacts to the nearby biophysical environment. To avoid potentially adverse environmental impacts and improve existing environmental conditions, OP/BP 4.01 Environmental Assessment is triggered for the project. The negative environmental impacts, such as changes in the landscape (loss of vegetation), noise pollution, air pollution due to dust formation, safety hazards from construction activities, inappropriate disposal of excavated materials and construction debris are likely to be limited, mostly reversible, localized, temporary, and easily mitigated through sensible construction management techniques and diligent environmental management practices and by integrating environmental due diligence into the expected subproject cycle. The project will not affect natural habitats. Any subproject that would have an impact on physical cultural resources as defined under OP/BP 4.11 Physical Cultural Resources would be on a ‘negative list’ for project implementation and will be excluded. 85. The ESMF ensures that environmental due diligence is integrated into the local development investment cycle. The ESMF specifies characteristics that would make a subproject ineligible for financing. Additionally, all subprojects would be subject to a simple environmental and social safeguards screening to be undertaken by counties, which would ensure that activities 27 with significant negative impacts are not implemented. If required, Environmental and Social Management Plans (ESMPs) will be prepared once works and sites are finalized. 86. The project triggers OP 7.50 on Projects on International Waterways since subprojects under Component 1 may include the rehabilitation or drilling of boreholes. However, any new boreholes to be drilled will be shallow in depth, will install non-motorized hand pumps and the amount of water to be extracted will be negligible. In line with paragraph 7(a) of OP 7.50 an exception has therefore been sought to the requirement that other riparian countries be notified of the proposed project, since the subprojects will relate to ongoing water schemes and will not adversely change the quality or quantity of water flows to the other riparians. Approval of the exception to riparian notification was obtained from the African Region Vice President on January 29, 2013. 87. The capacity of implementing institutions to implement the ESMF and other environmental and social safeguard instruments (such as Environmental and Social Management Plans) is very limited. Therefore the project will provide capacity building and technical support to MoFEP, LGB, PMU, FPs, SMoLGs, SMoFs, PCSOs and county level institutions in safeguards management, implementation and monitoring. A Senior Safeguards Specialist and Safeguards Officer in the PMU will: oversee safeguards implementation in LGSD; liaise with national and state environmental ministries on a regular basis; ensure compliance with the ESMF and other safeguard instruments; build capacity and troubleshoot for the state and county Safeguards Focal Points; prepare and implement ESMPs and other instruments as required; and raise awareness and build capacity of various stakeholders at the state, county and payam levels. 88. The project will also create awareness among communities and relevant stakeholders on sound environmental management practices and provide training and support to implement the ESMF and other safeguard instruments. GRSS will assign Safeguard Focal Points for each participating state and county to provide technical support to the county, payam and boma levels and to regularly follow up and monitor the implementation of subprojects to guarantee compliance with the ESMF and other safeguards instruments. Before the commencement of the project, intensive training on the implementation of ESMF and Bank safeguard policies will be provided to state and county Safeguard Focal Points to enable them to effectively act on the supervision and monitoring of the implementation of the frameworks and Bank policies, in conjunction with PDCs and FPs. 89. The Safeguards Focal Point at state level will also liaise with the government and Bank regarding environmental and social safeguards issues, and would play a lead role in increasing the level of awareness on environmental management at county, payam and boma level, providing training and capacity building to staff in MoFEP, LGB, PMU and other line ministries, conducting regular supervision and preparing progress reports. 28 aAnnex 1: Results Framework and Monitoring SOUTH SUDAN: Local Governance and Service Delivery Project Project Development Objective (PDO): To improve local governance and service delivery in participating counties in South Sudan. Cumulative Target Values Responsibilit Core Unit of Baseline Data Source/ Description (indicator PDO Level Results Indicators* Frequency y for Data Measure 2012 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 Methodology definition etc.) Collection 1. Intended beneficiaries that are Beneficiaries are defined as aware of project information Midterm Survey of the population in the payams and project supported percentage 0 n/a n/a 60% n/a 60% and beneficiaries PMU covered by the project, to be investments (%) [Participation completion (sampling) measured by the latest and civic engagement]4 available census data. Functioning defined as 2. Participating payams with meeting criteria on: Community functioning Payam Facilitating composition (e.g. participation percentage 6%5 60% 65% 75% 80% 80% Annually Participation Development Committees Partners of vulnerable groups) and Report (percentage) [Participation] frequency of meetings with quorum. 3. Subprojects or investments for which arrangements for Measures the existence of community engagement in STMCSTMC County specific arrangements created post-project sustainability PMU/PCSOs percentage 0 n/a 50% 60% 70% 80% Annually quarterly under the project to ensure and/or operations and (LGB and reports ownership by project maintenance are established MOFEP) beneficiaries. (percentage)6 [Community ownership and sustainability] 4. Counties remaining eligible in County PMU (LGB Minimum entry conditions7 percentage 0 n/a 70% 75% 80% 80% Annually subsequent year for the Payam Performance and MOFEP) for the first year of 4 To be disaggregated by gender in regular Implementation Status Reports(ISRs) 5 Based on a sample of 47 payams in the FTI counties. 6 Number of subprojects will be provided in regular Implementation Status Reports(ISRs) 7 These include: (a) the opening of a dedicated bank account at a commercial bank; (b) deployment of critical personnel at county level; (c) approved budget and development plan for the prior year; (d) existence of a secure cash storage facility; (e) signed Participation Agreement. 29 Development Grant (%) Audit participation plus additional [County performance] conditions8 for subsequent years. 5. Financed subprojects Subprojects affected by functioning and delivering Midterm Assessment of natural disasters or conflict are services to communities one percentage 0 n/a n/a 80% n/a 80% and sample PMU not considered to calculate year after completion (%) completion subprojects this indicator. [Service delivery] Beneficiaries defined as the population of targeted 6. Direct Project Beneficiaries 836,000 1,2 m 3,1 m 4,1 m 4,1 m County PMU/PCSOs payams, including those (number), of which female (%) number 0 Annually quarterly (LGB and getting access to basic [Governance and service percentage 48.1% 48.1% 48.1% 48.1% 48.1% reports MOFEP) infrastructure. Targets will be delivery] revised after targeted counties have been identified. Cumulative Target Values Responsibilit Core Intermediate Level Results Unit of Baseline Data Source/ Description (indicator definition Frequency y for Data Indicators* Measure 2012 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 Methodology etc.) Collection Intermediate Result: Strengthened intergovernmental grant system to incentivize accountability and capacity of local government to provide basic infrastructure (Component 1) 7. CDG and PDG Indicative Planning Figures published for Allocation yes/no no yes yes yes yes yes Annually MoFEP Including payment schedules. counties by official due date Letter (yes/no) [Transparency] 8. Eligible and reporting PDG payment compliant counties being sent Due dates are September 15 schedule/ planned PDG disbursement percentage 0 50% 50% 100% 100% n/a Annually MoFEP and February 15. Date of Special within 30 days of due dates payment not receipt. account (percentage) [Predictability] 9. Eligible counties with variance between budgeted and actual County Excluding residual amounts PMU (LGB PDG expenditures not percentage 0 70% 75% 80% 90% n/a Annually Performance rolled over in counties with an and MOFEP) exceeding 35 (percentage) Audit odd number of payams. [Execution] 8 These include: (f) a "“clean"� audit opinion (not adverse or disclaimed); (g) adequate utilization of the grant; and (h) complete submission of all quarterly reports that have fallen due. 30 Cumulative Target Values Responsibilit Core Intermediate Level Results Unit of Baseline Data Source/ Description (indicator definition Frequency y for Data Indicators* Measure 2012 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 Methodology etc.) Collection Intermediate Result: Strengthened community engagement in the planning, implementation and accountability of local investment activities in a conflict sensitive manner (Component 2) Disaggregated data by gender, 10. Participants in consultation vulnerable will be available. activities during project Community Facilitating Calculated based on estimated implementation (number) number 0 TBC TBC TBC TBC TBC Annually Participation Partners participation; will be revised [Participation and civic Report after targeted payams have engagement] 9 been identified. This indicator measures the 11. Grievances registered related transparency and to delivery of project benefits Grievance accountability mechanisms that are actually addressed percentage 0 n/a 50% 65% 75% 80% Annually System PMU established by the project. (percentage) [Transparency Report Grievances would need to be and accountability] registered and responded to. Intermediate Result: Improved County performance in local investment planning, implementation, and accountability (Component 3) Budget needs to be in line 12. Participating counties with GRSS guidelines and submitting approved and County PMU (LGB include CDG and PDG. passed and complete plans and percentage 24%11 75% 80% 85% 85% 85% Annually Performance and MOFEP) County plans and budgets budgets by October 110 Audit integrate priorities identified (percentage) in Payam Action Plans. Findings limited to a failure to comply with project 13. Participating counties with implementation requirements, “clean� (not adverse or County PMU (LGB the failure to comply with disclaimed) audit opinion on percentage 0 75% 80% 85% 85% n/a Annually Performance and MOFEP) community disclosure grant expenditures Audit requirements and the failure to (percentage) register completed assets on a subproject register. 14. Subprojects adhering to County PMU (LGB In line with technical technical standards and percentage 0 n/a n/a 60% 65% 70% Annually Performance and MOFEP) standards of bid docs. completed within one year of Audit 9 To be disaggregated by gender in regular Implementation Status Reports (ISRs) 10 Official submission date is 30 June but the indicator allows a three months “grace period� due to institutional factors beyond county level which often delay budget approval. 11 19 of 79 councils have submitted County Budgets for FY 2011/2012 approved by Legislative Councils. 31 Cumulative Target Values Responsibilit Core Intermediate Level Results Unit of Baseline Data Source/ Description (indicator definition Frequency y for Data Indicators* Measure 2012 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 Methodology etc.) Collection grant disbursement (percentage) Intermediate Result: Improved basic services infrastructure in counties covered by the project If investments trigger Bank 15. Disaggregated list of County PMU/PCSOs CORE indicators (e.g. investments by type and sector number 0 TBC TBC TBC TBC TBC Annually quarterly (LGB and classrooms, health centers, (number) reports MOFEP) water points etc.) these will be reported through the ISR. 32 Annex 2: Detailed Project Description SOUTH SUDAN: Local Governance and Service Delivery Project 1. LGSD will support a simple process for the planning, implementation and oversight of small-scale public infrastructure subprojects corresponding to community priorities. Key elements of this ‘Local Development Investment Cycle’ are set out in Table 1. LGSD will support this process through four inter-related components described in detail below. 2. Coverage and phasing. The strategic vision of the government’s program on local governance and service delivery is to include all counties in a broad package of governance, management and fiscal reforms. However capacity and resource constraints limit the speed with which states and counties can be helped to adopt new practices. Thus during the first five-year phase to be funded by this project, 40 counties in ten states will be included. Any additional counties that are created through re-demarcation of county boundaries during project implementation will also not participate in this phase.12 Within the second phase, all 79 counties are expected to be included, and the program’s technical scope gradually broadened. In order to accelerate the application of project methodologies as well as to produce tangible benefits to participating communities as soon as possible, a FTI is being undertaken before project effectiveness. Under the government and Bank supervised FTI, bilateral funding was secured from SIDA to finance coordinated implementation by NGOs of community engagement in the first eight counties in four states. As a result, community subprojects will be ready for funding soon after project effectiveness and LGSD technical methodologies will have been refined through field experience as a basis for accelerated project implementation. 3. Coverage: The number of counties selected to receive the PDG in each state will be based on the relative population sizes of each state. This approach is equitable as it maximizes the number of people that the project is able to reach. It also reinforces the population-based approach to the distribution of grants, while removing any incentives for states to expand the number of counties. Existing and emerging urban councils will be excluded from participation in the project. For the 40 counties across ten states which will receive PDGs (Component 1), community engagement facilitation (Component 2) and training plus on-the-job technical assistance (Component 3) will begin the year before grant disbursement. Within resource constraints, staff from counties not selected to receive the PDG will also be eligible to participate in basic capacity development activities under Component 3, which will reinforce skills related to the local development investment cycle that are also relevant to the government-funded CDG. 4. Phasing the entry of counties: In order to meet the target of fully covering 40 counties in all ten states under constrained resources and capacities during five years, project operations will gradually expand from the four FTI states during the first year of the project to cover seven states, and then all ten states by year three. In each year, community engagement, participatory planning and training of county staff will be supported in a new cohort of entering counties in each participating state, thus setting the stage for investment funding by the PDG in the subsequent year. The number of counties participating each year will rise incrementally, with an average of eight counties to be added in each year of the project. This is necessary to allow for 12 Participation will be restricted to that county which retains its headquarters in the original location. 33 the gradual expansion of program management and technical support capacity, particularly at state level. 5. Selection of counties: Counties in the first year of the project have been selected by national government in consultation with state governments and the Bank. These have been limited to eight counties in four states to avoid over-burdening project implementation mechanisms immediately after project effectiveness. In subsequent years, counties will be selected for participation in the project through a three-stage process, balancing minimum conditions for project implementation with concerns for geographical and social equity and security. 6. Each year a list of eligible counties will be defined by national government, prioritizing counties with a basic minimum level of organizational capacity necessary for the transfer of funds and the provision of capacity assistance. On this basis, state governments will select counties each year for participation from this list based on: (a) the number of additional counties assigned to them for that year (see indicative allocation in Table 5 below); (b) the likelihood of their compliance with the minimum entry criteria as specified in Component 1; (c) their assessment of population size, comparative need and existing county capabilities; and (d) availability of existing county support programs operating in the state. These criteria will be outlined in the Operations Manual. States will be required to submit the names of proposed counties no later than August 15 each year in order to allow for appropriate technical preparations to commence, failing which national government will make this determination on their behalf. 7. The national government will verify and, where appropriate, confirm the selection of counties by states, subject to no objection from the Bank. The annual selection process will account for the likelihood of changing security, capacity and humanitarian conditions over the life of the project. A county that is selected and complies with grant requirements will continue to participate over the life of the project. Counties that fail to comply with grant requirements will be suspended from participation but will not be replaced in that year. Table 5: Indicative Allocation of Participating Counties based on Population Population State (2008) Total Central Equatoria 1,103,557 4 Eastern Equatoria 906,161 3 Jonglei 1,358,602 7 Lakes 695,730 4 Northern Bahr El Ghazal 720,898 4 Unity 585,801 4 Upper Nile 964,353 4 Warrap 972,928 4 Western Bahr El Ghazal 333,431 2 Western Equatoria 619,029 4 Total 8,260,490 40 34 Component 1: Block Grants to Counties for Payam Development (US$14.8 million IDA and US$15.2 million from the LGSD TF) 8. The component aims to strengthen the intergovernmental grant system to incentivize accountability and capacity of local government to provide basic infrastructure in response to community demand. The project will support the introduction of a new block grant for counties, the PDG, which will provide predictable and earmarked resources for payam-level basic infrastructure subject to compliance with basic grant rules. The grant is an essential input to both community engagement and county capacity development as it provides the resources that fuel the annual local development investment cycle. The proposed system of Block Grants to Counties for Payam Development has been designed taking into account governance constraints and the pressures resulting from the recent austerity budget and limited local revenue capacity. 9. The PDG will be fully financed using project resources and will complement the existing CDG (funded by GRSS out of the budget) by providing dedicated resources within county budgets that respond to payam level priorities for small infrastructure investments. Although no project financing will be allocated to the CDG, it is an essential contribution to strengthening county governments and its management will benefit from capacity development supported by the project. GRSS has also outlined measures to enhance the performance of the CDG in the 2013/14 budget, particularly through adopting a population-based distribution formula. MoFEP will also revise grant conditions, reporting requirements and fund flow arrangements on the basis of improved county PFM procedures, which will also provide benchmarks for monitoring the use of CDGs as well as the quality of their administration. To date the CDG has not been consistently disbursed and has largely been used to finance buildings and vehicles used by county staff rather than service delivery infrastructure. 10. The PDG is designed to finance small-scale public infrastructure driven by beneficiary demand and oversight through a simple, transparent grant instrument which will complement the CDG. Capacity strengthening supported by the project to plan and manage the PDG will strengthen the county’s entire local development investment cycle, including the management of the CDG. This approach ensures that resources reach communities rapidly and transparently and supports the development of effective and legitimate local government systems. By allocating funds to payam level while transferring funds to dedicated county accounts, it significantly mitigates risks of resource diversion. Moreover, the basic approach to resource transfer will remain effective even in situations where state capacity is significantly eroded. 11. A detailed description of proposed size and allocation of the PDG, entry and annual participation requirements, eligible subprojects, reporting requirements and grant release and fund flow arrangements follows. Grant size, financial accountability and allocation 12. The PDG will amount to US$30 million over the first four years of the project. The total annual size of PDG transfers is projected to rise from US$2.3 million in FY2013/14 (nine percent of the current CDG allocation) to US$14.1 million in FY2016/17 (over 54 percent of the current CDG allocation), based on the proposed annual phasing of counties into the project. The transfer will be made directly to county governments, but earmarked for individual payams 35 within their jurisdiction at predetermined levels. Funds will finance the implementation of subprojects included in Payam Action Plans that are determined through a community-driven, participatory process. Payam Action Plans and associated investments will be incorporated into County Development Plans and County Annual Budgets. 13. Counties will remain the formal budgeting, procurement and accounting authority for PDG expenditures for fiduciary purposes. While these administrative functions will rest with county government, PDCs with representation from bomas will select subprojects and oversee the use of funds, subject only to compliance with grant conditions. Both counties and payams will be supported to plan for, implement and oversee expenditure programs related to the grant through other project components and through ongoing programs of other development partners. Accountability will be enhanced through requirements for mandatory, regular disclosure by counties on the allocation and disbursement of available resources as well as through fiduciary safeguards on the release of funds. 14. Limitations to the resources available for the grant severely constrain the coverage and phasing of counties. This is necessary to ensure that meaningful allocations can be made to each participating county and payam. Allocations to participating counties will be made through a population weighted formula from a national resource envelope on an annual basis. County-level data constraints and the need for a simple, fair, transparent and predictable resource envelope mitigate against the use of variables other than population at this point. Government has also decided to use 2008 population census data as the basis for CDG allocations as well as components of the state transfer system. 