The World Bank Public Sector Governance for Service Delivery Program (P169384) Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 03-Jun-2019 | Report No: PIDA26559 Feb 14, 2019 Page 1 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Project Data Country Project ID Project Name Parent Project ID (if any) Zambia P169384 Public Sector Governance for Service Delivery Project Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) AFRICA 03-May-2019 16-Jul-2019 Governance Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Ministry of Finance Ministry of Finance, Ministry of Local Government (Overall Project Coordinator), Decentralization Secretariat, Office of the Auditor General Proposed Development Objective(s) The Project Development Objective is to strengthen the local governments’ institutional capacity, accountability and management of resources. Components Strengthened Governance, Fiscal and PFM Framework for Local Service Delivery Performance Grant for Service Delivery Capacity Development Support to Strengthen Local Governance and Service Delivery Project Management PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 100.00 Total Financing 100.00 of which IBRD/IDA 100.00 Financing Gap 0.00 Feb 14, 2019 Page 2 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 100.00 IDA Credit 100.00 Environmental and Social Risk Classification Moderate Decision The review did authorize the team to appraise and negotiate Other Decision (as needed) B. Introduction and Context Country Context 1. Zambia has successfully raised its average annual gross domestic product (GDP) growth rate, however, public debt has been increasing at a rapid pace. The real GDP growth in Zambia was 7.6 percent in 20121. Despite the deceleration in GDP growth to 2.9 percent in 20152, it has recovered to 3.9 percent in 2017, remaining resilient at 3.7 percent in 20183. This is mainly due to the high international copper prices, improved domestic mining production and better electricity supply. Although the inflation rate has increased to 7.9 percent in 2018 compared to 6.1 percent in 20174, tight monetary policy has helped to stabilize the exchange rate and contain inflation within the target range of 6-8 percent. However, the economic recovery has been adversely impacted by large government payment arrears, which exerted pressure on the financial system – a system which has been under substantial stress, with increasing non- performing loans which have risen to 12.3 percent. The public debt has more than quadrupled since 2011, rising from US$ 1.98 billion in 2011 to US$ 10.05 billion in 2018 (Figure 1).5 In addition, publicly guaranteed state-owned enterprise debt reached US$ 1.3 billion at end-2018, a substantial increase from US$ 131 million in 2012. Domestically, the debt stock largely consists of treasury securities (22 percent of GDP) and 1 International Monetary Fund (IMF) Article IV Consultations 2017 2 International Monetary Fund (IMF) Article IV Consultations 2017 3 Zambia Ministry of Finance, March 2019 4 Zambia Ministry of Finance, March 2019 5 Non-concessional debt includes three Eurobond issues (from 2012, 2014, and 2015) totaling US$3 billion, syndicated loans (from 2013, 2016, and 2017) totaling US$834 million, and Chinese debt. Chinese creditors (official and commercial) hold about 30 percent of total outstanding external public and publicly guaranteed (PPG) debt, followed by Euro bondholders (26 percent), foreign banks (13 percent), and foreign investors holding the local currency debt (8 percent). The remainder is largely held by traditional multilaterals and bilateral donors (excluding China). Feb 14, 2019 Page 3 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) budget expenditure arrears (5.7 percent of GDP, comprised of mostly unpaid Value Added Tax refunds and uncompensated subsidies).6 This has been crowding out lending to the private sector, thus constraining private investment and consumption. FIGURE 1: PUBLIC SECTOR EXTERNAL DEBT Source: World Development Indicators (2018), and International Monetary Fund (2017), and Ministry of Finance (2018). 2. Despite GDP growth, poverty levels remain high, especially in rural areas. The incidence of poverty in 2015 was 54.4 percent at a national poverty line of ZMW 214 per adult equivalent per month, or roughly US$1 per day7. In urban areas, the incidence of poverty remained much lower than in rural areas and fell from 25.7 percent in 2010 to 23.4 percent in 2015. While poverty was already much higher in rural areas, it rose significantly from 73.6 percent in 2010 to 76.7 percent in 2015, thus widening the urban-rural poverty divide. Rural dwellers account for 58 percent of the population, but they represent 82 percent of the poor. Therefore, poverty in Zambia remains largely a rural issue. The absolute number of poor people increased mainly due to high population growth over the past decade and only moderate progress was achieved in reducing poverty. Between 2010 and 2015, an increase in population8 led to the number of poor people increasing by 1.2 million9 nationwide of which 1.1 million were in rural areas and 0.2 million were in urban areas. The poverty incidence in Zambia was well above the average for Sub- Saharan Africa as a whole, and Niger, Tanzania and Uganda ranked higher than Zambia in making progress in poverty reduction.10. 