15. Payams within each participating county will be allocated grant resources (though not actual funds) in alternate years only, with 50 percent of payams selected in each year. This is necessary to accommodate the especially long project implementation cycles that arise from the inaccessibility of payams for large parts of the year (due to poor connectivity and a long rainy season) and which is the reality in most areas of the country. In addition, this approach effectively doubles the resources available to a payam in the extended project cycle, and thus assists in overcoming issues of lumpiness within the constrained resource envelope. Counties will select the first cohort of participating payams through an open and transparent process, and then alternate annually among payams thereafter. The remaining payams will participate in the subsequent year, subject to the continued eligibility of that county for the PDG (or immediately on the resumption of eligibility by that county in later years). 16. Allocations to participating payams will be divided equally among them in that year. The use of a flat rate for payam allocations is preferred for reasons of transparency and legibility to communities, as well as the likelihood that payam-level population data is less accurate than county level data. Allocations must amount to the full PDG allocation to counties, less the projected amount for county-level expenditures (the set-aside of a maximum of US$5,000 per year). In the case of counties with an odd number of payams, the smaller number of payams must be selected first while the allocation must be divided by mean. The residual amount must be budgeted as a rollover, and retained in the county grant account for allocation in the subsequent financial year. 36 17. Both county and payam level allocations will be determined at a national level and communicated to state and county governments, payams and directly to communities. No discretionary adjustments to either set of allocations will be permitted to prevent the diversion of funds and protect the predictability of resource envelopes for the purposes of subproject planning and implementation. 18. It is expected that each participating county would receive an annual allocation of US$287,500 (with 50 percent of payams receiving US$94,167) in FY2013/14, rising to US$352,500 (with 50 percent of payams receiving US$115,833) in FY2016/17. This assumes a total resource envelope of US$30 million for four years of the grant and a gradual increase in participating counties from eight in FY2013/14 to 40 in FY2016/17. These amounts are considered sufficient incentive for communities to participate in the local development investment cycle. Each participating payam will receive an average of US$6.51 per capita for every two year investment cycle. These figures are set out in Table 6 below. Table 6: Grant Simulation (US$, Nominal) 2013/14 2014/15 2015/16 2016/17 TOTAL Average States participating in 4 4 7 10 10 PDG Disbursement Counties benefitting from 8 12 30 40 40 PDG Disbursement Total Annual PDG $2 300 000 $3 700 000 $9 900 000 $14 100 000 $30 000 000 Allocation Grant / participating $ 287 500 $ 308 333 $ 330 000 $ 352 500 $1 278 333* $ 319 583* county County costs $5 000 $5 000 $5 000 $5 000 $20 000* Grant / participating $94 167 $ 101 111 $ 108 333 $ 115 833 $ 209 722** $ 104 861** payam % nominal annual 7% 7% 7% increase / County*** Average Payam level $5.85 $6.28 $6.73 $7.19 $13.02** $6.51 Grant per capita *The total and average amount a county will receive from the PDG in the project, assuming that it receives the grant from year 1 (FY2013/14). **Each payam receives a grant in alternate years. ***This increase is necessary to maintain the real value of the grant over time. 19. Actual allocations to individual payams will be a function of the total allocation to that county and the number of payams, which in turn is a function of the county’s population size relative to those of other counties participating in that year (assuming a fixed annual resource envelope). Conceptually at least, this may result in small counties with a larger number of payams receiving very small allocations. The associated need for a minimum allocation (or floor) to address the issue of lumpiness will continue to be assessed during project implementation, following the detailed analysis of population data of selected counties and estimated unit costs of small-scale community infrastructure. The available estimates of unit costs (Table 7) suggest that payams will be able to undertake at least one subproject per two year cycle, and this is considered to be sufficient to incentivize community engagement. A minimum allocation may also create incentives for the proliferation of payams. 37 Table 7: Unit Cost Estimates for Small-scale Infrastructure Subproject Location* Juba/ Other Equatorias Hand Pump Boreholes construction $15,000 $20,000 Hand Pump Boreholes repair $5,000 2 Small Office Block (80 m with latrine) $80,000 $100,000 Community Resource Centre (200 m2 with latrine) $180,000 $225,000 Built Pit Latrine (2 to 4 stances) $12,000 $15,000 Classrooms (Block x2) $52,000 *Costs vary by location, security situation and season of implementation 20. In order to support counties in monitoring and supporting payams, counties will be permitted to reserve a maximum of US$5,000 from their annual PDG allocation to cover their own administrative and logistical expenses. These modest allocations will be authorized through the counties’ annual budget process and managed according to government procedures; their value will be deducted from the PDG allocation prior to providing indicative planning figures to participating payams. County expenditures in this regard will be restricted to banking fees and the direct costs of travel to state capitals or payams (fuel, accommodation, hire of private vehicles). This allowance will be closely monitored, and will be removed once greater clarity emerges on the overall GRSS financing framework for county recurrent costs. County entry and annual participation requirements 21. Counties selected for participation in any year will have to meet basic minimum conditions to receive a grant allocation. These conditions ensure basic administrative capability for project implementation. Minimum entry conditions for the first year of participation are: (a) The opening of a dedicated bank account at a commercial bank for the receipt of the PDG, in the name of the county and with the Executive Director, Controller of Accounts and Senior Accounts Officer as the only signatories. This must be supported by an original letter from the bank providing account details, and specimen signatures; and (b) The deployment or functional mapping of county personnel to perform key project activities. The positions of Executive Director, Controller of Accounts, and Planning Officer must be filled. Additionally, county staff must be assigned (functionally mapped) to assume project-related responsibilities for: (i) procurement; (ii) engineering; (iii) monitoring and reporting; and (iv) environmental and social safeguards management. Counties will be required to provide evidence of compliance through the submission of the names, contact details and bio data of these officials on an annual basis; and (c) A copy of the approved County Development Plan and County Budget for the prior year; 38 (d) Photographic evidence that the county has a secure cash storage facility (strong room), together with confirmation that access to this facility is being controlled; and (e) A Participation Agreement, entered into by representatives of the participating county, the relevant state and GRSS, which shall include terms and conditions approved by the Bank and reflected in a template agreement to be included in the Operations Manual. Each Participation Agreement shall be in compliance with the form and substance of the model included in the Operations Manual. The Participation Agreement will be signed by the County Commissioner for the participating county, counter-signed by the State Minister of Local Government. The final agreement will be counter-signed by the Minister of Finance and Economic Planning. 22. Each county must submit evidence of compliance with these entry conditions by October 31 in each year directly to LGB. Only in the case of there being no changes to any of the above conditions (including no change in the sitting Commissioner) a county may indicate confirmation of compliance by letter, without resubmitting evidence. Standard formats for compliance will be included in the Operations Manual. Compliance will be verified in the annual County Performance Audit. 23. For each subsequent year that a county participates in the project it will be required to continue to meet these entry conditions as well as the following basic performance requirements: (a) The achievement of a substantively “clean� audit opinion from the annual County Performance Audit process, defined as an opinion that it not adverse or disclaimed. For the purposes of this project, these findings will be limited to a failure to comply with project implementation requirements (the investment menu, safeguards procedures or financial management and procurement standards associated with the PDG), variance between approved Payam Action Plans and the subprojects that were actually executed, the failure to comply with community disclosure requirements and the failure to register completed assets on a subproject register (a basic inventory); and (b) Adequate utilization of the grant, measured by the variance between budgeted and actual PDG expenditures not exceeding 35 percent (excluding residual amounts rolled over in counties with an odd number of payams, and the US$5000 allocation for county overhead costs); and (c) The complete submission of all quarterly reports that have fallen due. 24. The determination of performance criteria will be verified through the annual County Performance Audit process that will closely involve and be disclosed to communities. This assessment is a critical element of the capacity development process and will cover all budgeted activities of the county, including PDG-related expenditures and subprojects, and comply with national audit requirements as outlined the LGA and Local Government PFM Manual. Eligible PDG expenditures and execution requirements 25. PDG subprojects will be selected and overseen by PDCs based on an inclusive participatory planning process that will be supported under Component 2; they will be drawn from an 39 indicative investment menu to be updated annually based on community demand. This menu includes both public social and economic infrastructure and may also include club goods benefiting local associations where justified. The scope of the indicative investment menu, which will be fully detailed in the Operations Manual, is summarized in Table 4. 26. No subproject may be selected if it does not comply with the project’s environmental and social safeguards requirements. This includes restrictions on subprojects that require the acquisition of land as defined under OP/BP 4.12 on Involuntary Resettlement or that impact on physical cultural resources as defined under OP/BP 4.11 Physical Cultural Resources. The screening for and application of mitigation measures for adverse impacts will be undertaken as part of the payam and county level planning process, prior to the approval of the county budget, on the basis of a simple screening procedure that will be outlined in the ESMF and Operations Manual. The project will finance training for state and county Safeguards Focal Points on safeguard planning and compliance. The Senior Safeguards Specialist and Safeguards Officer at the PMU will design necessary modules, provide training and trouble shoot for the state and county safeguards focal points. Execution of grant expenditures 27. It is anticipated that many subprojects will be amenable to execution on the basis of standardized technical (engineering) designs, for which standardized drawings, bills of quantities and other documentation will be provided in the Operations Manual. The application of standardized designs will be undertaken by assigned county engineering staff, which will be supported through Component 3. In subprojects that require modification of these designs, or entirely new designs, county staff will also be responsible with the support of State Ministries of Physical Infrastructure and TA personnel, but final technical approval will be subject to technical screening by PCSOs and, and when necessary by the PMU. 28. County governments will be responsible and financially accountable for implementing all PDG subprojects. Counties may employ one of two modalities for subproject execution: conventional public sector investment management and community execution. Conventional management will employ public sector procurement procedures for the purchase by county government of the services of construction contractors and/or goods provision from local vendors for installation and use at the payam level. In cases where accessibility, security or other capacity constraints impede county execution, or where subprojects are small-scale and technically simple, community execution will provide an alternative. Through the community execution modality, county governments will contract Subproject Management Teams, with PDC nominated members, who will be responsible for subproject implementation. These modalities are discussed further in the procurement appraisal (Annex 3). County procurement activities will be managed by a designated county official, who will be trained and supported through TA provided under Component 3. Community execution modalities will be further supported by FPs financed by Component 2. Detailed procurement, resource management, and accountability procedures for each of these two execution modalities will be provided in the Operations Manual and Local Government PFM Manual. Simple documentation for all subprojects will be required. The procedures and formats for these documents will be outlined in the Operations Manual, and will be subject to annual verification during the County Performance Audit process. Counties will be supported to enhance their formal record-keeping for subprojects 40 under Component 3; this monitoring and reporting requirement will be complemented by community participation in subproject oversight, as supported by Component 2. Figure 1 depicts the PDG allocations, fund flow, reporting and oversight arrangements. Figure 1: PDG Allocation, Fund Flow, Reporting and Oversight Arrangements Grant releases and reporting 29. The annual PDG allocation will be transferred to each county in two equal releases on September 30 and February 28 of each year. The transfer will be made directly from a Designated Account at national level to dedicated bank accounts managed by county governments. This will avoid potential risks of delay to the transfer of funds at state level. Dedicated county bank accounts will form part of basket ‘Local Government Development Fund’ as required by the Local Government Act and will be under the control of the County Executive Director, who will establish a simple fund account for each payam. Mandatory public disclosure of account and payam fund balances will be required on a quarterly basis. No onward transfer will be made to payams. Rather, counties will undertake procurement and contractor payment on their behalf. Where community execution is utilized as a procurement method, cash payments for wages and shopping for small materials will be made at county level through the community’s Subproject Management Team or the payam administrator where acceptable Formal fiduciary controls will continue to be exercised at county level. Counties will report quarterly on the receipt and utilization of the PDG. Reports will be due 30 days after the end of each quarter. An integrated, simple quarterly reporting system for all transfers to counties will be 41 used, as outlined in the Local Government PFM Manual. Quarterly reports contain only essential information (such as receipts, expenditures, bank reconciliation) in order to reduce the compliance burden for counties. 30. Each PDG release will be subject to the submission of quarterly reports by the county, in order to reinforce the reporting system. In addition, for the second release in each year (February 28) a county will be required to demonstrate, via the quarterly report, that they have made expenditure commitments (signed agreements or contracts) that amount to at least 65 percent of the first grant release. This measure is required to avoid the accumulation of large cash balances in county bank accounts. Releases that are delayed for either of these reasons will be effected immediately on evidence of compliance (i.e. reports submitted or commitments made). 31. The basic reporting cycle and requirements is shown in Table 8 below. Table 8: Quarterly and Annual Reporting Requirements for Participating Counties* Quarter Date Content Grant linked 1 1 Nov Quarterly FM and physical progress report and Annual Financial Statements (AFS) (previous FY), including procurement commitments 2 1 Feb Quarterly FM, including procurement commitments and Release 2 (28 Feb) physical progress report 3 1 May Quarterly FM and physical progress report 4 1 Aug Quarterly FM and physical progress report (prev. FY), Release 1 (30 Sept) approved annual budget and procurement plan due (current FY) *The Financial Year runs from July 1 to June 30 32. Reports will be submitted to the SMoLG, which will formally review them in County Transfers Monitoring Committees (CTMCs) that include the SMoFEP. Reporting will be supported by the project’s State Coordinators, their Monitoring and Information Officers, and by TA providers as needed. CTMCs will produce basic monitoring reports for distribution to counties and the existing State Transfers Monitoring Committee (STMC) at national level. The STMC in Juba will prepare a national monitoring report that will be the basis for grant releases. 33. A robust annual calendar is required to correctly sequence the actions that are required for a transparent and predictable flow of resources. A detailed project timeline for the grant cycle will be included in the Operations Manual. The detailed administrative procedures for the management of the grant at all levels will be developed in a specific Grants Manual that will form part of the Operations Manual. Delay or withholding of allocations or releases 34. No annual grant allocation or releases will be made to those counties that fail to meet minimum entry conditions, basic performance requirements and reporting requirements. In the case of minimum entry conditions this can be established prior to an allocation or release of the PDG to a county. However, due to the time-lag inherent in any (retrospective) audit process, audit outcomes (performance requirements) will only be known by January 30, seven months into the subsequent financial year. By this time the first grant release for the second year 42 (September 30) and the IPFs for the third year of participation (December 1) will have been provided. In the case of a county not achieving the required performance standards, the IPF for the third year will be withdrawn and the outstanding (second) grant release will be withheld. The second release may also be withheld for a failure to report or inadequate expenditure commitments, as described in the reporting arrangements above. 35. Counties that fail to comply with the timeframes associated with entry and performance criteria will be excluded from receiving the PDG in the subsequent year. This standard will be applied regardless of whether they are able to substantively comply with requirements as this will significantly disrupt processes at national level. This includes the calculation and release of grant allocations to other counties. 36. Counties that are excluded from receiving the grant in a particular year will be able to receive the grant in the subsequent year, provided that they meet the entry conditions outlined above and can demonstrate that they have subsequently achieved the basic performance requirements that led to their exclusion. The grants funds that they have foregone will not, however, be reinstated. State governments will not be able to substitute another county for a non-performing county. 37. By establishing clear criteria for eligibility of both counties (based on their administrative rigor and engagement with communities) and subprojects (based on their relevance to poverty reduction and their responsiveness to community demand), the PDG will also contribute to institutionalizing precedents for sound and responsive county management of the CDG and other resources. Grant management arrangements 38. MoFEP will be responsible for the overall management of the PDG, including national budgeting, allocation and release procedures. Monitoring of the grant and eligibility requirements will be undertaken through the STMC, that will approve decisions to withhold allocations and releases. Technical assistance to MoFEP, LGB and the STMC will be provided through the PMU in Component 4. Support at state level will be provided in Component 3. Component 2: Community Engagement (US$12.6 million IDA and US$12.8 from the LGSD TF) 39. Component 2 aims to facilitate and strengthen the engagement of communities in the planning, implementation and accountability of local development activities with a particular focus on vulnerable social groups and their access to social and economic infrastructure. The component will therefore support more inclusive and participatory local-level planning, implementation and accountability processes that also address local drivers of conflict. Table 9 sets out the key activities supported under this Component. Broadly, these include: (a) An information campaign, designed and led by the PMU, to disseminate the key features of the project and the processes to ensure citizen voice and oversight as well as government accountability, at the national, state and county level; and supported by FPs at the community-level. 43 (b) Community mobilization and organization including the establishment of BDCs and PDCs. Figure 2 provides the community structure at the boma and payam levels, and the administration structure at the County level. Figure 2: Local Government and Community Institutions (c) Social and conflict analysis that seeks to map ethnic composition, vulnerable groups (including elderly, women, youth, disabled, displaced and returnees), intra-community divergences/tensions, and leadership structure, will be a key activity in the process of community engagement. Key outputs of this conflict mapping methodology will include: an increased sensitivity among stakeholders on vulnerability and marginalization of different social groups, an understanding of conflict drivers at play locally, potential investment priorities that have equitable benefits, and more inclusive boma representation at the PDC. (d) Proposals resulting from boma-level consultative processes will be considered at the payam level by the PDC. The PDC will decide on the subprojects to be selected for financing under the annual grant envelope, and on the selection and phasing of subprojects for subsequent years. The planning process and resulting Payam Action Plan will be integrated into the County Development Plan, which in turn would provide the framework for activities by nongovernmental actors and other donor agencies operating in a particular county. (e) Priority subproject list will be shared by the PDC in an open meeting of all residents. PDC members will also liaise with line ministries at the county to seek assurance on 44 technical feasibility of the subprojects. A PDC approved Payam Action Plan and priority subproject list will be sent to the county administration. (f) Responsibility for the direct community implementation of simple projects will be delegated to a community-selected Subproject Management Team established by the PDC. Similarly for each contractor executed subproject a Subproject Supervision Team will be established to provide oversight on the community’s behalf. Table 10 provides details on the implementation modalities for indicative subprojects. (g) Support for accountability mechanisms between local authorities and their citizenry at payam and boma levels, involving mandatory regular disclosure by county and payam officials on available resources together with information on the release of these funds during subproject execution. The accountability arrangements will establish citizens’ oversight over the use of public funds to ensure that they are used in accordance with agreed plans, that infrastructure and service delivery meet established standards, and that access to benefits corresponds to the agreed development plan. (h) An accessible and responsive feedback and grievance mechanism will provide an independent avenue to address grievances relating to the project to ensure the integrity and responsiveness of decision-making and resource management by county officials. 40. LGSD will engage NGOs and similar organizations as a CA at national level, and as FPs in each state to implement these activities under the highly diverse and challenging conditions which result from endemic capacity deficits and the legacy of long-standing conflicts in South Sudan. FPs will be selected based on their prior field operations and deep local knowledge so that they bring relevant capacities that can be leveraged in support of community engagement linked to the local development investment cycle. This demand-side and civil society support provided under Component 2 will complement the supply side public-sector support to be provided by Component 3. 41. The project also foresees alternative implementation modalities at county and payam levels in response to possible dysfunction resulting from potential public sector fiscal crises and/or local level conflict; either of which may constrain the assumption by local authorities of the “normal� development planning and management competencies attributed to counties under the Local Government Act. In the event these sorts of local governance disruptions occur in all or part of the counties where LGSD is to be implemented, implementation protocols would be adjusted while the project is restructured to shift responsibility away from management by county authorities and toward direct resource and subproject management by communities and their FPs. In this way the Community Engagement component provides not only a key demand- side element for conventional local development planning and accountability but also serves as a contingency mechanism for situations where conventional modalities cannot be implemented. In these exceptional cases, the project would be restructured and project procedures adjusted to more closely follow a CDD-social fund model in which local authorities are included as stakeholders in partnership with non-governmental resource managers. Under this scenario the role of FPs will be enhanced to allow them to play a more prominent role in the management of subproject resources and to provide more direct support to communities in subproject implementation. 45 Table 9: Community Engagement Activities Phase Activities Participants Responsibility Prerequisites Outcomes Information Boma meetings to introduce the All villages in a boma FP Communication strategy Communities aware of dissemination project developed by PMU with project objectives, local input from CA, and the development investment finalization of cycle and their roles. communication materials. Project launched at county level by Commissioner Community Facilitators recruited and trained by FP Boma-wide social Mapping of social groups All villages in boma FP Methodology finalized by Social and conflict map for and conflict analysis Identification of conflict incidence CA each boma and drivers Preliminary list of boma Identification of boma priorities priorities BDC and PDC Establishment and/or validation of All bomas and payam FP Guidelines for Inclusive process of formation membership administrators establishing BDC/PDCs BDC/PDC formation Orientation of elected members and finalized and issued by payam administrator CA Training material developed by CA Payam Action Plan Consolidation of boma level priorities All bomas, FP Payam allocation known List of subprojects with Preparation of Payam Action Plan Payam administrator, Standardized subproject proposed arrangements for Selection of subprojects for financing Councillor, PDC and costing developed by implementation (operations under PDG BDC members PMU/PCSO and maintenance plan, Standardized subproject estimated community designs developed by contribution, whether PMU/PCSO community or county managed) Technical Feasibility and consistency of PDC representative, FP FP Preliminary feasibility of List of priority subprojects discussion with subprojects with sector plans subprojects ensured. sector departments Confirmation of arrangements for Modifications where at county level recurring costs with sector necessary incorporated departments 46 Phase Activities Participants Responsibility Prerequisites Outcomes Approval of Signing of Payam Action Plan by PDC PDC with FP Approved list of subprojects prioritized PDC support subprojects Submission of Payam Action Plan to county by PDC Nomination of Subproject Management/Supervision Teams County level Discussion and preparation of County PDC reps, line ministries, County County strategic plan and processing (2-3 Strategic Plan, County Annual Plan County administration, Administration County annual plan/budget months) and Annual Budget at the planning County legislative and budgeting conference, including council, Council integration of Payam Action Plan Planning Committee, Review of final County Strategic development partners, Plans by Council Committee NGOs responsible for planning and budgeting Feasibility Preliminary feasibility assessment for County Administration, County Prepared Safeguard Draft subproject proposals assessment and draft individual subprojects – e. g technical, contracted TA, State Administration Checklists per payam subproject proposal safeguards, cost, personnel PMU, relevant line Proposal formats preparation Preparation of draft subproject ministries proposals with simplified procurement plan and costing Detailed subproject Proposal finalization with budget, County administration, County Final subproject proposals designs and community contribution, and contracted TA, PCSO, Administration preparation of simplified procurement plan and relevant line ministries finalized subproject costing proposals Identify contracting arrangements for each subproject Subproject County Implementation: County administration, County Formation of SST/SMT, Completed subprojects implementation Advertisement, receiving bids and SMT, SST, PDC, FP Administration list of eligible contractors selection of contractors; procurement and SMT at county and state level of material. Subproject supervision for different sectors, team to monitor periodically identified markets for Community Implementation: construction material Procurement of material at county or payam level preferably by community and direct payment by county; 47 Phase Activities Participants Responsibility Prerequisites Outcomes payment for labor against invoice from SMT Regular updating of subproject information board Subproject County Implementation: PDC, FP, County FP Subprojects completed and completion SST verification; Completion report Administration handed over by PDC Certification by county technical staff Handing over to facility management committee (water management committee for boreholes or parent teacher committee for schools) Community Implementation: SMT verification; Completion report by PDC Certification by county technical staff Handing over to facility management committee 48 Table 10: Indicative Subproject Execution Modalities Sector Items Technical Markets Labor Required Community* Implementation Safeguards Issues Complexity for Contribution Modality Materials Water Construction or repair of non-motorized Medium Payam or Skilled County managed Equitable access hand-pumps and boreholes (boreholes will County be improvements or change to an existing water scheme) Tanks High County Skilled County managed Voluntary land donation; equitable access Dug wells Medium Payam Skilled and unskilled Labor Community managed Equitable access Haffirs for cattle and human consumption High County Skilled and unskilled Wage Labor County managed Sanitation Provision or repair of VIP latrines for Medium Payam Skilled Community managed public use Construction of flood protection Medium County or Skilled and unskilled Wage Labor County managed infrastructure Payam Storm Repair of flood protection infrastructure Low Payam Skilled and unskilled Labor Community managed water Irrigation Repair of small-scale community irrigation High County Skilled and unskilled Wage Labor County managed Equitable access, land schemes issues Repair of small-scale irrigation schemes Low Payam Unskilled Labor Community managed Roads Rehabilitation of local roads High County Skilled and unskilled Wage Labor County managed Voluntary land donation Repair of local roads Low Payam Unskilled Labor Community managed Foot paths Low Payam Unskilled Labor Community managed Land issues Culverts Medium County Skilled Labor Community managed Land issues Bridges Medium County Skilled and unskilled Labor Community managed Land issues Health Repair or extension of existing PHCC or High County Skilled and unskilled Wage Labor County managed Voluntary land donation PHCU Purchase of furniture for existing PHCC or Medium County N/A County managed PHCU Education Repair or extension of existing primary High County Skilled and unskilled Wage Labor County managed Voluntary land donation schools Purchase of furniture or equipment for Medium County N/A County managed existing primary Schools General buildings with local materials Low Payam Unskilled Labor Community managed Voluntary land donation Other Markets Medium County Skilled and unskilled Wage Labor County managed Livestock dips Medium County Unskilled Community managed Proper disposal of water *No fixed amount, based on local circumstances 49 Component 3: Institutional Strengthening (US$10.9 million IDA, US$11.1 million from the LGSD TF) 42. The objective of this component is to increase the capacity of county governments to fulfill the roles and undertake the functions required to effectively implement the local development investment cycle. This component thus operates in conjunction with the provision of PDG resources in Component 1 and community engagement activities in Component 2. Institutional strengthening of county governments, and of state governments in their roles to support and supervise them, will contribute to the implementation of sub-national structures, systems, and procedures for local governance, planning, resource and investment management, and accountability. 43. Priority areas for LGSD capacity building include those capacities supporting a responsive, effective and transparent local investment cycle, focusing on the following dimensions: (a) participatory local development planning and budgeting; (b) financial management; (c) procurement; (d) technical (engineering) aspects of local infrastructure planning and implementation; (e) monitoring and reporting; (f) environmental and social safeguards management; (g) social accountability; and (h) communication and information dissemination. Capacity building will be oriented to achieve specific results, to be monitored based on specific indicators and benchmarks, for each of these dimensions. Progress in capacity development will be monitored in each county by periodically assessing progress against a selected number of such indicators for each dimension. 44. Training will not be limited to counties receiving the PDG, although PDG recipient counties will be prioritized for institutional strengthening. Since all counties will continue to manage their respective CDGs, local government staff from other counties, as well as state personnel who work closely with county governments in relevant fields will also be eligible for LGSD-financed training depending on the availability of sufficient resources. The methodologies promoted for local development planning, management and accountability will be useful to all local government staff since the CDG will continue to be allocated and disbursed to all counties under the GRSS budget. 45. To ensure the relevance, impact and sustainability of capacity development investments, the project will employ a ‘learning by doing’ approach through which the provision of short-term, practical training will be linked to on-the-job technical support and coaching related to specific, priority functions being implemented by county staff. State level ‘capacity building platforms’ linked to relevant state ministries complemented by TA provision, will provide the venue at state level for implementing these activities in keeping with the GRSS’s broader public sector reform and capacity building efforts. Via these partnerships as well as its direct financing of training and on-the-job support to counties, the project will improve the operations of county government in the planning, management, and accountability of local development investments. 46. Annual cycles of short-term training and on-the-job coaching will be implemented by project financed TA providers in close collaboration with State Ministries of Local Government and State Ministries of Finance and with the state PCSO. Scheduling/ coordination assistance as well as financial and logistical support for training and follow-up field visits will be provided by the 50 PCSO in each state. Job-related equipment may also be provided to county offices to enable local staff to effectively undertake the methodologies promoted by the project. 47. Course content and manuals will be reviewed and approved at national level by LGB and MoFEP, in consultation with other ministries or GRSS agencies as appropriate. GRSS County Planning and Budgeting Guidelines are already approved and in use, while a GRSS Local Government PFM Manual (including accounting, procurement and reporting procedures) is currently under preparation and is expected to be approved before project effectiveness. These will provide the core references for LGSD institutional strengthening activities. Whenever possible in each state, county capacity building activities will be co-financed, co-implemented, or coordinated with relevant development partners in order to ensure alignment with GRSS standards and systems as well as consistency of approach in the field. As prioritized by government, public sector training and capacity development will include appropriate content in such cross-cutting themes as: transparency and accountability for good local governance, gender, conflict prevention and mitigation, and HIV/AIDS awareness and prevention. 48. Governance related capacity development will employ a broader approach, involving county government staff, civil society including community and traditional structures, and local representative bodies such as County Legislative Assemblies. Implementation of governance capacity strengthening will be undertaken through the CA and FPs, as well as in partnership with specialized organizations with expertise relevant to improving communication and accountability between governing structures and citizens. In the area of communication, during its first year the project will finance the development of a National Local Governance Communication Strategy. The project with advice provided by the CA and FPs will ensure the availability as required of additional technical assistance for the development of State Local Governance Communication Plans which will tailor the strategy’s implementation to the specific conditions in each state. Component 4: Project Management (US$11.7 million IDA including PPA refinancing of US$2.6 million, and US$9.4 million from the LGSD TF) 49. This component will support: (a) the management of the project, including technical, financial, procurement, social and environment safeguards management, monitoring and evaluation; (b) spot checks and annual County Performance Audits of county management of the PDG and individual subprojects as well as annual Project Financial Audits; (c) implementation of a feedback and grievance redress mechanism related to all project supported activities; and (d) implementation of a grant monitoring system, project monitoring framework and system as well as project evaluations based on data collection at mid-term and completion. 50. Recognizing that various elements of the project (grant allocation and access, planning and budgeting, procurement, institutional strengthening, the application of safeguards, social accountability and communication/information dissemination) could become a focus for local disputes, a feedback and grievance redress mechanism will be integrated into the design of each component, and described fully in the Operations Manual. Although the project will support GRSS to integrate grievance mechanisms into the accountability arrangements for each component, and clearly assign responsibilities at the agency level (MoFEP and LGB), and through subsidiary agreements (NGOs, contractors), the Bank will also use trust fund resources to: (a) provide dedicated technical support to establish and operate these arrangements; (b) create 51 a ‘back up’ system in the event that these Grievance Redress Mechanisms (GRM) arrangements perform sub-optimally; and (c) provide ongoing support to GRSS to consider ways in which local authorities (the county governments, as well as non-state dispute resolution systems) may be enhanced over time. 51. Component 4 will finance the staffing of a dedicated PMU at central level led by a full-time Project Coordinator and staffed with key specialists (procurement, financial management, monitoring and evaluation, and safeguards). Likewise in each state a PCSO with a full-time State Coordinator and additional administrative support and TA staff will be funded. 52. The project will support, and the PMU will contract for, audit services of two types: (a) The annual Project Financial Audit will conduct a standard audit of all project accounts, as described in Annex 3 (Financial Management). Audits of the project accounts, including the PMU managed Designated Accounts and the state level sub- accounts to be managed by the PCSOs, will be undertaken following standard Bank fiduciary standards. This audit will include a sample of county level dedicated PDG bank accounts. (b) An annual County Performance Audit will also be conducted each year in all participating counties. The County Performance Audit will be an “entity-level� audit that covers all activities of the county, including but not limited to the dedicated PDG bank account. It will evaluate compliance with basic financial, physical and social performance requirements and its finding will be publicly disclosed. The purpose of this audit is to assist in strengthening governance systems and relationships in line with project development objectives. The audit will be undertaken by the Auditor-General in terms of the Local Government Act, where provision is already made for the use of private firms of chartered accountants. The scope and methodology for the audit will be kept simple to reflect the limited funding under management and the relative infancy of the county PFM system. It will however comply with national standards that will be outlined in the Local Government PFM Manual. The Auditor-General will supervise these audits through pre-qualifying audit firms and conducting spot checks of audit reports. Supervision will include spot checks on the veracity of the assessment process. In the event of any discrepancy between this audit and the Project Financial Audit, the latter will have precedence. 53. The PMU will also manage a Project Monitoring System to be implemented at county, state and national levels. Under the supervision of state governments and with the support of the PCSO and other technical assistance, counties will provide quarterly financial and physical progress reports within a single framework for all transfers, including the CDG, and project supported activities related to all three substantive components. Additional evaluation studies as agreed between GRSS and the Bank will also be commissioned and managed by the PMU. 52 Annex 3: Implementation Arrangements SOUTH SUDAN: Local Governance and Service Delivery Project Project administration mechanisms 1. LGSD will be implemented on behalf of GRSS by MoFEP in collaboration with LGB. MoFEP and LGB at national level and SMoFs and SMoLGs at state level will have overall responsibility for project implementation. In keeping with their institutional mandates, MoFEP will have responsibility for resource management and reporting and LGB for the technical content of support to county governments and for the monitoring of county performance, with the exception of decentralized PFM procedures for which MoFEP will retain responsibility. Figure 3: Project Administration Mechanisms 2. Project management arrangements: The overall project management arrangements are comprised by a central level PMU and by state level PCSOs. The PMU and PCSOs will provide support to national and state governments in core project management and fiduciary functions, primarily financial management, procurement, environmental and social safeguards management, and monitoring and evaluation. Each will be staffed by project contracted personnel and will draft and implement approved project plans as well as manage project resources. The PMU will be led by a Project Coordinator and include the following fulltime staff contracted by the project: a Financial Management Specialist supported by one or more accountants, a Procurement Specialist supported by an Engineering and Contracts Management Officer, an Institutional Strengthening Specialist, a Communication Officer, a Safeguards Specialist and Safeguards Officer, and a Monitoring and Evaluation Officer. A Community Engagement Advisor, to be funded under bilateral partnership arrangements, is also foreseen during the first two years of project implementation. Part-time specialists will be contracted by the PMU to provide periodic high level input as needed in such areas as: social development and conflict issues; transparency and accountability issues; and other crosscutting issues which may 53 arise. PCSOs will be led by State Coordinators supported by a Project Accountant and a Monitoring and Information Officer (all contracted by the project). PCSOs will work closely with the FPs regarding coordination of community engagement activities and with institutional strengthening TA providers to ensure adequate planning and scheduling of technical inputs to county governments. 3. Oversight arrangements: At the national level, LGSD will be overseen by two bodies: a Project Steering Committee to provide policy and strategic guidance, oversight, accountability and coordination and a Project Management Committee to propose policy and strategic options to the Project Steering Committee for approval and to provide, operational, and technical guidance, oversight, accountability and coordination to project managers and project implementers. The Project Steering Committee will be chaired by the MoFEP Undersecretary for Economic Planning with the LGB Undersecretary as deputy chair, and will include Undersecretaries from other relevant ministries and several MoFEP directors. The Project Management Committee will be chaired by the MoFEP Director of Aid Coordination, and include LGB Directors General and Inspectors, Directors of Planning from relevant ministries, relevant MoFEP Senior Inspectors, and the LGSD Project Coordinator as Secretary. 4. At state level, LGSD will be overseen by a State Project Management Committee which will ensure integration of project plans and activities with state government programs and plans, and ensure accountability and compliance of county officials and state staff for project implementation and procedures for the use of project resources. State Project Management Committees will be chaired by the SMoLG Director of Planning and will include the SMoFEP Director of Planning and Management, directors of relevant state ministries, with the LGSD State Coordinator as Secretary. 