3. The lack of progress in poverty reduction in Zambia is strongly tied to its spatially unbalanced economic growth. Urbanization has been a driver of change over the past 15 years, although urban 6 World Bank. 2017. How Can Zambia Borrow without Sorrow. Economic Brief 11. Washington DC: World Bank. 7 Living Conditions Measurement Survey (LCMS),World Bank 2015 8 Central Statistical Office, 2016. The Population grew from 7.9 million to 9.0 million, with the urban population increasing from 5.2 million to 6.5 million. 9 The total number of poor increased from 7.2 million to 8.4 million during this time period 10 The World Bank (full citation needed here) Feb 14, 2019 Page 4 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) growth has significantly focused on the major cities, rather than secondary and rural towns. Historically, economic activities in the country were concentrated in the country along the railway line from Livingstone through Lusaka, and the Southern Province to the Copperbelt Province where the main cities were located. As such, these areas experienced significant reductions in poverty. For example, the percentage of the population classified as urban increased from 34.8 percent in 2000 to 40.9 percent in 2015, almost doubling the urban population to 6.5 million11. However, ther provinces, such as the Northern, Western, and Luapula Provinces were excluded from recent economic gains and have high poverty incidence rates. These disparities may further exacerbate the country’s uneven territorial development, as secondary and rural towns play a crucial role in strengthening the links within the local, provincial, national and international supply chains. 4. Despite Zambia’s positive economic growth trend in recent decades, serious challenges remain with respect to governance and institutions which have undermined service delivery. Historically, Zambia has had centralized nature of institutions and political power has been confined to a narrow elite in Zambian society. Since its Independence in 1964, Zambia has had an established democratic form of government and has been one of the most politically stable countries in Africa. However, these features have yet to translate into accountable institutions and effective service delivery outcomes. Between 2012 and 2017, Zambia’s rank with regard to governance effectiveness fell from 39 to 2912 in the World Bank’s Worldwide Governance Indicators13. Similarly, between 2013 and 2018, Zambia’s score fell from 38 to 35 in the Transparency International’s Corruption Perception Index (CPI)14. The deterioration in these indicators is manifested in weak policy coordination and implementation of reforms, as well as limited transparency and accountability in the public sector. Indeed, in the public sector vested interests are prevalent and have a disproportionate influence in policy making and public resource allocation. Coupled with weak capacity to implement reform programs, this has undermined effective service delivery. Evidence suggests that policy implementation has been weak in Zambia, with 75 percent of Cabinet decisions never implemented. 5. The Government has addressed the governance and institutional challenges in its Vision 2030 and 7th National Development Plan (7NDP, 2017-2021). The challenges to governance, institutions, and accountability are well recognized and articulated in the national development plans, and the Government has a clearly articulated strategy to address these challenges. Vision 2030 is the Government of Zambia’s (GRZ)’s Strategic Plan for long-term development with the goal of “becoming a prosperous middle-income country by 2030�. One of the key steps to attaining Vision 2030 is to ‘strengthen governance mechanisms and institutional capacities’, which includes improving the policy environment, enhancing transparency and accountability, accelerating decentralization and devolution to local authorities, and improving the rule of law, human rights and constitutionalism15. The 7th NDP is the economic strategy for achieving the goals of Vision 2030. The good governance agenda is emphasized in a pillar ‘creating a conducive governance environment for a diversified and inclusive economy’, which consists of six development outcomes, viz.: (i) Improved policy environment; (ii) Improved transparency and accountability; (iii) An inclusive democratic system of governance; (iv) Improved service delivery; (v) 11 Zambia Systematic Country Diagnostic, World Bank, March 2018. 12 The rating scale is from 0-100, with 0 corresponding to the lowest rank, and 100 corresponding to the highest rank. 13 http://info.worldbank.org/governance/wgi/#home 14 See https://www.transparency.org/ 15 7NDP 2017-2021. The Government of Zambia. Feb 14, 2019 Page 5 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) Improved rule of law, human rights and constitutionalism; and (vi) Enhanced national values, principles, and ethics. 7NDP sets out ‘accelerating the implementation of decentralization policy’ as a core strategy of the development outcome #(i) Improved policy environment. 