5. LGSD will be integrated into the government’s LSSAI coordination mechanisms at two levels. At the highest level, harmonization of policies and strategies will take place through the Quarterly Government-Donor Forum to which the three other LSSAI initiatives (PFM, Education and Health) will also report. At the operational level, the harmonization of plans and methodologies will take place via the LSSAI Technical Task Force which incorporates representatives of the respective Technical Working Groups. 54 Figure 4: LSSAI Coordination Mechanisms 6. Component 1 will be implemented under the direct responsibility of MoFEP. After approval of the annual project budget and its clearance by the Bank, the annual PDG budget and disbursement plan will be implemented by the PMU, verifying county eligibility and disbursing the first release of PDG allocations to PDG bank accounts of eligible counties. Insofar as administration of the PDG is to be undertaken by county government staff, the implementation of Component 1, including assurance of fiduciary and safeguard standards, will depend upon the provision of training and technical assistance to county planning, procurement and financial management personnel. The implementation of government systems for planning, financial management, and procurement through GRSS procedures which meet Bank standards will link Component 1 and the institutional strengthening activities to be supported under Component 3. Thus the training of county staff and strengthening of institutional systems at the county level will contribute both to compliance with Bank fiduciary requirements as specified in the Operations Manual and to improved performance with respect to GRSS PFM procedures, since these will be the same for PDG and CDG administration. 7. Component 2 implementation arrangements will be organized under the guidance and supervision of LGB, involving contracted agencies that will provide the local knowledge, technical expertise and logistical capacities necessary for undertaking challenging grassroots mobilization and participatory development activities in highly diverse and widely dispersed rural communities. Technical assistance will be provided principally by non-governmental partners, either NGOs or other organizations that would fulfill the role of FPs under the component design. To ensure methodological support and quality assurance for participatory processes and reduce the demands of coordinating up to ten FPs, a CA will be contracted by the PMU to oversee their work. FPs will be directly contracted by the PMU based on the advice of the CA regarding their selection and supervision. In each state, FPs will be part of the state project implementation team, coordinated by the PCSO under the supervision of the SMoLG and SMoFEP. The scheduling and coordination of community engagement activities will be coordinated with the grant cycle and with public sector institutional strengthening activities supported by Components 1 and 3 respectively. 55 8. Component 3 will be implemented under the guidance and supervision of LGB, with input from MoFEP on PFM issues. Operational management will be the responsibility of the PMU and PCSOs. Similarly state level institutional strengthening activities will be guided and supervised by the SMoLG and SMoFEP, and will be undertaken by TA providers coordinated by the PCSO. PCSOs will play an important role in providing resources for the implementation of institutional strengthening activities at state and county levels. Training costs and operating expenses will be administered from PCSO bank accounts in order to ensure the timeliness and flexibility required for frequent, often small-scale, and low cost field activities such as local training workshops and technical support visits to counties. Specialized training and technical assistance for state ministry personnel in environmental and social safeguard management, grievance redress, social communication, and other key methodologies will be organized by the PMU to ensure compliance with IDA fiduciary standards. 9. Component 3 implementation will mobilize necessary technical capacity through contracts and, when feasible, partnerships. Several agencies, including UNDP, GIZ and USAID (BRIDGE) have in recent years been supporting capacity building activities at state and county levels; these agencies and projects may contribute technical materials and/or partner in the implementation of specific training or on-the-job support targeting county staff. In consultation with other partners, GRSS will procure field TA to the states in areas such as: local development planning, financial management, procurement, small works engineering, and others. Additionally, specialized experts will be contracted by the PMU for the development of project- supported methodologies. Institutional strengthening activities will be planned and coordinated at state level via the SMoLG, SMoFEP and PCSOs. 10. With respect to Component 4, the arrangements for project management, monitoring and evaluation, audits and safeguards assurance will be under the remit of the PMU and PCSOs. Responsibility to implement the project’s feedback and grievance redress mechanisms will be a core PMU/PCSO function with the support of the CA and FPs. 11. The project design provides flexibility to allow for ongoing implementation in the case of substantially deteriorating political or economic conditions. Where deteriorating conditions are limited to a small number of states and counties, decisions to pause, suspend or move operations could be accommodated within the project’s planned coverage and phasing strategy. However, in situations where a large region of the country is severely affected by widespread and sustained insecurity or fiscal illiquidity that prevents numerous states or counties from implementing PDG- financed subprojects, contingency measures could be triggered to restructure the project to enhance the role of FPs in the management of PDG allocations as a means to continue local development investments using community management modalities for subproject execution. This would maintain engagement with and support for communities in dire circumstances until local governance conditions return to meet minimum standards of functionality and stability. The specific entry and exit triggers for these arrangements will be identified in the Operations Manual, and a decision to activate contingency mechanisms through a project restructuring would be based on a review of conditions by the Project Steering Committee and a request by GRSS with concurrence by the Bank. 56 Financial Management, Disbursements and Procurement Financial Management 12. The Bank’s OP 10.02 requires the recipient and implementing agencies to maintain adequate financial management arrangements—including accounting, financial reporting, internal controls, budgeting and auditing arrangements—to ensure that accurate and timely financial information can be provided regarding grant resources and expenditures, and that funds will be used for the intended purposes. A Financial Management Assessment (FMA) was conducted to ensure that these requirements are met. The FMA was conducted in accordance with OPCS guidelines titled “Assessment of Financial Management Arrangements in World Bank-Financed Projects – Guidelines to Staff� issued by the Financial Management Sector Board on October 15, 2003, and the Financial Management Manual for Bank-Financed Investment Operations issued on March 1, 2010. This assessment was conducted at the national level at MoFEP, and at state and county levels, where Makal and Baliet counties in Upper Nile State and Ikotos County in Eastern Equatoria State were visited. 13. The review reveals that there are financial management capacity challenges that are likely to affect the project, including lack of key financial management competencies and internal controls, particularly at state and county levels. Therefore, financial management for the project will be initially supported by the recipient’s PFMU set up within MoFEP for the MDTF-SS, while the financial management capacity of the PMU is being developed with support from the project. The PMU will be made up of key project staff including a professional Financial Management Specialist, with relevant and adequate qualification and experience acceptable to the Bank. In view of the decentralized nature of the project with many implementing entities and the weak capacity of counties, the financial management risk is assessed as Substantial. Country Issues 14. A Public Expenditure and Financial Accountability Assessment (PEFA) was carried out for GRSS and four state governments: Jonglei; Unity; Western Equatoria; and Northern Bahr-el- Ghazal states. The report indicates several areas where progress has been made on PFM issues including: the preparation of the national budget reflects government policies; the ongoing installation of an integrated financial management system; the establishment of an electronic payroll system; emerging internal and external audit systems. However, it noted significant weaknesses in downstream PFM areas such as budget execution, accounting and some internal control systems. Consequently the resulting budgets are not credible, demonstrated by: aggregate and spending agencies’ expenditure outturns significantly different from the approved budgets; constitutional and legal controls on changes in approved budget not fully adhered to; low in-year predictability of availability of funds; build-up of payment arrears; non transparent public procurement system; and lack of robust internal control system. The counties assessed during the FMA conducted by the Bank’s fiduciary team are yet to go through any significant PFM reform. 57 Project Financial Management System 15. Financial management for the project (financed by IDA and the proposed LGSD Trust Fund) will be carried out at national level by the PMU which will engage a professionally qualified Financial Management Specialist and will also include an assigned government accountant to promote the transfer of skills and knowledge. As noted above, the PFMU handles financial management for the MDTF-SS and therefore has knowledge and experience in Bank financial management requirements. The team’s review of supervision reports of the PFMU indicate that they have the required capacity to carry out the financial management for the project. At state level, financial management for the project will be carried out by the PCSOs, which will engage a qualified Project Accountant. Financial management procedures at national and state levels will be set out in the Operations Manual. Adoption of an Operations Manual acceptable to the association is a condition of effectiveness for the IDA credit. 16. At the county level, where there will be no project-contracted staff, government accountants will be assigned as Controller of Accounts for the project in each participating county. Financial management procedures at county level will follow the Local Government PFM Manual, and staff will be supported with training and on-the-job coaching on financial management under Component 3. The Local Government PFM Manual provides comprehensive but simple instructions on processing of accounting information for accountability and reporting purposes with respect to budgeting, revenue collection, expenditure, recording and preparing financial statements and reports for all levels of local government. 17. Component 1 will be implemented at the county level with support from the PMU/PCSOs in close collaboration with MoFEP. This will follow the same budget framework and procedures of the GRSS block grants to counties. The detailed flow of funds and other control measures will be reflected in the Local Government PFM Manual and the Operations Manual. Component 2 will be implemented by FPs under the oversight of a CA contracted by the PMU. In addition, the project’s accountability arrangements will include citizens’ oversight over the use of public funds at the payam level to ensure that funds are used in accordance with agreed plans and for the intended purposes. Component 3 will be implemented with TA that will be competitively selected and contracted by the PMU. Component 4 will be the ambit of the PMU/PCSOs. 18. The Audit Chamber has the constitutional responsibility for external audit but currently has limited capacity. The project would support the Audit Chamber to engage an External Audit Agent to ensure that staff of the Audit Chamber are able to carry out a Project Financial Audit to provide an independent opinion on the reliability of the financial statements produced for the project, the systems and internal controls used by the project and the eligibility of expenditures incurred. The project is also engaging a separate audit firm to carry out an annual County Performance Audit of the counties management of the PDG. Budgeting Arrangements 19. The PMU, working closely with each of the PSCOs and relevant implementing entities and partners will prepare the budget, work plan and cash flow forecast for each component and submit for the necessary approvals from the line ministry (MoFEP/LGB) and the TTL. 58 20. The counties will remain the formal financial management (budgeting, procurement and accounting) authorities for the PDG expenditures for fiduciary purposes. To qualify for PDG disbursement, the county will submit an approved County Development Plan and County Budget, which will include expected project cash flow needs. Accounting Arrangements 21. The project Operations Manual and the Local Government PFM Manual will include the relevant accounting procedures. The project accounting will be on a cash basis and will cover all project funds including IDA and bilateral contributions in the LGSD Trust Fund. These will be supported with appropriate records and documentation to track commitments and to safeguard assets. Accounting records will be maintained in US$ and SSP. The PMU and each PCSO responsible for project implementation will ensure that: (a) All important business and financial processes are adhered to; (b) Adequate internal controls and procedures are in place; (c) Interim un-audited Financial Reports (IFRs) are prepared on a timely basis; (d) The financial information required by the PMU/PFMU are provided promptly by the counties and each PCSO; (e) The financial statements are prepared on a timely basis and in accordance with International Accounting Standards (IAS) or International Public Sector Accounting Standards (IPSAS); and (f) The external audit is completed on time and audit findings and recommendations are implemented expeditiously. 22. The Chart of Accounts will facilitate the preparation of relevant reports and financial statements, including information on total project expenditures; total expenditure on each project component/activity, and analysis of that total expenditure into various categories of goods, training, consultants and other procurement and disbursement categories. Efforts will be made to ensure that project financial management records will be maintained using a computerized system and necessary training carried out for the accounting staff. All transactions would be properly accounted for and recorded properly. 23. For Component 1, the Bank will recognize eligible expenditures as documented when funds are received by counties. For Bank reporting purposes, the PMU will recognize these block grants as expenditures when funds are received by counties and confirmation of the same is obtained. Normal government regulations will continue to be applicable as documented in the Public Financial Management and Accountability Act of 2011 and the Local Government PFM Manual. These regulations require accountability of transfers/grants. In addition, the Operations Manual will describe all requirements regarding the block grant component. 24. For Components 2, 3 and 4, eligibility of expenditures will be based on the actual amount expended evidenced by appropriate supporting documents. 59 Internal Control and Internal Auditing 25. The Operations Manual and the Local Government PFM Manual will incorporate relevant internal control procedures and acceptable control procedures for approval and payment processes. These procedures require that the implementing ministry certifies the completion and acceptance of goods or services before requesting for payment. The PMU/Financial Management Specialist will also ensure that the contracts are consistent with the invoices and payment request before processing them. They will also monitor and report on the utilization of project funds, including the fiduciary standards complied with and the reliability of the FM system. The Fixed Assets Register relating to the project will be prepared by the project and shall be updated. Physical verification/count of assets is carried out periodically. A Contracts Register will also be maintained in respect of all contracts with consultants, contractors and suppliers. The PMU will prepare Contract Status Reports quarterly as part of the IFRs. Control procedures over fixed assets and contracts management will be the responsibility of the PMU. 26. MoFEP’s Internal Audit at national level will review the activities of the project and report on semiannual basis to LGB, MoFEP and the Bank. Similar internal audit arrangements will exist at the state level for activities in the states and counties. Financial Reporting Arrangements 27. Quarterly IFRs will be prepared by the PMU/Financial Management Specialist and will cover all project funds including IDA and bilateral contributions in the LGSD Trust Fund for the purpose of monitoring the implementation of the project and submitted to LGB, MOFEP the Bank and other participating bilateral agencies within 45 days of the end of each fiscal quarter. This report must cover all IDA funds received for the project as a whole as well as counterpart or government funds received under the project if any. It includes a statement showing: period and cumulative inflows by sources and outflows by main expenditure classifications; beginning and ending cash balances of the project; and supporting schedules comparing actual and planned expenditures. Expenditures would be classified by component and by category. Semiannual cash forecast statement should also be included. A template for this report was agreed between MoFEP/ LGB and the Bank during negotiations. 28. The PMU/Financial Management Specialist will be responsible for providing overall consolidated financial reports as defined in the relevant covenants. The accounting system to be put in place will ensure that financial reports will provide relevant and timely information to the PMU, implementing agencies, and various stakeholders monitoring project performance. It is expected that all levels of implementation will maintain adequate filing and archival system of all accounting and relevant supporting documents for review by the Bank during supervision missions and also for audit purposes. 29. The PMU/Financial Management Specialist will also prepare annual financial statements (AFS) for the entire project. The content of the statements will be documented in the Audit ToRs agreed during project negotiation. AFS will be prepared in accordance with International Public Sector Accounting Standards (IPSAS). The AFS shall include adequate notes and disclosures consistent with the cash basis of financial reporting under the IPSAS. 60 Auditing 30. The Audit Chamber has the constitutional responsibility for carrying out all audits in RSS. The Bank, through the Multi Donor Trust Fund has supported the Audit Chamber in developing its capacity. However, this capacity is not fully developed. In order to continue to support the strengthening of country systems, the Project Financial Audit would be carried out by the Audit Chamber with support from an External Audit Agent. The project will support the financing of this external audit. The audited project annual financial statements together with any additional information required will be submitted to the Bank within six months after the end of the financial year. The audit would be in conformity with the Bank’s audit requirements and in accordance with internationally recognized auditing standards. The auditor will express an opinion on the Financial Statements in compliance with International Standards on Auditing (ISA). The external auditors will also prepare a Management Letter giving observations and comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the Grant Agreement. The project is also funding a County Performance Audit as an additional control procedure and as part of the project activities. 31. County expenditures on the PDG will be audited annually as part of the project-wide independent audit. Each county will be audited every year, in accordance with procedures contained in the Local Government PFM Manual, and concluded within six months of the end of the financial year. These will be conducted by auditors acceptable to the Bank using terms of reference agreed with the Bank, and will be subject to sample verification during the project audit as well as spot checks during project supervision. Fraud and Corruption 32. Possibility of circumventing the internal control system with colluding practices as bribes, abuse of administrative positions, mis-procurement etc., is a critical issue and may include: (a) late submission of supporting documents; (b) poor filing and records; (c) lack of system integration; (d) lack of budget discipline; (e) unauthorized commitment to suppliers, bypassing budget and expenses vetting procedures; (f) unsecured safekeeping and transportation of funds. These are mitigated as follows: (i) specific aspects on corruption auditing would be included in the external audit TOR; (ii) the internal auditor at National level would report directly to the MoFEP as well as present semi-annual reports to the World Bank; (iii) FM Procedures (as part of Operations Manual) approved before project effectiveness and the Local Government PFM Manual will be finalized before any disbursement to the project in regards to Component 1; (iv) strong FM arrangements including qualified Financial Management Specialist at national level and Project Accountants at state level, periodic IFR including budget execution and monitoring; (v) measures to improve social accountability and transparency are built into the project design. 61 Action Plan 33. Table 11 sets out the actions to be taken to address the weaknesses that have been identified and to ensure the financial management system is robust and strengthened. Some of these actions are to be completed prior to credit effectiveness and these will be monitored on an ongoing basis during implementation. Table 11: Financial Management Action Plan Action Responsibility Due Date 1 Appoint qualified and experienced Financial Management MoFEP/PMU Effectiveness Specialist at PMU Designate government accountants and internal auditor to MoFEP/PMU Effectiveness support the project at PMU 2 Designate an accounts officer (Controller of Accounts) Participating Entry requirement with responsibility for project accounting and reporting at Counties for county county level participation 3 Prepare Project Operations Manual incorporating FM MoFEP/PMU Effectiveness procedures 4 Procure desktops and install an accounting system MoFEP/PMU Three (3) months including training of staff after effectiveness 5 At central level, open two Designated Accounts and two MoFEP/PMU Prior to SSP accounts. One will be for Component 1 while the other Disbursement will be for Components 2, 3 and 4. Advise the Bank of signatories and other banking information 6 Open County bank accounts Counties Prior to the first release of the PDG to counties 7 Prepare ToRs for the Project Financial Audit and County MoFEP/PMU Effectiveness Performance Audit 8 Support Audit Chamber to engage External Audit Agent to MoFEP/PMU Nine (9) months carry out Project Financial Audit and County Performance after effectiveness Audit Conclusion and Supervision Plan 34. The FM residual risk is substantial. In the first year of implementation, there will be two on- site visits to ascertain continued adequacy of arrangements, supplemented by desk reviews of IFRs, monitoring reports and annual audit reports. The FM supervision mission’s objectives will include ensuring that strong financial management systems are maintained for the project throughout project life. Missions would also include visits to selected PDG beneficiaries to verify financial record keeping and procedures. In adopting a risk-based approach to FM supervision, the key risk areas of focus will include assessing the accuracy and reasonableness of budgets, their predictability and budget execution, compliance with payment and fund disbursement arrangements particularly with regard to operations of the PDG and the ability of the PMU to generate reliable financial reports. 62 Project FM Risk Assessment and Mitigation 35. The residual FM risk of the project is assessed as Substantial. The FM risk rating is expected to improve over time with capacity building for key staff and as management becomes more conversant with the process. Table 12: Financial Management Risk Rating Summary Risk Risk Risk Mitigating Measures/Remarks Residual Rating Risk Rating Country Level Apart from the PFMA Act that has been passed, Internal Audit, H GRSS is strengthening the role of the counties in capacity building S Audit Chamber and Procurement Bills are still outstanding. through deepening ongoing reforms in PFM. Fiduciary framework for Weaknesses in the effective use of public funds, weak oversight the project supported by PFMU which has been trained on Bank regarding transparency and accountability. Poor linkages procedures. External Audit Agents will support the Audit Chamber. between strategic planning and long term budgeting at the sector Dissemination of the CIFA will be done prior to project effectiveness levels. The weaknesses in planning and budgeting, revenue and followed by support to government to implement the action plan. administration, budget execution (including procurement), internal controls, and accounting and reporting systems are noted in the recent South Sudan Integrated Fiduciary Assessment (SSIFA) Entity Level MoFEP has experience in handling Bank managed projects, with H The Local Government PFM Manual is developed and will be S capacity built through the MDTF. However counties are very finalized during implementation. weak in basic PFM areas with limited experience and capacity in Continuous capacity building mechanisms and interventions management of public funds. including training and institutional strengthening activities are embedded in the project. Project Level The adoption of operational guidelines, Local Government PFM Integration of project activities, staff and reporting requirements S Manual and practical continual training will help mitigate the risk. M into the Counties could prove challenging. The Operations Manual will set out a clear system of monitoring of Project has a number of implementing entities. Project activities PDG beneficiaries through field visits and returns from beneficiaries. at states and county levels where capacity is low. Oversight mechanisms and sanctions are designed and included as Management’s ability to undertake effective monitoring of part of this project. ToR of annual audits to also include field visits beneficiaries to ensure project achieves value for money may be and report of selected beneficiaries. A County Performance Audit is a challenge. also planned for the project. PFMU will support the PMU in the first year of operation and External Audit Agent would be engaged to support the Audit 63 Chamber in its audit responsibilities. Overall Inherent Risk H S Budgeting Budgets are not comprehensive; budgeting, cash flow forecasts, S Work plans and budgets will be required to be prepared by PMU S planning and controlling are not properly executed; overspending working closely with the all implementing entities. The Bank will which makes budgetary control difficult and the use of such also review these. PMU will design and implement budget budgets as a tool for performance monitoring is weak. monitoring measures. Project budget figures will be captured in the overall GRSS budget to support the creation of a comprehensive budget with donor input. Local government PFM Manual includes detail procedures for budget preparation and monitoring. The capacity building interventions designed in the project will support the beneficiary counties in the preparation of annual budgets and budget monitoring aspects. Accounting Accounting records and documents may not be accurate at H Oversight mechanisms and sanctions are designed and included as S county level. The counties have no comprehensive accounting part of this project. PMU/PFMU through a monitoring agent or other procedures manual and systems in place and the current measures will regularly supervise the utilization of resources accounting staffs have little experience with project management An experienced Financial Management Specialist would be and reporting. contracted for the PMU. The current manual accounting system in use could result in PDG disbursement will take place after manuals are finalized, delays in reporting accounts officers are in place and at least one training session is conducted. Local Government PFM Manual is developed and will be finalized before project implementation. The capacity building mechanisms under Component 3 will support the beneficiary counties to develop their systems. Internal Controls Controls in the preparation and approval of transactions, S Local Government PFM Manual is developed and will be finalized S payments, cash and bank transactions may not be complied with. before project implementation with detailed procedures and formats Risk of ineligible expenditures exists. PDG may be misapplied relating to all grants to counties as well as the approval and by beneficiaries. authorization processes should be implemented. Currently, internal audit is absent or very weak at the county The capacity building mechanisms under Component 3 will support level and where they exist their focus is on transactions rather the beneficiary Counties. than risk, and hence would not be of much help to the project Oversight mechanisms and sanctions are designed and included as with regard to monitoring of performance of beneficiaries part of this project including internal, external and an annual performance audit. 64 Funds Flow Many implementing entities, lack of experience in Bank H CDD model is envisaged to facilitate disbursement S disbursement procedures, the process of ensuring that PDG are PFMU has experience in Bank disbursement procedures and this will used for purposes intended may lead to delays in fund flows. and help the project to facilitate disbursement. The PFMU as well as the result in slow disbursement Bank will also train the Financial Management Specialist t at the PMU on disbursement issues. Financial Reporting Delays in processing and submitting IFRs and other progress H Involvement of the PFMU in the first year of implementation should M reports to ensure compliance with reporting deadlines. facilitate that the overall report preparation. Standard reporting Information received from implementing entities may also be templates and timelines for submission will be agreed and inaccurate for report preparation compliance strictly monitored. The accounting software will support in the preparation of reports and financial statements Auditing Audits may not be completed on time to ensure compliance with H The Bank fiduciary team will agree project management to on ToR S covenants. Likely capacity challenges in the Audit Chamber. for audit and commence process of appointing an auditor shortly after effectiveness. The Audit Chamber will outsource the external auditing activity Overall Control Risk H S Overall Risk Rating H S H – High S – Substantial M – Moderate L – Low 65 Funds Flow and Disbursement Arrangements 36. The PMU/Financial Management Specialist, initially with support from the PFMU, shall submit withdrawal applications to the Bank based on Advances, Reimbursements and Direct Payments. Two pooled DAs will be opened for the project, one for Component 1 (Block Grants) and a second for Components 2, 3 and 4. 37. For Component 1 (Block Grants to Counties for Payam Development) (a) The PDG will be assigned a dedicated expenditure category in the Financing Agreement. (b) A Designated Account (DA) in US Dollar (USD) will be opened in a commercial bank acceptable to IDA, after conducting an appropriate Financial Institution (FI) due diligence review. (c) Given that new counties are expected to join in subsequent years, the ceiling of the DA will be based on a variable forecast for two (2) quarters as provided in the quarterly IFRs to be reviewed and approved by the Bank’s Financial Management Specialist (FMS) and Task Team Leader (TTL). (d) A sub-account of the DA will be opened in South Sudanese Pounds (SSP) at national level in a commercial bank acceptable to IDA. (e) USD payments will be made from the USD DA while payment in SSP will be made from the SSP sub-account upon transfer of same amount from the USD account. Transfers from the USD account to the SSP sub-account will only be made after the expenditure has been incurred (justified and properly documented) and payments are to be made. In essence, as much as possible, the SSP sub-account at the national level would have a zero balance. (f) IDA and trust funds from the LGSD TF will be transferred into the DA against an approved Withdrawal Application to be prepared by the PMU. The first IDA fund release in each year will be an advance payment in USD, in anticipation of the first PDG release to counties for 6 months. It will be disbursed to government based on the submission of a Withdrawal Application which includes the proposed payment schedule for the release of the PDG for the first year. (g) Replenishment of the DA will be based on the submitted IFR indicating the actual amount transferred to counties in the previous release with a forecast of expenditure and cash flow needs for the next six months. Necessary due diligence will be carried out by the PMU to ensure that counties achieve basic agreed performance benchmarks documented in the Operations Manual. (h) Counties will be required to open a dedicated bank account in SSP at a registered bank for the sole purpose of receipts and expenditures of the PDG. All payments for goods, services and operating costs that are eligible under the PDG will be made from this account and processed by the Controller of Accounts; signatories to the county bank 66 account will be the Executive Director (the accounting officer of the county), the Controller of Accounts and Senior Accounts Officer. (i) Other than operating costs, most payments are anticipated to be made to private contractors on the basis of the payment schedules agreed in the contracting process. (j) Funds provided to communities for community-managed subprojects will be accounted by the Subproject Management Team (SMT) which includes a treasurer using very simple book keeping to account for funds. The procedures for community- managed subprojects will be clearly outlined in the Operations Manual. Figure 5: Flow of Funds for Component 1 38. For Components 2, 3 and 4 (Community Engagement, Institutional Strengthening and Project Management): (a) A second DA in USD will be opened by MoFEP specifically for Components 2, 3 and 4 in a commercial bank acceptable to IDA and after undertaking a FI due diligence review. Sub-accounts of the DA will be opened in South Sudanese Pounds (SSP) at national level and in each participating state. (b) IDA and trust funds from the LGSD TF will be transferred into the DA against an approved Withdrawal Application to be prepared by the PMU. The first IDA release will be an advance payment in USD, anticipating the payments to the CA, FPs and TA providers in the first six months of project implementation. Subsequent withdrawals will be based on the actual amount expended with a forecast of expenditure and cash flow needs for the next six months. (c) Payments to CA and FPs (Component 2) will be by direct payment from the DA upon submission of invoice and approval by the PMU. 67 (d) Payments to TA providers(s) (Component 3) will be by direct payments from the DA upon submission of necessary reports including work plan, staffing plan, implementation reports specifying clear activities and outputs/outcomes, and invoices and approval by the PMU. (e) At the state level, operating costs of the PCSO will be handled from an SSP- denominated bank account that will be a sub-account of the DA for the PMU at national level. Figure 6: Flow of Funds for Component 2, 3 and 4 39. Detailed disbursement arrangements are documented in the Disbursement Letter. Procurement 40. In South Sudan, public procurement is governed by the Interim Public Procurement Regulations, 2006. These Regulations do not apply to local governments. Government is preparing a new Procurement Law which is at draft bill stage and expected to be enacted within the life of the project. The Bank provided comments to the draft bill and most of the comments have been taken on board except for comments relating to institutional arrangement for decentralizing procurement management which will have effect on this project once the law is enacted. The draft bill designates MoFEP as the only procuring entity and all other government ministries, departments and agencies including local governments would have to apply to be designated as procuring entities by MoFEP. The implication is that once the law comes into force unless designated, local government will not have the mandate to carry out procurement. This will also affect the efficiency and accountability in the management of the procurement process. Extensive discussions were held with government and options were offered by the Bank team to refine the law for practical implementation. Government agreed to make commitments in their Letter of Development Policy to address these concerns and create a procurement framework within which the project would be implemented. 68 41. GRSS is at an advanced stage of preparing a Local Government PFM Manual for use by local governments and communities. The Bank will review the manual for acceptability for use in LGSD and advise government on any necessary modifications to be incorporated before project effectiveness. The government has been advised that the manual should as much as possible operationalize the proposed Procurement Law so that policies and procedures in the LG PFM Manual do not have to change once the law is enacted. For the manual to take legal effect, it will have to be officially issued by an appropriate authority in order to mandate local governments to adhere to the manual. Once agreed between the Bank and government, the Local Government PFM Manual will guide public procurement at county and community levels and any inconsistencies with Bank procurement guidelines will be addressed within the Operations Manual. South Sudan does not have standard bidding documents and therefore Bank Standard Bidding documents will be used for NCB of high value contracts but simplified bidding and solicitation document formats will be used for low value contracts and at county and community level. These will be included in the Operations Manual. 42. Recently, the Bank in collaboration with GRSS and other donor partners carried out a SSIFA, which included a procurement assessment at state level (on the basis of four sample states) and at central level. The assessment revealed that the overall procurement environment in the country is very weak. Further, the country is geographically vast with approximately ten million people. The connectivity to various remote areas is very difficult and becomes almost inaccessible during the rainy season. The capacity of the private sector to supply goods and services is still developing. These country challenges pose challenges for project implementation and also to service delivery in remote areas. 43. Procurement for the proposed project will be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works and Non Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers� dated January 2011 and “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers� dated January 2011 and the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants�, dated October 15, 2006 and revised in January 2011. NCB shall be in accordance with procedures acceptable to the Bank. 44. Component specific procurement arrangement: Procurement arrangements for the four components are described below. 45. Procurement under Component 1: Block Grants to Counties for Payam Development: The total estimated grant per payam at alternate year is in the range of US$95,000 to US$115,000. Thus, procurement under this component will include goods, works and services for simple infrastructure projects that will include water and sanitation, repair/extension of existing schools, marketplace and small-scale irrigation schemes among others. Procurement under this component would be carried out at two levels. Major subprojects will be implemented by the county administration which will include procurement of goods and works. Some simple subprojects shall be implemented at community level by the community-based Subproject Management Team. The main procurement methods under this component will be Community Participation and Shopping. Force account may also apply in certain circumstance at request of Government. Detailed procedures for the Community Participation will be elaborated in the 69 Local Government PFM Manual prepared by GRSS and reviewed by the Bank. A summary of the procurement methods to be followed at county and community level is given below: A. Procurement by the county administration: (a) Procurement of goods (materials required for the subprojects) normally following shopping and in exceptional cases by direct contracting. (b) Procurement of works normally by following local competitive bidding, in some cases by shopping or in some exceptional cases by direct contracting. (c) Procurement of non-consultancy services: This procurement may be required in some exceptional cases. This will be done by shopping or by direct contracting B. Procurement by the community Subproject Management Team (a) Procurement of goods (materials required for the subprojects) shall be done by following shopping or by direct contracting as may be appropriate. (b) Procurement of services (skilled or unskilled labor) shall be done by following shopping or direct contracting as appropriate. (c) Procurement of works: The design of the project at present does not envisage such subprojects to be implemented by the community, which may require procurement of works. However, keeping in view any possible future development and restructuring of project, the Operation Manual will prescribe procedure of procurement of simple works at community level, which shall be done by following local competitive bidding, shopping or direct contracting. 46. Procurement under Component 2: Community Engagement: Procurement will include selection of a CA to work at national level and FPs, one for each state, for supporting community engagement in planning, implementation and oversight of local development activities. FPs will also support the community in the execution of those subprojects managed by the community. Community managed subprojects will utilize Community Participation procedures as outlined under Component 1. Selection of CA and FPs will utilize selection methods such as Consultant Qualification, Single Source Selection (SSS), Quality and Cost Based Selection (QCBS), Quality Based Selection (QBS) and Fixed Budget Selection (FBS) based on the value and prevailing circumstances. Contracts have been reflected in the procurement plan. All procurement under this component shall be carried out by the PMU. 47. Procurement under Component 3: Institutional Strengthening: The main procurement under this component shall be selection of a consulting firm for capacity strengthening of local government including fiduciary capacity development. Other procurable items under this component will include some small value office equipment and short term consultants. Goods will be procured through Shopping and Direct Contracting as appropriate. Selection of consultants will follow Consultant Qualification, QCBS, Least Cost Selection (LCS), FBS, Selection of Individual Consultants and SSS as appropriate. Detailed procurement and selection arrangements are included in the procurement plan. All major procurements under this 70 component shall be procured by the PMU. Some small value goods and short term consultants required in the states shall be procured by the PSCOs, which will work under direct control of PMU. 48. Procurement under Component 4: Project Management: Procurement will include individual consultants to constitute the PMU at national level and PCSOs at state level; consultant services for monitoring and evaluation, project audit and national communication program; small works for the rehabilitation of offices; vehicles, office furniture and equipment; short term consultants to support counties; and workshops and trainings. The contracts have been reflected in the draft procurement plan. All the procurement activities under this component shall be carried out by the PMU except The procurement of some small value goods and the rehabilitation of offices required in the states which shall be procured by the PSCOs under direct control of PMU. 49. Procurement and Selection Methods: Procurement of goods, works and non-consulting services will utilize methods such as International Competitive Bidding (ICB), NCB, Procurement from UN Agencies, Community Participation, Force Account, Shopping and Direct Contracting. At the start of the project, the need for ICB has not been established. However more donors are expected to confirm their participation in the financing of the project and high value contracts may emerge. Procurement from UN Agencies such as UNOPS will be used for procurement of vehicles and equipment due to low capacity of Government staff to undertake ICB and lack of in country market. Selection of consultants will follow QCBS, QBS, Selection based on Consultants’ Qualification (CQS), LCS, FBS, Selection of Individual Consultants and SSS. Both procurement of goods and selection of consultants will utilize Bank Standard Bidding Documents/Request for Proposal. 50. Workshops, conference attendance and study tours will be carried out on the basis of approved annual work plans that would identify the general framework of training or similar activities, including the nature of training/study tours/workshops, number of participants, and estimated cost. 51. Operating costs, excluding salaries, bonuses, and fees for government civil servants, would be incurred using procedures acceptable to the Bank and described in the Operations Manual. 52. Assessment of the agency’s capacity to implement procurement: Procurement under the project would be carried out at the following levels: 53. By a central level PMU: The PMU will be staffed by contracted personnel and will be led by a Project Coordinator and include a full time Financial Management Specialist supported by one or more accountants, a Procurement Specialist and an Engineering and Contract Management Officer, an Institutional Strengthening Specialist, a Communication Officer, and a Monitoring and Evaluation Officer. The PS shall be responsible for all procurement support at PMU level. The PS will initiate the procurement based on the approved procurement plan and do all procurement processing. There shall be a procurement committee in accordance with IPPDR to accord approval at various stages of procurement. A Bid/proposal opening committee and ad hoc bid/proposal evaluation committee shall also be formed as needed. All large value goods, works and consultancy contracts will be procured by the PMU. 71 54. By state level PCSOs: At state level, PCSOs will be led by State Coordinators supported by a Project Accountant and a Monitoring and Information Officer. There shall be small procurements at the PCSO level. These would mainly include small value works for rehabilitation of the office for PCSO, procurement of office equipment and selection of some short term consultants. These will be handled by the PCSO team under the guidance of the PS in PMU. The State Coordinator will initiate procurement as advised by the PMU and conduct necessary procurement processing as advised by the PMU. All approval of contract awards shall be provided at PMU/MOPEP level. 