6. Decentralization is a core element of the Government’s strategy to strengthen governance and service delivery. To counter the historically centralized nature of Zambian institutions and of political power being confined to a narrow elite in Zambian society, the Government has made decentralization a key plank of its governance strategy16. The National Decentralization Policy (NDP 2009) was formulated to explicitly articulate the intention of the Government to enhance the participation of citizens in governance at all levels, thereby strengthening democratic accountability. The revised National Decentralization Policy (2013) and the Decentralization Implementation Plan (DIP 2014-2017, since extended) provide a comprehensive policy and procedural framework for the implementation of the Government’s devolution agenda. Since then, the Government’s intention has been to transfer powers, functions and resources to local governments with a view to empowering them. It also aims to use their greater proximity to citizens to strengthen the social contract between the State and its citizens. 7. Decentralization in Zambia had several false starts in the past; however, it is now accepted as a necessary policy choice on both sides of the political spectrum. Political economy analysis of decentralization in Zambia reveals that the devolution of authority and control over resources to local governments has been recognized as essential to the equitable development of both the Zambian economy and polity. Yet, decentralization implementation has often been affected by political considerations17. The main reasons for the previous failures of decentralization reforms include centralized power and authority structures; informal power relations that pervade legal-rational rules and lead to elite capture; and the lack of local-level participation in decision-making (Simutanyi 2007; p.2). Some of these political economy factors may still pose a threat to the smooth implementation of decentralization. However, there is a broad political acceptance of the policy, including implementation of the policy through a well-defined Decentralization Implementation Plan. In this regard, the senior Government leadership firmly supports Decentralization as a “given� within the Zambian polity. 8. The Government has recently undertaken a series of important steps to implement the decentralization agenda. The Constitution of Zambia, amended in 2016, has reemphasized the Government’s intention to strengthen decentralization by demarcating clearly the functions of central and local governments. The Public Finance Management Act was amended in 2018 and has strengthened the legal framework for transparency and accountability in the management of public resources. Other significant reforms include the Decentralization Secretariat being brought under the Office of the Secretary to the Cabinet18 and the establishment of the Intergovernmental Fiscal Relations Unit (IFRU) in the Budget Office of the Ministry of Finance (Mo)F in 2018. Moreover, the mandate of the Office of the Auditor General expanded to include the audit of local governments. These activities have established a renewed commitment on the part of the Government to further decentralization as the key policy instrument to improve the transparency, efficiency and accountability of public service delivery. 16 Accelerating the implementation of Decentralization Policy is one of the core strategies in the “Improving the policy environment� development outcome. 17 “Challenges to Decentralization Implementation in Zambia: A Political Economy Analysis� (2010) Neo Simutanyi, Centre for Policy Dialogue, Lusaka, Zambia (report prepared for the World Bank). 18 The Decentralization Secretariat was previously located under the Ministry of Local Government. Feb 14, 2019 Page 6 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) Sectoral and Institutional Context 9. Zambia has a functioning system of local governments. As prescribed in the Constitution (2016), Zambia has a three-tiered structure of the government, including the Central Government, the Provincial Government and the Local Government. Unlike in other countries, the Provincial Government in Zambia has limited financial autonomy and acts as a deconcentrated arm of the Central Government. Each of the nine Provinces has a designated Minister and a Permanent Secretary who coordinate the Central Government’s programs within their respective Provinces. Soon after the independence in 1964, Zambia enacted The Local Government Act19 (1965 with recent amendment in 2016) creating a local government system, which is classified based on population; The local government system includes City Councils, Municipal Councils and Town Councils. Currently, there are 5 City Councils, 15 Municipal Councils, and 96 Town Councils in the country. The elected Mayor (for City and Municipal Councils) or the Council Chairperson (for Town Councils) along with elected councilors form the leadership of a local government. They are supported an executive team of civil servants headed by a Town Clerk (for City and Municipal Councils) or Council Secretary (for Town Councils). The specific responsibilities and areas of services provided by Local Government are outlined in the Constitution (2016)20. These include, among others, provision of local infrastructure, sports and recreational facilities, street cleaning and drainage, sanitation and solid waste management, and maintenance of parks. 10. Service delivery by local governments, especially in rural areas faces significant challenges . For example, only 50 percent of the people in rural areas have access to safe drinking water, and only about 35 percent of the rural population have access to improved sanitation facilities21. Poor service provision is especially prominent at Town Councils due to the (i) limited policy and guidance provided from the central government, (ii) limited resources for capital expenditure, and (ii) limited capacity in fulfilling their basic administrative mandates such as planning, budgeting, procuring, monitoring of service delivery, and engaging with citizens. Therefore, public perception of poor service delivery by local governments continues to persist22. 