55. At county level the procurement will be carried out by the county administration for the subprojects to be executed by them under Component 1. There are administrative officers with sufficient minimum academic qualifications available at county level that could be designated and trained to perform specific functions such as of procurement. The capacity at this level will be further supported by institutional strengthening activities under Component 3 which will consist of class room as well as on-the-job training. Procurement will be initiated by the designated procurement officer of the county and will conduct all necessary procurement processing. The accounting officer (County Executive Director) will form a procurement committee to accord approval at various stages of procurement. A bid/proposal opening committee and ad hoc bid/proposal evaluation committee shall also be formed as needed. 56. At community level the subprojects under Component 1 will be executed by the Subproject Management Team constituted by the PDC, which will be responsible for procuring local goods and skilled labor (other inputs would be procured by the county). The community will be helped in planning as well as implementation process by the FPs. 57. An assessment of the procurement capacity of county administrations suggests that the procurement system at county level is very weak with no dedicated procurement staff. The scrutiny of procurement in the past utilizing funds from the CDG indicates that no proper procurement procedures were followed, and there is extensive use of direct contracting method. Record keeping was also observed to be weak. No capacity assessment was done for communities since beneficiary communities will only be known when identified through participatory processes described in the PAD. However the Local Governance PFM Manual/Operations Manual will provide guidance on systems and procedures to be followed by Communities and counties for community managed subprojects. 58. The overall procurement risk for the project is considered High. In order to mitigate the risks identified in the fiduciary assessment, an action plan has been prepared in consultation with MoFEP and LGB and is included below. 72 Table 13: Procurement Risk Mitigation Action Plan Risk Risk mitigation measures Responsibility Due Date 1 The capacity at PMU will consist of one contracted MoFEP/ Effectiveness MoFEP to execute Procurement Specialist. PMU (Until the procurement of the Procurement project is very limited. Specialist is contracted, MoFEP will be assisted by TA(s) available in MoFEP) 2 Stakeholders involved Preparation of an Operation Manual MoFEP/ Effectiveness in procurement and which will include a procurement PMU/Bank related activities lack section clearly describing knowledge about procurement arrangements, roles and various aspects of responsibilities, procurement procurement. methods etc. 3 The IPPDR does not For procurement to be handled at MoFEP/PMU/ Effectiveness identify local local government level the Bank government as a government is preparing a LG PFM procuring entity. Manual, which will govern Except for MoFEP, all procurement at that level. The Bank other agencies have to will review and accept it for use in apply for designation the project at local government level. as a procurement Any inconsistency with the Bank entity. The Public procedure will be taken care of in the Procurement Bill is yet Operations Manual. to be enacted as law. 4 Lack of designated The Participation Agreement MoFEP/relevant Before entering procurement staff at requires that the County has State/ into Participation county level deployed or functionally mapped participating Agreement staff to perform key activities county including procurement. 5 The designated This will be responsibility of PCSOs County Continuous procurement officer to be closely in touch with the Administration and other staff in the county administration to monitor /PCSOs/ county handling progress under Component 3 with /MoFEP/PMU procurement do not get respect to formal training as well as sufficient training and hand holding support. Any laxity on hand holding support the part of TA would have to be from the TA for immediately brought to their notice Component 3 to handle for corrective action. The PCSOs the procurement will also keep the PMU regularly efficiently. updated on these activities. 6 Delays in the Similar action by PCSO as for item 5 County Continuous completion of designs above Administration for infrastructure /PCSOs/ subprojects will delay /MoFEP/PMU the procurement process. 73 59. Procurement Plan: The Borrower has developed a procurement plan indicating procurements to be carried out over the entire period of the project. The procurement plan will include all the contracts to be financed by the project, and to be procured by the PMU and State PCSOs which will consist of the procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements. The procurement plan will be updated at least annually, or more frequently as required, to reflect the actual project implementation needs and improvements in institutional capacity. 60. For PDG-financed subprojects, including both county management and community based procurements under Component 1, due to the decentralized, demand-based planning process and the large number and the wide geographical spread of resulting subprojects, preparation of a central procurement plan and agreement with Bank does not appear practical. Therefore, the county administration will prepare a procurement plan for all procurement to be undertaken by them directly or through the community in accordance with the procedure and format prescribed in the Local Governance PFM Manual/Operations Manual, with similar information as for the procurement plan mentioned above, once the items to be procured is finalized. Any revisions to the plan should also be recorded therein. These procurement plans shall be reviewed concurrently for accuracy by the PMU/PCSOs and will be subject to post review by the Bank. The procedure will be further elaborated in the Local Governance PFM Manual/Operations Manual. 61. Threshold for each method of Procurement/Selection and for Prior Review: The recommended methods of procurement/selection and the prior review thresholds for the project would be as given below. The Bank’s prior review requirements are stated in Appendix 1 to the Guidelines for Procurement and Appendix 1 to Guidelines for Selection and Employments of the Consultants. All Terms of Reference (ToRs) regardless of contract amount shall be subject to the Bank’s Prior review. A. Procurement of Goods, Works and Non-Consulting Services Table 14: Procurement Methods and Thresholds for Goods, Works and Non-Consulting Services Procurement Method Threshold (US$) Comment 1. ICB (Works) 5,000,000 Equivalent or more 2. ICB (Goods and non-consulting services) 500,000 Equivalent or more 3. NCB (Works) 5,000,000 Less than 4. NCB (Goods and non-consulting services) 500,000 Less than 5. Shopping (Works) 300,000 Equivalent or less 6. Shopping (Goods and non-consulting services) 100,000 Equivalent or less 7 Direct contracting Any value 8 Community Participation 50,000 To be elaborated in LG PFM Manual/ Operations Manual 9 UN agencies (UNOPS) Any value 74 Table 15: Prior Review Thresholds for Goods, Works and Non-Consulting Services Procurement Method Prior Review Comments Threshold (US$) 1. ICB (Goods, Works and Non- All Contracts Consultant Services) 2. NCB (Goods and Non-consulting 500,000 Equivalent or more services) 3. NCB (Works) 5,000,000 Equivalent or more 4 Direct Contracting (Goods, Works All above US$1,000 and Non-Consultant Services) 5. Community Participation None All contracts expected to be within shopping category 6 UN Agencies All contracts 7 Shopping (Goods, Works) None All shopping of goods and works shall be subject of post review. B. Selection of Consultants Table 16: Selection Methods and Thresholds for Consultants Selection Method Threshold Comments (US$) 1. QCBS, QBS, FBS, Any value Selection method shall depend on nature and complexity of LCS assignment. 2. CQS 500,000 Equivalent or less 3 Individual consultant Any value 4 SSS Any value Table 17: Prior Review Threshold for Consultants Selection Method Prior Review Threshold (US$) Comments 1. Competitive Methods (Firms) 200,000 Equivalent or more 2. Individual consultant selection 100,000 Equivalent or more 3 Single Source (Firms)/Individuals US$1,000 Equivalent or more 62. Frequency of procurement supervision: In addition to the prior review supervision to be carried out by the Bank, the Bank shall conduct an annual post review of a sample of 20 percent of all contracts finalized by the PMU and subject to post review. The post review of contracts executed by the state-level PCSOs, and by participating counties and communities shall be undertaken by the firm engaged under the project for the project audit. The sample size of the annual independent procurement review will be agreed by the Bank at the beginning of the exercise, which shall be based on the total number of procurements done over the period of review. However, the Bank team will also play a role in quality control and undertake sample spot checking to enhance the outcome of the annual independent post review. 63. Simplified Procurement Plan: The draft procurement plan prepared by the Borrower is set out below. 75 Table 18: Simplified Procurement Plan 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD Component 2: Community Engagement 2 Consulting Services under Component 2 Consultancy for Coordination Agency 2.1 Services (4 years) 3,200,000 0 QCBS Prior April 2013 Nov 2013 2017 Engagement of Facilitating Partners for April 2013 Nov 2013 2017 1st batch of 4 states for 4 2.2 years each: Facilitating Partner QCBS Prior 2.2.1 Services for State 1 2,000,000 0 Facilitating Partner 2.2.2 services for State 2 2,000,000 0 QCBS Prior Facilitating Partner Prior 2.2.3 Services for State 3 2,000,000 0 QCBS Facilitating Partner 2.2.4 Services for State 4 2,000,000 0 QCBS Prior Engagement of Facilitating Partners for Dec 2013 Sept 2014 2017 2nd batch of states for 3 2.3 years each (3 states) Facilitating Partner 2.3.1 Services for State 5 1,500,000 0 QCBS Prior Facilitating Partner 2.3.2 Services for State 6 1,500,000 0 QCBS Prior Facilitating Partner 2.3.3 Services for State 7 1,500,000 0 QCBS Prior 76 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD Engagement of Facilitating Partners for Dec 2014 Sept 2015 2017 3rd batch of states for 2 2.4 years each (3 states) Facilitating Partner 2.4.1 Services for State 8 1,000,000 0 QCBS Prior Facilitating Partner 2.4.2 Services for State 9 1,000,000 0 QCBS Prior Facilitating Partner 2.4.3 Services for State 10 1,000,000 0 QCBS Prior Component 3: Institutional Strengthening 3. Consultancy Services under Component 3 Technical Assistance for PDG Planning, Management & Supervision for FTI period:(Two planning IC Prior Feb 2013 April 2013 Dec 2013 and financial management individual 3.1 consultants) 110,000 110,000 Technical Assistance for PDG Planning, Management & IC Prior Feb 2013 April 2013 Dec 2013 Supervision for FTI period: (Two engineering and procurement 3.2 individual consultants) 130,000 130,000 Technical Assistance for PDG Planning, Management & Supervision Firmfor four July 2013 Nov 2013 2017 3.3 Years – 15,300,000 0 QCBS Prior 77 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD Component 4: Project Management 4.G: Goods under Component 4 Office Furniture for PMU (Office desks with chairs; Vistors' chairs; Metal 4.G. 1 Filing cabinets) 70,000 70,000 Shopping Post Mar 2013 Apr 2013 June 2013 Office Furniture for 1st Batch of 4 States(Office desks with chairs; Vistors' chairs; Metal Filing 4.G. 2 cabinets)- 4 lots 80,000 80,000 Shopping Post June 2013  July 2013  Sept 2013 Office Furniture for 2nd batch of 3 States (Office Sep 2014 desks with chairs; Vistors' chairs; Metal Filing 4.G. 3 cabinets) - 3 lots 60,000 0 Shopping Post May 2014 July 2014 Office Furniture for 3rd batch of 3States (Office desks with chairs; Vistors' chairs; Metal Filing 4.G. 4 cabinets) - 3 lots 60,000 0 Shopping Post Mar 2015 July 2015 Sep 2015 IT and other office equipment for PMU (Desk top Computers; Lap top Computers; Laser Jet July 2013 4.G. 5 Printer/Copier/Scanner) 50,000 50,000 Shopping Post Mar 2013 Apr 2013 IT and other office equipment for 1st Batch of State Offices (Desk top 4.G. 6 Computers; Lap top 40,000 40,000 June 2013 78 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD Computers; Laser Jet Printer/Copier/Scanner) - 4 Lots Shopping Post July 2013 Sept 2013 IT and other office equipment for 2nd Batch of States (3 No) (Desk top Computers; Lap top Computers; Laser Jet Printer/Copier/Scanner) - 3 June 2014 4.G.7 Lots 30,000 0 Shopping Post Mar 2014 April 2014 IT and other office equipment for 3rd Batch of States (3 No) (Desk top Computers ; Lap top Computers; Laser Jet Printer/Copier/Scanner) - 3 June 2015 4.G. 8 Lots 30,000 0 Shopping Post Mar 2015 April 2015 Purchase of Vehicles: 6 No (4WD station wagons - 2 for PMU); 4WD Double Procurement from May 2013 Cabin Pick-ups -1 each for UN Agencies Prior Feb 2013 4.G. 9 the 1st batch of 4 states) 320,000 320,000 (UNOPS) Feb 2013 Procurement from Purchase of 7 No UN Prior July 2013 Vehicles: (4WD station Agencies(UNOPS) Oct 2013 wagons -3 for PMU); 4WD Double Cabin Pick-ups (1 each for the 1st batch of 4 4.G. 10 states) 380,000 0 June 2013 79 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD Purchase of 6 No 4WD Double Cabin Pick-ups (2 Procurement from Prior each for the second batch UN July 2014 Oct 2014 4.G.11 of 3 states) 300,000 0 Agencies(UNOPS) June 2014 Purchase of 6 4WD Double Procurement from Prior Cabin Pick-ups (2 each for UN July 2015 Oct 2015 4.G.12 the last batch of 3 states) 300,000 0 Agencies(UNOPS) June 2015 Purchase of (4 No.) Off - road Motorcycles for 1st batch of 4 SCSOs (1 motor 4.G. 13 bike for each) 24,000 24,000 Shopping Post Mar 2013 April 2013 June 2013 Purchase of (4 No.) Off - road Motorcycles (1 each for the 1st batch of 4 4.G. 14 SCSO ) 60,000 0 Shopping Post June 2013 July 2013 Oct 2013 Purchase of (6 No.) Off - road Motorcycles ( 2 each for a 2nd batch of 3 4.G. 15 SCSOs) 36,000 0 Shopping Post March 2014 April 2014 June 2014 Purchase of (6 No.) Off - road Motorcycles ( 2 each for a 3rd batch of 3 4.G.16 additional SCSOs) 36,000 0 Shopping Post March 2015 April 2015 June 2015 4.W: Civil Works under Component 4 Construction of Office 4.W.1 Building for PMU 200,000 200,000 Shopping Post March 2013 April 2013 August 2013 4.W.2 Rehabilitation of SCSO 30,000 30,000 80 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD (State 1) Shopping Post July 2013 Aug 2013 Nov 2013 Rehabilitation of SCSO 4.W.3 (State 2) 30,000 30,000 Shopping Post July 2013 Aug 2013 Nov 2013 Rehabilitation of SCSO 4.W.4 (State 3) 30,000 30,000 Shopping Post July 2013 Aug 2013 Nov 2013 Rehabilitation of SCSO 4.W.5 (State 4) 30,000 30,000 Shopping Post July 2013 Aug 2013 Nov 2013 Rehabilitation of SCSO 4.W.6 (State 5) 30,000 0 Shopping Post Feb 2014 Mar 2014 June 2014 Rehabilitation of SCSO 4.W.7 (State 6) 30,000 0 Shopping Post Feb 2014 Mar 2014 June 2014 Rehabilitation of SCSO 4.W.8 (State 7) 30,000 0 Shopping Post Feb 2014 Mar 2014 June 2014 Rehabilitation of SCSO 4.W.9 (State 8) 30,000 0 Shopping Post Feb 2015 Mar 2015 June 2015 Rehabilitation of SCSO 4.W.10 (State 9) 30,000 0 Shopping Post Feb 2015 Mar 2015 June 2015 Rehabilitation of SCSO 4.W.11 (State 10) 30,000 0 Shopping Post Feb 2015 Mar 2015 June 2015 Consulting Services under Component 4 C.1 Contract Staff for PMU: Project Coordinator (4.5 IC See Note 2 Jan 2013 2017 C.1.1 years) (See Note 1 below) 432,000 72,000 Senior Procurement IC See Note 2 Feb 2013 Mar 2013 2017 C.1.2 Specialist (4.75 years) 684,000 96,000 Senior Finance Management Specialist See Note 2 C.1.3 (4.5 years) 684,000 72,000 IC Feb 2013 Mar 2013 2017 Senior Institutional C.1.4 Strengthening Specialist 684,000 75,000 IC See Note 2 Feb 2013 Mar 2013 2017 81 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD Engineering and Contract C.1.5 Management Officer (4.5 324,000 36,000 IC See Note 2 Dec 2013 Jan 2013 2017 years) C.1.6 Financial Manager (4.5 324,000 36,000 IC See Note 2 Apr 2013 June 2013 2017 years) C.1.7 Accounting Officer (4.5 216,000 24,000 IC See Note 2 Apr 2013 June 2013 2017 years) C.1.8 M&E Officer (4.5 years) 216,000 24,000 IC See Note 2 May 2013 June 2013 2017 See Note 2 C.1.9 Communications Officer 204,000 12,000 IC See Note 2 Jul 2013 Sept 2013 2017 4.25 years) C.1.10 Senior Safeguards 216,000 48,000 IC See Note 2 Apr 2013 June 2013 2015 Specialist (2.25 years) C.1.11 Safeguards Officer(4.25 204,000 12,000 IC See Note 2 Apr 2013 June 2013 Sept 2017 years) C.2. Contract Staff at state level: C.2.1 State Coordinators (4 No. at post for 4.25 years each) April 2013 June 2013 2017 C.2.1.1 State 1 State Coordinator See Note 2 255,000 15,000 IC C.2.1.2 State 2 State Coordinator See Note 2 255,000 15,000 IC C.2.1.3 State 3 State Coordinator See Note 2 255,000 15,000 IC C.2.1.4 State 4 State Coordinator See Note 2 255,000 15,000 IC C.2.2 State Coordinators (3 No. 0 IC See Note 2 at post for 3 years each) July 2014 Sept 2014 2017 C.2.2.1 State 5 State Coordinator IC See Note 2 180,000 82 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD C.2.2.2 State 6 State Coordinator IC See Note 2 180,000 C.2.2.3 State 7 State Coordinator 180,000 IC See Note 2 C.2.3 State Coordinators (3 No. 0 IC See Note 2 at post for 2 years each) July 2015 Sept 2015 2017 C.2.3.1 State 8 State Coordinator 120,000 0 IC See Note 2 C.2.3.2 State 9 State Coordinator 120,000 0 IC See Note 2 C.2.3.3 State 10 State Coordinator 120,000 0 IC See Note 2 C.2.4 State M&I Officers (4 IC See Note 2 No. at post for 4 years July 2013 Sept 2013 2017 each) C.2.4.1 State 1 M&I Officer 144,000 0 IC See Note 2 C.2.4.2 State 2 M&I Officer 144,000 0 IC See Note 2 C.2.4.3 State 3 M&I Officer 144,000 0 IC See Note 2 C.2.4.4 State 4 M&I Officer 144,000 0 IC See Note 2 C.2.5 State M&E Officers (3 IC See Note 2 No. at post for 3 years July 2014 Sept 2014 2017 each) C.2.5.1 State 5 M&I Officer 108,000 0 IC See Note 2 C.2.5.1 State 6 M&I Officer 108,000 0 IC See Note 2 C.2.5.3 State 7 M&I Officer 108,000 0 IC See Note 2 C.2.6 State M&I Officers (3 216,000 0 IC See Note 2 No. at post for 2 years July 2015 Sept 2015 2017 each) C.2.6.1 State 8 M&I Officer 72,000 0 IC See Note 2 C.2.6.2 State 9 M&I Officer 72,000 0 IC See Note 2 C.2.6.3 State 10 M&I Officer 72,000 0 IC See Note 2 C.2.7 State Accountants (4 No. IC See Note 2 April 2013 June 2013 2017 at post for 4 years each) C.2.7.1 State 1 Accountant 96,000 0 IC See Note 2 C.2.7.2 State 2 Accountant 96,000 0 IC See Note 2 C.2.7.3 State 3 Accountant 96,000 0 IC See Note 2 83 1 2 3 4 5 6 7 8 9 Estimated Costs in USD Contract Procurement Review Expected Expected Expected Ref. Description Total Amount to Method by Bank Bid/Proposal Contract Completion No. Estimated be spent (Prior / Submission signature Date Date cost in under PPA Post) Date USD C.2.7.4 State 4 Accountant 96,000 0 IC See Note 2 C.2.8 State Accountants (3 No. IC See Note 2 April 2014 June 2014 2017 at post for 3 years each) C.2.8.1 State 5 Accountant 72,000 0 IC See Note 2 C.2.8.2 State 6 Accountant 72,000 0 IC See Note 2 C.2.8.3 State 7 Accountant 72,000 0 IC See Note 2 C.2.9 State Accountants (3 No. See Note 2 April 2015 June 2015 2017 at post for 2 years each) C.2.9.1 State 8 Accountant 48,000 0 IC See Note 2 C.2.9.2 State 9 Accountant 48,000 0 IC See Note 2 C.2.9.3 State 10 Accountant 48,000 0 IC See Note 2 C.3 Design and Installation of 30,000 30,000 IC Post March 2013 April 2013 Sept 2013 M&E/MIS C.4 Development of 60,000 60,000 IC Post Feb 2013 March 2013 Sept 2013 Communication strategy C.5 Design, Installation and 25,000 25,000 IC Post Feb 2013 March 2013 Sept 2013 Testing of FM System Notes: 1: Project Coordinator is being initially recruited under existing LGSD Preparation Grant. 2(a): All IC above 1.5 years shall be contracted for 1 year at a time. 2(b): The selection of IC for the estimated value for the entire estimated duration of USD 100,000 or above as indicated in the procurement plan shall be subject to prior review. Subsequent extensions after completion of 12 months of successful service with the same existing terms and conditions shall be subject to Post Review 84 Environmental and Social (including safeguards) 64. The project is categorized under environmental Category B-Partial Assessment and triggers the Bank’s safeguard policies OP/BP 4.01 on Environmental Assessment, OP/BP 4.10 on Indigenous Peoples and OP/BP 7.50 on Projects on International Waterways. The environmental and social safeguard issues are related to the local public and economic infrastructure activities to be financed by the PDG under Component 1 of the project. However, unlike traditional investment operations, the actual investment composition under the PDG cannot be determined a priori since the choice of investment subprojects on the menu will result from a participatory local planning process and the selection of subprojects from an indicative investment menu. The envisaged subproject interventions are likely to generate potential positive and negative environmental and social impacts. 65. The project triggers OP 7.50 on Projects on International Waterways since subprojects under Component 1 may include the rehabilitation or drilling of boreholes. New boreholes to be drilled will be shallow in depth, will install non-motorized hand pumps and the amount of water to be extracted will be negligible. Under paragraph 7(a) of OP 7.50 an exception has been sought to the requirement that other riparian countries be notified of the proposed project since the subprojects will relate to ongoing water schemes and will not adversely change the quality or quantity of water flows to the other riparians. Approval of the exception to riparian notification was obtained from the African Region Vice President on January 29, 2013. 66. In order to offset any potential adverse social and environmental impacts anticipated due to the implementation of subprojects, GRSS has prepared and disclosed a draft ESMF on January 22, 2013 in compliance with OP 4.01. This draft will be consulted, finalized and disclosed in country and the Bank's InfoShop by project effectiveness. The ESMF establishes a mechanism to determine and assess the potential environmental and social impacts of subprojects, and sets out appropriate mitigation, monitoring and institutional measures to be taken during implementation and operation of the subprojects to avoid and/or minimize the expected environmental impacts to an acceptable levels. The ESMF also requires a basic environmental and social screening (a simple form/checklist) that will be applied by PDCs and counties during the identification of subprojects. Any activities that will have significant negative social or environmental impacts, require land acquisition of have an impact on physical cultural resources (as defined under OP/BP 4.11 Physical Cultural Resources), will be on a ‘negative list’ for implementation and be excluded. The ESMF provides guidance on preparing chance find procedures for contractors in bidding documents for any construction activities supported by the project. Environmental and Social Management Plans (ESMPs) will be prepared during project implementation. 67. In the context of South Sudan, where land is predominantly held under customary land tenure arrangements and where population pressure on land is very low (13 persons per sq. km), access to land is not a major issues. Land for construction of facilities will be obtained either: (a) through documented voluntary community donations of land arrived at through local consultation; or (b) by using available government land that is free of encroachments, squatters or other encumbrances, and has been authorized for project use by the authorities. Any subproject requiring land acquisition under eminent domain, which would trigger OP 4.12 on Involuntary Settlement, would be on a ‘negative list’. 85 68. OP/BP 4.10 on Indigenous Peoples is triggered, as analysis by Bank and other experts confirms that the majority or all people in the project area meet the requirements of the policy. Per the requirements of OP/BP 4.10, when Indigenous Peoples are the sole or the overwhelming majority of direct project beneficiaries, the elements of an Indigenous Peoples Plan (IPP) should be included in the overall project design; a separate IPP is not required. The proposed project is co-financing a national program that will eventually cover the entire country, and its centerpiece is a local participatory planning process that aims at including all vulnerable sub-groups (whether ethnic/tribal/kinship minority groups, women, youth and displaced) in consultations to agree on the subprojects to be undertaken with the grant. The project has a particular emphasis on identifying and reaching the most vulnerable social groups, ensuring their representation in community organizations and due consideration to their needs and priorities. This process embeds the basic principles of OP 4.10 of a free, prior, and informed consultation leading to broad community support for the project. Consequently, the design of the proposed project supports the intentions and outcomes of the policy by (a) including as an early activity in the participatory county planning process a mapping of ethnic tribal groups with identification of particularly vulnerable minority groups and the nature of their vulnerabilities, so that measures can be taken to ensure their inclusion in the planning process; (b) applying the principle of “equitable access to benefits� across all vulnerable sub-groups (whether ethnic/tribal/kinship minority groups, women, youth and displaced) within the county; (c) monitoring delivery of equitable benefits across ethnic groups with particular emphasis on the vulnerable (e.g. by accountability arrangements that disclose information on budgets and spending and that involve communities in monitoring); and (d) establishing a simple feedback and grievance mechanism that is accessible to the different groups. 69. The key social risks to the project emerge from the years of internal (and external) violence and civil war and displacement that has exacerbated ethnic and livelihood-based rivalries and eroded traditional sources of authority. Further the key drivers of local conflict and grievance— changing structures of authority with unclear roles and responsibilities; rapidly changing relationships and realignments along a range of vectors including ethnicity, wealth, age, education; a widespread perception of patronage and impunity fuelling distrust in government; and access, use and ownership of natural resources— have only deepened the fissures. The community mobilization strategy of the project therefore seeks to identify, acknowledge and address these key drivers of local conflict and grievance. Elite capture of resources and decision making processes, with the marginalization of the vulnerable sections is a real concern. The project seeks to address this through extensive information dissemination on the project investments and benefits, guidelines for social and conflict analysis, process for constituting community institutions with representation of the vulnerable groups, sensitive facilitation, and an accessible grievance redress mechanism. 70. Responsibilities for safeguard screening and mitigation. MoFEP, LGB, SMoFEP, SMoLG and participating counties are responsible for safeguards. MoFEP and LGB are responsible for the coordination of overall development planning at state, county and payam levels including issues related to environmental and social safeguards management and environmental sustainability. The implementing institutions have very limited competence or capacity to support or supervise environmental and social safeguard management activities. The project will therefore engage a Safeguards Specialist and Safeguards Officer in the PMU to: (a) oversee safeguards implementation in LGSD; (b) liaise with national and state environmental ministries 86 on a regular basis; (c) ensure compliance with ESMF and other safeguard instruments; (d) build capacity and troubleshoot for the state and county level Safeguards Focal Points; (e) prepare and implement ESMP and other safeguards instruments as required; (f) and raise awareness and build capacity of various stakeholders at the state, county and payam levels. The project will also assign Safeguard Focal Points for each state and county, with responsibility for providing technical support to the county, payam and boma levels and who will regularly follow up and monitor the implementation of subprojects to guarantee compliance with the ESMF. Safeguard Focal Points at state level will work in collaboration with the national Ministry of Environment and State Ministry/Directorate of Environment to manage the environmental and social safeguard issues in the project. 71. The project will clarify and reinforce responsibilities for implementing and monitoring the environmental and social safeguard aspects of the project, and provide technical support to the implementing institutions for the implementation of the ESMF and other environmental and social safeguard instruments. The Safeguard Focal Points at state level will have the following responsibilities: (a) following safeguards issues and concerns; (b) applying screening checklists to subprojects; (c) conducting environmental and social management activities and ensuring sound implementation of ESMF; (d) be responsible to develop, implement and monitor the environmental and safeguard tools (e.g. ESMPs) as required; (e) providing training and capacity building activities to local government staff and to community members at state, county, payam and boma levels; (f) conducting regular supervision; and (g) preparing progress reports. The Safeguard Focal Point at state level will also liaise with the government and Bank regarding environmental and social safeguard issues, and would play a lead role in increasing the level of awareness on environmental management at county, payam and boma levels, providing training and capacity building to staff both in state ministries of local government and finance, and other line ministries at state level and other implementing institutions. 72. Capacity Building and Monitoring of Safeguard Framework Implementation. As part of the capacity building arrangements made for implementation of the proposed operations, the project has proposed environmental and social Safeguard Focal Points at state and county levels and a Safeguards Specialist and Safeguards Officer at the PMU. To assist in the capacity building and provide subsequent guidance and review of the ESMF’s application, the Bank environmental and social safeguard specialists in the project task team will provide guidance to the implementing institutions at various level. The project will also ensure responsibilities of implementing and monitoring the environmental and social safeguard aspects of the project, provide training and technical support to the MoFEP, LGB, PMU, state, counties and payam offices and other line ministries staffs and create awareness among communities and relevant stakeholders on sound environmental management practices and implementation of the ESMF. During supervision of these operations, the Bank will assess the implementation of the ESMF and recommend additional strengthening, if required. 73. Consultation and Disclosure. The final ESMF will be shared with MoFEP, LGB, state Ministries of Local Government and Finance, participating counties, line ministries, communities, concerned NGOs and other development partners. The ESMF provides guidance on the approach to be taken during project implementation for the screening and design of subprojects and planning of mitigation measures. The public notice concerning the ESMF will be published in-country and will be made available to the public before project effectiveness. 87 74. Implementing agencies will consult participating communities and local NGOs on the project’s environmental and social aspects on an ongoing basis, and will take their views into account. Implementing agencies will initiate these consultations as early as possible, and for meaningful consultations, will provide relevant material in a timely manner prior to consultation, in a form and language(s) that are understandable and accessible to the groups being consulted. Monitoring and Evaluation 75. A Project Monitoring System will be established by the PMU during the first year of implementation and installed in each state PCSO. A full time Monitoring and Evaluation Officer will be part of the PMU and each PCSO will employ a Monitoring and Evaluation Officer, who will be dedicated approximately half time to project monitoring. Data on activities and outputs will be provided in routine (monthly and quarterly) reports prepared and submitted to PCSOs by participating counties and state ministries as well as by FPs for Component 2 and Training/TA Providers in each state. PCSOs will cross-check and enter data into the Project Monitoring System for consolidation and review at central level. Annual reports will also include current outcomes/results by county and state for each project component. Annual Project Review Meetings of the LGSD Project Management Committee will review these reports and on their basis analyze, review and approve annual project plans and budgets for each year of implementation. The Project Monitoring System will provide data for assessing progress on indicators in the project’s Results Framework. 76. In addition to the project’s internal information systems, participatory monitoring and public information systems will be employed. Community and PDCs will be engaged in monitoring the use of PDG resources and subproject execution, as well as broader implementation of the County Development Plan by local authorities. Mobile phones will be employed to document progress of subprojects and other payam level activities. Web pages will be used to disseminate project related information for public access and review, including grant execution and subproject monitoring data, reports, and project-sponsored studies. These additional modalities to provide greater information follow and transparency as a contribution to project monitoring and accountability will be financed using project resources. Role of Partners Important partnerships for LGSD include NGOs (national and/or international) or similar agencies which will be contracted by the PMU as CA and FPs to undertake field implementation of the community engagement activities under Component 2. Collaborating and coordinating partnerships with other donor agencies and project implementers which support reform and institutional development at county level—including UNDP, GIZ, USAID (BRIDGE) and others—will be structured through venues jointly organized with their governmental partners: the LGB and MoFEP. 88 Annex 4: Operational Risk Assessment Framework (ORAF) South Sudan: Local Governance and Service Delivery Project (P127079) Stage: Appraisal 1. Project Stakeholder Risks Rating High Description: Borrower/Government Relations: (i) State Risk Management: A continuous process of engagement and consultations with state governments may object to the proposed grant allocation governments and other key stakeholders to involve them in the preparation process and to formula, funds flow arrangements, annual audit process or strengthen the consensus on the rationale for and the guiding principles for the project phasing of the project if states perceive themselves to be at design and phasing; Under the leadership of MoFEP, government is developing a Service a disadvantage relative to other states in terms of resources Delivery Framework to clarify roles and responsibilities for decentralized service delivery to be allocated; (ii) Government stakeholders other than and the associated financing framework; If there are major departures from the Letter of implementing agencies may have different views on the Development Policy, the project will be restructured at mid-term. speed and form of fiscal decentralization, and there may emerge tendencies towards centralization; (iii) Government policy on decentralization and intergovernmental fiscal Due Date: Status: In Resp: Client Stage: All stages relations unfolds contrary to intentions described in the Continuous Progress Letter of Development Policy. 2. Implementing Agency Risks (including fiduciary) 2.1 Capacity Rating: High Description : Risk Management: 2.1.1 (a) The Bank has undertaken preparatory diagnostic studies 2.1.1 Availability of competent staff with adequate skills, including an institutional assessment of local government and intergovernmental systems, organizational knowledge and financial resources to a financial management capacity assessment, and a procurement capacity assessment, implement the project: (a) Implementing agencies at central which have informed the detailed design of the institutional arrangements for project and state levels have limited implementation capacity, little implementation and coordination, and identified key capacity gaps and targeted capacity experience of Bank operational requirements (including building measures including direct TA to strengthen the capacity of implementing FM and procurement) and may have difficulties hiring agencies to manage, monitor and support implementation; (b) MoFEP and LGB, supported qualified staff; (b) County governments and their sub-units by the Capacity Building Trust Fund (CBTF) and other development partners with the have limited capacity, which may lead to inadequate Bank’s input, will continue efforts to strengthen local planning processes and build local utilization of funds, low uptake of capacity support, low government capacity during preparation, particularly in the area of PFM; (c) The project disbursement, and non-compliance with safeguards and will support the strengthening of county government functionality through: (i) long-term reporting/fiduciary requirements; (c) Coordination TA and capacity building in core local government competencies including planning, mechanisms at central and state levels are weak. budgeting, FM and procurement, environmental and social safeguards management, and 2.1.2 Availability, standardization and efficiency of monitoring and evaluation; (ii) increasing resources for ‘learning by doing’; and (iii) relevant processes and systems (including FM and establishing basic eligibility requirements for the grant to ensure basic administrative 89 procurement) to support project implementation and results capacities are in place in participating counties. achievement: (a) No comprehensive procedures in place for 2.1.2 (a) MoFEP has developed a simple Local Government PFM Manual; (b) The local government PFM or procurement; (b) Internal control Operations Manual will include clear accounting, internal control and audit procedures; (c) and audit functions are weak or non-existent; (c) No The project will finance the hiring and/or training of procurement and financial effective financial reporting or external audit of county management specialists in implementing agencies at central and state levels; (d) The governments. release of the County Development Grant would be linked to the establishment of minimum fiduciary institutions and systems at the county level. Due Date : Status: In Resp: Both Stage: All Stages Continuous progress 2.2 Governance Rating: High Description: Clarity and adequacy of implementing Risk Management: (a) The project would aim to support central and state governments to agencies responsibilities and oversight processes: (a) create an enabling policy, regulatory and oversight environment for local governance MoFEP and LGB and their corresponding ministries at (including in-year monitoring systems, audit practice, and regular analysis and evaluation state level have overlapping mandates for local government of public expenditures and systems at the local level) based on a clarification of the oversight and limited capacity for effective supervision; (b) respective roles of each tier of government; (b) The project would aim to provide targeted Weak systems and capacity for internal and external support to: (i) enable the population of payams and bomas to engage in an inclusive and oversight; (c) Capture of local planning and prioritization participatory planning process; (ii) enable them to implement simple investment projects process by local elites; (d) Limited scrutiny and oversight with funds allocated to them; and (iii) support communities to exercise effective oversight from citizens. of local development activities. Stage: Due Date: Status: Not yet Resp: Client Implementation Continuous due 3. Project Risks 3.1. Design Rating: Moderate Description: Scope/Coverage: Dispersed implementation Risk Management: Given the challenging operational environment across the country, a across states and counties, the lack of all-season road carefully sequenced and phased approach to project implementation is necessary. This will access to significant number of counties and payams, the include the implementation of some initial project activities to test approaches and lack of ICT infrastructure and banking facilities, and the implementation arrangements as part of the FTI. A phased entry of counties into the full risk that insecurity undermines the achievement of project scope of project activities will allow for national and state level implementation support outcomes. capabilities to be developed or enhanced. The first few years of project implementation will focus on a subset of strategic, core governance and service delivery activities, which can be incrementally expanded over the longer term as state, local government and community capabilities are developed. Moreover, the phasing of counties will take into account current UN security assessments and state government security committee 90 recommendations to avoid counties with high levels of insecurity (revisited on an annual basis to reflect revised security assessments). Due Date : Status: Not yet Resp: Both Stage: All Stages Continuous due 3.2. Social and Environmental Rating: Moderate Description: (a) Subprojects are not designed or executed Risk Management: An ESMF has been prepared for the project. (a) Subprojects are in a manner that is consistent with Bank safeguards expected to have positive benefits; most will be small-scale in nature and environmental policies, leading to negative impacts for the people or the impacts can be mitigated through good construction practices; (b) Subprojects requiring environment; (b) project exacerbates local conflict or has involuntary land acquisition and resettlement or affecting cultural heritage will be inadequate outcomes that reduce conflict; (c) elite capture excluded from the investment menu for counties and their sub-units; (c) ESMPs will be in local planning and budgeting process; (d) vulnerable developed which will outline simple procedures for environmental and social screening of groups are excluded or marginalized in the local decision proposed subprojects; (d) Per the requirements of OP/BP 4.10, when Indigenous Peoples making processes. are the sole or the overwhelming majority of direct project beneficiaries, the elements of an Indigenous Peoples Plan (IPP) should be included in the overall project design; a separate IPP is not required; (e) Close monitoring of safeguards during implementation by central and state authorities and the Bank; (f) Appropriate staffing of implementing agencies with social and environmental staff and adequate training of these staff; (g) providing for information dissemination on project investments and benefits, guidelines for social and conflict analysis, process for constituting community institutions with representation of the vulnerable groups, sensitive facilitation, and an accessible grievance redress mechanism. Status: Stage: Due Date : Resp: Both Not yet Implementation Continuous due 91 3.3. Program and Donor Rating: Moderate Description: Weak partnership arrangements: (a) Risk of Risk Management: (a) Close partnership very early-on in project preparation, with joint diverging views on project concept and detailed design that Bank, Danida, SIDA and UN missions; (b) early and continuous consultations with would undermine partnership arrangements; (b) insufficient interested development partners, NGOs and CSOs, with increasing interest from co-financing resulting in a reduced scope of project development partners to finance the project; (c) Clear definition of roles, responsibilities activities. and accountabilities at various stages of project preparation and implementation. Status: Due Date : Resp: Bank Stage: All Stages In Continuous Progress 3.4. Delivery Monitoring and Sustainability Rating: High Description: Risk Management: 3.4.1 Project Delivery/Contract Monitoring: (a) weak 3.4.1: (a) The project includes substantial support for technical supervision; (b) Standard capacity in the local private sector leading to unsuccessful designs, bills of quantities and bidding documents will be used for local infrastructure; (c) procurement processes or poorly-executed works; (b) TA and capacity building will aim to strengthen contract management capabilities of limited supply of construction materials in the local market counties; and (d) To reduce costs and risk of unsuccessful bids, a key role for the resulting in high prices (due to poor road networks, long PMUs/PCSOs will be to consolidate activities across counties to ensure economies of scale distance of most of the counties from the centre and the fact when procuring complex services (e.g. borehole drilling). that the key construction materials are imported from 3.4.2: (a) Strong emphasis on monitoring and evaluation; (b) Appropriate staffing of neighboring countries); (c) escalations in construction costs implementing agencies with monitoring and evaluation staff and adequate training of these dues to insecurity; (d) irregular and late payment of staff. contractors. 3.4.2: (a) Local planning and budgeting procedures and capacity building will need to 3.4.2. Lack of sufficient data collection and analytical support the linkages with state and sector planning and budgeting processes. capacity: Limited measurability of project outputs and outcomes due to insufficient reporting systems at central, state and local government levels. Status: 3.4.3 Sustainability: Operations and maintenance of new Stage: Due Date : Resp: Both Not yet local infrastructure is not adequate resulting in limited Implementation Continuous due functionality or an accelerated deterioration of the infrastructure. 