11. The Government’s Decentralization Plan envisages the devolution of more service delivery responsibilities to local governments; however, the weak state capabilities to implement and manage this process remains a serious concern. Local governments are currently fully responsible for ‘fully devolved’ sectors such as feeder roads, the maintenance of markets and waste management. Service delivery sectors such as health, education and agriculture are still being ‘deconcentrated’ from the central ministries. The Constitution, Local Government Act, and various decentralization strategies envisage a transfer of existing ‘deconcentrated’ service delivery responsibilities to local governments, and the Government has piloted the handover of responsibilities in health and education in one Town Council (Chibombo). When the devolution of these responsibilities to local governments starts to happen, it will increase the flow of resources to local governments. As such, there will be a need for more technical and management capacity of local governments to handle these mandates23. Before such devolution happens, 19 Part IX, X and XI of the Constitution (2016) and the Local Government Act (2016) provide the legal framework for the local government system and decentralization arrangements in Zambia. 20 Article 147 (2) and Annex C in the Constitution of Zambia (2016) 21 Zambia Statistics, Central Statistical Office, 2017 22 https://www.lusakatimes.com/2017/12/01/improve-service-delivery-vincent-mwale-urges-councils/ 23Bardhan (2002) quoted in “Decentralization in Zambia: A comparative analysis of strategies and barriers to implementation�; Ashraf, Bandier and Blum; International Growth Centre (2016). Feb 14, 2019 Page 7 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) though, the central government will need to strengthen its capacity to analyze, monitor and provide oversight of local governments and create an institutional system that can hold local governments accountable. 12. The existing intergovernmental fiscal transfer system needs reform. Developed in 2017, the Intergovernmental Fiscal Architecture (IFA) provides a framework for fiscal decentralization as outlined in the 2013 National Decentralization Policy. Its focuses on four pillars, namely: (i) local level expenditure responsibilities; (ii) local own source revenue responsibilities; (iii) intergovernmental fiscal transfers; and (iv) local level borrowing and debt management. According to the IFA, Zambia currently utilizes with four intergovernmental fiscal transfer systems: the Local Government Equalization Fund (LGEF, for general- purpose grants), Grants in lieu of Rates (also for general-purpose grant), Local Authorities Development Fund (for mineral royalty sharing), and the Constituency Development Fund (the ‘special’ development fund based on electoral constituencies). Out of these four transfer systems, the Local Authorities Development Fund is now incorporated into the LGEF, whereas the Constituency Development Fund is operated as a special allocation with its own rules. Although the IFA clearly laid out a formula-based allocation of resources to enhance the transparency and predictability of local government financing, in practice there are several gaps in practice. For example, the recipient local governments do not know their allocation as per the formula and there are delays in the disbursement of the LGEF grant. Though the LGEF was envisaged to provide a predictable source of financing for meeting the capital investment requirements of local governments, in practice they are being used mostly for meeting salary and other recurrent costs. Also, the grant rules for the utilization of the LGEF grant are weak in terms of reporting, oversight and citizen participation. 13. The Increased mobilization of local revenues is critical to the financial sustainability of local government in delivering its mandated services. Zambia collects only about 0.2 per cent of GDP from property taxes as compared to 0.5 per cent in comparable developing countries24. Preliminary analysis has shown that even with the share of the equalization fund, local governments have limited resources in meeting their capital and operating expenditures. Improving collection of own-source revenues is necessary to broaden the local government fiscal space, funding local public goods, and increasing the accountability of local governments to citizens. There have been some isolated efforts to strengthen local revenue collection and administration with donor support. However, local revenue collection continues to be weak due to lack of updated property cadasters, the absence of timely valuations of properties, manual methods for property tax administration, as well as poor tax administration skills at the local level. 