92 3.5. Other: Fiscal Risks Rating: High Description: Emerging uncertainties regarding the Risk Management: (i) participating counties would need to meet basic minimum uncertainty of government revenues and possible conditions to receive a grant allocation to ensure basic administrative capability (including reductions in public sector spending (operating costs and the deployment of critical staff); (ii) irrespective of the impact of austerity measures on capital expenditure) that may destabilize funding to state transfers and the County Development Grant, the project would provide a reliable counties, and weaken the predictability of the mechanism for the transfer of resources for subprojects selected at the discretion of intergovernmental fiscal framework. payams, as well as providing for subprojects to be managed by communities; (iii) risks of diversion of funds will be managed through dedicated bank accounts, strengthened fiduciary controls and enhanced social accountability mechanisms; (iii) technical assistance will be established at critical points in the implementation architecture at central and state levels to protect funds flow; (iv) a top-slice of the PDG would be made available to counties to meet monitoring and supervision costs associated with subproject implementation; (v) NGO FPs and Institutional Strengthening TA would be leveraged to support the supervision and monitoring of project outcomes (use of contracted monitoring agents would only be cost effective as the project acquires scale); and (vi) in the most inaccessible and high risk counties, implementation arrangements would leverage the logistical and administrative infrastructure provided by UN County Support Bases to enable technical assistance and supervision at county level. In situations where a large region of the country is severely affected by fiscal illiquidity that prevents numerous states or counties from implementing PDG-financed subprojects, contingency measures could be triggered to restructure the project to enhance the role of FPs in the management of PDG allocations as a means to continue local development investments using community management modalities for subproject execution. Status: Stage: Due Date : Resp: Both Not yet Implementation Continuous due 93 3.6. Other: Insecurity Rating: High Description: Risk that insecurity undermines project Risk Management: The project design anticipates and responds to some of the key outcomes. conflict stresses by: (a) supporting a more equitable allocation of resources at the sub- county level; (b) ensuring more inclusive and participatory local-level planning, implementation and accountability processes that also address local drivers of conflict; (c) clarifying the responsibilities of sub-national actors for the local development investment cycle; (d) incorporating dispute and grievance redress mechanisms. Moreover, the project design and operational modalities incorporate measures to mitigate against the risk that insecurity undermines the achievement of project outcome by: (i) ensuring that the phasing of counties takes into account current UN security assessments and state government security committee recommendations to avoid counties with high levels of insecurity (revisited on an annual basis to reflect revised security assessments); (ii) ensuring that the selection of facilitating partners takes into account their track record of working with locally recruited staff that could provide some measure of continuity of operations in areas where the presence/movement of international staff is constrained; and (iii) providing for smart-phone monitoring of project outcomes in remote or insecure areas and which would include off-line capabilities (upload data where/when coverage permits). In situations where a large region of the country is severely affected by widespread and sustained insecurity that prevents numerous states or counties from implementing PDG-financed subprojects, contingency measures could be triggered to restructure the project to enhance the role of FPs in the management of PDG allocations as a means to continue local development investments using community management modalities for subproject execution. Status: Due Date : Resp: Both Stage: All Stages In Continuous Progress 4. Overall Risk Following Review 4.1 Implementation Risk Rating: High Comments: Key risks including continued insecurity, the uncertainty of government revenues, the challenging operational environment and weak institutional capacity and coordination mechanisms (as experienced during the implementation of the MDTF-SS supported projects) will need to be systematically addressed through institutional arrangements for project implementation and coordination, direct support through project components, supervision and oversight and clear reporting and accountability mechanisms. 94 Annex 5: Implementation Support Plan SOUTH SUDAN: Local Governance and Service Delivery Project Strategy and Approach for Implementation Support 1. In the design of the Implementation Support Plan (ISP), consideration has been given to the risks identified in the ORAF and the particular characteristics of the environment in South Sudan including: (d) Severe implementation blockages associated with the still emerging administration (especially outside Juba) and limited experience of implementing agencies with IDA- financed and Bank-managed activities requiring intensive support and follow-up. Consequently traditional approaches to engagement are not effective and implementation will require staff-intensive presence in-country, so that staff are positioned to take a more pro-active role in supervising, guiding and supporting activities with GRSS. (e) Implementation costs are very high since: (i) South Sudan is highly import-dependent with a very poor road infrastructure; (ii) implementation blockages mean that tasks are more time intensive than elsewhere; and (iii) the logistical challenges in travelling outside the capital mean transport costs are high and visits need to be longer. Based on this experience the required level of operational costs has proven to be about twice the Regional norms. Experience during the CPA period and since has shown that standard, regional coefficients for the costs of operational activities in South Sudan do not reflect the very high costs of doing business. 2. Additionally, the ISP reflects the nature of project activities and implementation modalities including: (a) the pioneering nature of the project, which will be the first IDA credit to GRSS; (b) the decentralized nature of project implementation involving central, state and county government, their sub-units at payam and boma levels, as well as efforts to engage and organize communities; (c) the broad geographical coverage of the project—which will extend to all ten states and 40 of the 79 counties by the end of the project period; (d) the necessity for the project design to respond to key project risks including insecurity and fiscal uncertainties, which may require adjustments or even restructuring; (e) the reliance on the provision of key inputs by other actors—private firms for public sector capacity buildings and multiple NGOs for facilitating community engagement—and the necessity for a well-managed partnership framework; (f) the necessity to establish and effectively manage a MDTF to channel bilateral contributions, including the donor outreach/coordination and the additional management/reporting burden this entails; and (g) the limited scope at the outset of the project to employ third-party monitoring agents due to the high costs relative to the resource envelope available for the project. 3. Therefore the approach to implementation support will include: (f) A strong team for support missions to ensure that all technical areas are professionally catered for to provide the required advice to implementing agencies at all levels. While 95 GRSS and its implementing agencies remain responsible for project implementation, responsibility for resolving challenges constraining achievement of the PDO will be shared by all stakeholders including GRSS and the Bank. The Bank will need to conduct two or three implementation support missions per year. (g) The Bank team has necessarily been multi-sectoral for project preparation, including team members from AFTUS, AFTSP, AFTCS, OPCFN and J4P. It will be critical to continue this multi-sectoralism in the implementation support phase, including formalizing cross-support commitments. (h) In addition to the implementation support missions, a Mid-Term Review will be carried out within 24 months of project implementation to assess and respond to implementation challenges. (i) Missions and reviews will be complemented by assessments that could include the following areas: financial management, procurement, monitoring and evaluation, safeguards and technical. Implementation Support Plan 4. A core technical team will be established in the region to provide hands-on support to implementing agencies and to liaise with development partners including a TTL, Co-TTL, a Danida-financed CDD specialist (to support the implementation of the FTI) and a South Sudanese local government development specialist. Moreover, the Bank’s implementation support team will leverage the presence in the Country Office and region of procurement, financial management, environmental and monitoring and evaluation specialists, all of whom have had significant experience in providing support to the implementation of the MDTF-SS. The team based in the region will be supported by international specialists including a Local Government Institutional Development Specialist, Intergovernmental Fiscal Specialist and Social Development and Safeguards Specialist, who will participate in regular implementation support missions. Specifically, the following technical support and due diligence will be required by the project: Table 19: Focus of Implementation Support Time Focus Skills Needed Resource Partner Estimate Role First Component 1:Block Grants to Core technical expertise on: community- US$300,000 twelve Counties for Payam Development driven development in conflict and fragile months states; intergovernmental fiscal transfer  Establishing fiduciary systems systems; local government development; (bank accounts, reporting, monitoring and evaluation (including the accounting, monitoring, use of ICT technologies); and grievance auditing) redress systems.  Disbursement of block grants to Fast Track counties Financial management, procurement and environmental and social safeguards. Component 2: Community Engagement 96  Contracting of NGOs as FPs  Mobilization and training of community facilitators  Information campaign, community mobilization and local planning and budgeting process in year 1 counties Component 3: Institutional Strengthening  Implementation of financing (via MDTF)  Training of state and county staff on core fiduciary, safeguard and grant management functions  Support to counties executing PDG (Fast Track counties) Component 4: Project Implementation Support  Training of PMU  Establishment and training of PCSOs in states  Spot checks of county level grant accounts and individual subprojects  Implementation of a grievance mechanism  Implementation of a grant monitoring system, project monitoring framework and system Ongoing Component 1:Block Grants to Core technical expertise on: community- US$250,000 Counties for Payam Development driven development in conflict and fragile (annually) states; intergovernmental fiscal transfer  Disbursement and monitoring systems; local government development; of block grants to participating monitoring and evaluation (including the counties use of ICT technologies); and grievance redress systems. Component 2: Community Engagement Financial management, procurement and environmental and social safeguards.  Information campaign, community mobilization and local planning and budgeting process  Support for community executed projects  Support for community oversight mechanisms 97 Component 3: Institutional Strengthening  Consolidation and expansion of capacity building to counties entering the full scope of the project. Component 4: Project Implementation Support  Project management  Fiduciary (including project and entity audits)  Safeguards  Monitoring and evaluation Table 20: Skills Mix Required Skills Needed Number of Staff Comments Number of Trips Weeks Task Team Leader/Co-TTL TTL based in Juba and Co- 2-3 full TTL based in the region implementation Local government specialist Local staff support missions CDD Specialist SIDA financed for 1-2 years, annually, along based in the region with need-based Local Government Institutional Consultant backstopping Development Specialist support in specific Intergovernmental Fiscal Specialist Consultant areas. Social Development and Safeguards Based in headquarters Specialist Procurement Specialist Based in the region Financial Management Specialist Based in the region Environmental Safeguards Specialist Based in the region Monitoring and Evaluation Specialist Based in the region Trust Fund Administrator Based in headquarters Table 21: Partners Name Role UNDP Capacity building support to states UN Country In counties with County Support Bases, accommodation and facilities for project staff and Program development partners. UNMISS civilian staff could potentially support the participatory planning and community engagement processes. SIDA Financing of the FTI and potential contributor to the project Denmark Bilateral contributor Norway Bilateral contributor Kingdom of the Bilateral contributor Netherlands EU Potential contributor to the project GIZ Technical Coordination of Support to the Office of the President and LGB on the Decentralization Policy and local government capacity building USAID Technical Coordination of local government capacity building in specific states and counties 98 Annex 6: Feedback and Grievance Redress Mechanisms SOUTH SUDAN: Local Governance and Service Delivery Project Rationale 1. LGSD will operate in an environment prone to a range of conflict drivers at the local level. A preparatory social assessment for the project undertaken by the London School of Economics concluded that violence and grievances at the local level mainly manifest in relation to: (a) uneven resource allocation, underpinned by a history of marginalization and perceived dominance by a core elite, often based on ethnic identities; (b) changing structures and nature of authority that create a lack of clarity as to who is responsible for what; (c) rapidly changing relationships and realignments along a range of vectors including ethnicity, wealth, age, education; and (d) widespread perceptions of patronage and impunity fueling distrust in local government. 2. While improved systems for local governance and service delivery supported by the project can potentially ameliorate local conflicts by empowering communities, ensuring the inclusiveness and transparency of resource allocation decisions, expanding access to livelihood opportunities or addressing the root causes of conflicts that emerge around scarce resources, nevertheless the project must anticipate that it is also likely to have unintended consequences that may exacerbate local grievances and disputes. Investments by the project could both inflate existing grievances and become the sources of new contests. 3. For example, the project supports more robust community engagement modalities that seek to enhance the voice of all citizens in a participatory planning process through representative community institutions (BDCs and PDCs) while clarifying roles and responsibilities of local government, traditional authorities and civil society. These arrangements will shift existing power and authority relationships. It is therefore reasonable to expect that grievances will arise involving individuals, communities and local authorities. Grievances should not be considered a ‘by-product’ of the project, but as essential element of change. 4. It is essential that the project incorporate modalities to register and respond to grievances arising from project activities. These have to be able to respond rapidly and in a sensitive manner, should ensure that grievances lead to positive outcomes, and help prevent these feeding into existing social cleavages and conflict stresses. Furthermore, project feedback and grievance redress mechanisms can enhance the capacity of government to handle grievances and feedback, and thereby enhance government’s accountability and credibility to its citizens. The project will therefore support a simple project feedback and grievance redress mechanism, alongside local conflict resolution mechanisms and safeguards, which can later be mainstreamed into government structures. The project’s feedback and grievance mechanism, to be described fully in the Operations Manual, will also identify the linkages to formal redress mechanisms in the domestic legal framework where the law is broken. 99 Table 22: Project-Specific GRM Step of GRM Function Actors Requirements / Comments Assess and Mechanism available For Project Beneficiaries: Requirements: Clarify to help aggrieved - Boma Resource Person - training manual for FPs person assess if (FP); on GRM; grievance is - Social Mobilization Officer - GRM are part of warranted. (FP). communication and training strategies; For LG Staff: - establishment of State Coordinator (PCSO). project notice boards and easy access to project information Reporting Depending on the Complaints from Project Comments: By being type of grievance and Beneficiaries: able to report to the CA, the person aggrieved - Community person FP or directly to the – institutions receive nominated as Focal Point PMU, a complainant has reports of grievances. for Feedback and the option to choose Grievances; between alternative - Chief (for issues under addresses. their purview, such as land conflicts, or for forwarding Relevant grievances can grievance to FP); be reported by the PMU - Boma Resource Person to LG auditors or the (FP) government’s - Social Mobilization Officer independent audit (FP) (if grievance concerns structure, in order to the Boma Resource strengthen the Person); governmental system. - Programme Manager (FP) (if grievance concerns Grievances that relate to Social Mobilization government, but not Officer); directly to the project - Coordinating Agency (CA) can be passed to the (if grievance concerns FP); respective government - PMU or PCSO (if office with copy to the grievance concerns FP or project (PCSO / PMU). CA). Complaints from LG Staff: Requirements: - PCSO or PMU - hotline number (Communications Officer) installed at PMU and number provided in information sessions after FTI; - include establishment and administration of drop boxes, reception of grievances, 100 documentation and reports in TOR of Boma Resource Person (FP); - include reception and registration of grievances in TOR of CA and Social Mobilization Officer (FP); - include reception and handling of grievances in TOR of PCSO/PMU officers; - train Chiefs and Paramount Chiefs in grievance handling. Acknowledge Rapid Locally Resolved Grievances: Grievances reported to and Follow-Up acknowledgement the Social Mobilization and follow up are Chiefs / local courts: Officer (FP) or the important in order to - Intra community disputes PCSO, that relate to prevent conflicts. The over project sites or community dynamics officer who received decision making processes; outside project the grievance has to - local disputes that do not procedures, should not decide where it concern violations of simply be passed back to should be handled. project; the chief. Complainant Some grievances - disputes that arise after may have deliberately should be solved project completion. circumvented locally, while others ‘traditional’ conflict must not. Chiefs / Paramount Chiefs / resolution institutions. If Customary Law Council / LG conflict management is Officials: required to address the - inter-communal disputes grievance, project chiefs may report to the structures (FP, PCSO, paramount chief, who can PMU) should cooperate handle the issue; with neutral personalities - Chiefs can call LG for help facilitate the formation as a third party / to provide of a ‘Special Baraza’ security); (group of neutral and - Special Barazas can handle respected individuals the grievance (they can that will manage the consist of neutral conflict). Special individuals, e.g. neutral Barazas have the chiefs, church/mosque advantage that leaders, teachers, police, grievances are solved and others). locally where possible, using local structures, Non- Local Redress: (where project but still circumventing staff or local government officers those social structures are involved, or where accusations that may be part of the of fraud and corruption are made) grievance. They can be given powers to 101 - PCSO / PMU: Grievances recommend punishment. reported PCSO are Members should be registered and forwarded to selected on ad hoc basis the PMU for investigation; to avoid individuals - Government: Grievances manipulating the regarding the government members. and not the project should go through government Requirements: channels; - train chiefs, Boma Social Mobilization Officer (FP) a) Resource Persons, Social investigates received complaints, b) Mobilization Officer in if the grievance is in regards to LG, GRM; forwards it to the county - include training on administration or line ministries government GRM in with a copy to the PCSO / PMU. Institutional Strengthening. 1. Verify, Once grievance - Social Mobilization Investigation officers Investigate and reports have been Officer: investigates and have to act rapidly and Act forwarded to the acts upon grievances that have the capacity to set appropriate address he does not pass on. sanctions and within project - CA: Deputy Program punishments; structures, grievances Manager investigates and need to be verified, acts upon a grievance Investigations are investigated and report. described, logged, and acted up. - PMU: Reports from project filed with the results / beneficiaries or from LG outcomes of the case; staff that have been passed to the PMU are Complaints are treated investigated by the confidentially. Communications Officer. Complainants and witnesses are protected; Appeals: Appeals against decisions of the FP and CA are filed at the Decisions are PMU. Appeals against decisions transmitted in a taken at the PMU can be filed with transparent manner. the PMU Project Manager Requirements: - train FP Officers, respective CA Officer and PMU officer in investigation, standard of evidence, possible sanctions, etc… - provide transport and means of communication and travel for investigations, to interview witnesses, 102 access records etc… Monitoring Grievances reports, Filing of Data: Requirements: and Feedback case logs and - Boma Resource Persons - train Boma Resource investigation results (FP) and Social Person, Social are registered and Mobilization Officers (FP) Mobilization Officer, filed by the forward their data on SPSCO officer, respective officers. grievances to the CA; respective PMU Officer - The CA will forward them in provision of feedback Feedback is provided to the PMU; and modalities of to the complainant - PMU: All data is filed by monitoring; and all aggrieved the Communications - train government and parties against every Officer, data is shared with partners at all levels on complaint received, M&E officer, officer the need and proposed in order to inform on responsible for institutional mechanisms for GRM. the results of the strengthening, and with the investigation and CDD Advisor (who will show that the then advise the Project grievances were Coordinator on necessary handled. adjustments of the project). - LGB: Data on government Data on grievances related grievances that has should be used to been passed to government refine is shared with the LGB. project/processes. Feedback: Depending on the confidentiality of the case, results can be posted on the project notice boards, or can be transmitted through the Boma Resource Person or the SPSCO, where appropriate – with copy to the county government. 103 Figure 7: Project GRM 104 To 34˚E 36˚E SOUTH SUDAN Khartoum 12˚N LOCAL GOVERNANCE AND SERVICE DELIVERY PROJECT Renk CITIES AND TOWNS MAIN ROADS To STATE CAPITALS RAILROADS Ed Damazin NATIONAL CAPITAL STATE BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES SOUTH 24˚E 26˚E To 28˚E 30˚E 32˚E SUDAN Nyala To Babanusa To Kadugli SUDAN Paloich Arab Bahr el ' 10˚N To 10˚N Nyala UPPER NILE ABYEI Kodok Abyei l Ghazal NORTHERN Ba h r e Malakal BAHR EL Bentiu Lol GHAZAL UNITY So Jur ba Aweil Nasser t f ara Raga Bahr ez Z I Meshra’ r WESTERN Warrap Waat o 8˚N n BAHR EL GHAZAL Ayod 8˚N s WARRAP t o ETHIOPIA po o n S Wau N u b i a n Akobo e Ak JONGLEI ob Ton o P go l Shambe a LAKES Pon CENTRAL t e Rumbek Pibor AFRICAN a W u Sue hite REPUBLIC Bor Ka Nil ng e en 6˚N 6˚N Tambura To CENTRAL Djema Li Yubu WESTERN EASTERN EQUATORIA EQUATORIA EQUATORIA Maridi JUBA Kapoeta Yambio Torit t o n g 0 50 100 150 Kilometers I m o M t s . Lake Turkana 4˚N Kinyeti D.R. OF CONGO Yei (3187 m) KENYA 4˚N 0 50 100 150 Miles IBRD 39830 Nimule To MARCH 2013 This map was produced by the Map Design Unit of The World Bank. To Isiro Nakuru The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 26˚E GSDPM Map Design Unit 28˚E 30˚E 32˚E UGANDA 34˚E 36˚E