14. Enabling local governments to meet their service delivery responsibilities to their citizens in an inclusive and efficient manner has become increasingly important. The Government recognizes that for the Decentralization Strategy to translate fully into improved service delivery outcomes at the last mile, local governments need to be institutionally capable. Improved capabilities will enable local governments to address their increasing service delivery responsibilities in an efficient, accountable and inclusive manner. This will require strengthening the institutional capacities of the local state as well as enabling an active engagement between the State and citizens around the delivery of local services. This would reduce the prospects for elite capture at the local level and enhance the trust between citizens and local governments. The Government recognizes that these critical priorities need to be addressed immediately if its decentralization strategy will translate into more effective service delivery outcomes and has sought World Bank support to address these through a specific investment operation. 24 Intergovernmental Fiscal Architecture (2017), Republic of Zambia Feb 14, 2019 Page 8 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) C. Proposed Development Objective(s) Development Objective(s) (From PAD) The Project Development Objective is to strengthen the local governments’ institutional capacity, accountability and management of resources. D. Project Description 15. The project consists of four components viz: Component 1. Strengthened the Governance, Fiscal and PFM Framework for Local Service Delivery; Component 2. Performance Grant for Service Delivery; Component 3. Capacity Building Support to Strengthen Local Governance and Service Delivery; and Component 4. Project Management. Component 1 and 2 will disburse against agreed eligible expenditure programs (EEPs) upon achievement of Disbursement Linked Indicators (DLIs). Component 3 and 4 will disburse against eligible expenditures upon submission of Interim Unaudited Financial Reports (IUFRs). Component 1: Strengthened Governance, Fiscal and PFM Framework for Local Service Delivery (US$ 6.5 million) 16. This component aims to strengthen the institutional capacity at the Central Government through the development of the policy, monitoring, fiscal and financial management framework to analyze, monitor, and provide oversight of local government (LG) finances. The component consists of three sub� components: (i) Strengthening the intergovernmental fiscal policy framework; (ii) Supporting Public Financial Management (PFM)reforms for service delivery; and (iii) Strengthening the oversight of local government. This component will disburse upon achievement of results as measured by the Disbursement Linked Indicators (DLIs), and against the execution of agreed-to Eligible Expenditures Programs (EEPs). The Results focus of this component will incentivize the Ministry of Finance (MoF) and the Office of the Auditor General (OAG) to build upon the technical assistance and capacity support provided by the PFMRP as well as leverage the ongoing technical assistance support provided by Cooperative Partners to achieve the agreed-upon results. This component will complement the provision of capacity support to town councils in Component 3 by laying out suitable standards and guidelines that will inform the content of the Capacity Building support. Component 2: Performance Grant for Service Delivery (US$70 million) 17. In accordance with the Government’s Intergovernmental Fiscal Architecture (IFA), the project will introduce a “Performance Grant� to Town Councils that will incentivize institutional performance and accountability of Town Councils from the bottom up. It will do so by providing discretionary resources to them for meeting their capital investment and service delivery obligations. The Performance Grant will reward superior institutional performance of Town Councils as measured through an Annual Performance Assessment (APA). Specifically, the APA will measure the performance of participating Town Councils in core areas of local governance and service delivery that fall within the existing mandates of Town Councils as described in Article 147 (2) Section C in the Annex to the Constitution (2016). Those Town Councils that qualify in the APA will receive the Performance Grant, which will provide a discretionary source of funding for them to be used for meeting their capital investment and service delivery responsibilities. Feb 14, 2019 Page 9 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) Those Town Councils that do not qualify the APA will be provided with targeted capacity support with the objective of helping them to qualify in the subsequent years. 18. Disbursement Linked Indicators: The Performance Grant component will be supported by two DLIs with a target allocation of US$65 million for the performance grants, and US$5 million for timely completion of the APA, and the Quality Assurance of the APA process. Component 3: Capacity Development Support (US$ 20 million) 19. This project component will be implemented by the Ministry of Local Government (MoLG) to support service delivery to citizens by Town Councils (TCs) in the following ways: • Core Training and on-the-job support technical assistance to TCs (Subcomponent 3.1) • TA Support for increased citizen participation and beneficiary feedback on TC services (Subcomponent 3.2) • Information and Communication Technologies (ICT) support for improved last-mile connectivity and access to shared digital platforms (Subcomponent 3.3) • Support to national level monitoring of TCs and management of capacity building activities (Subcomponent 3.4) 20. Capacity development activities are deliberately sequenced within each subcomponent and informed by a theory of change (see Figure below) to ensure that the activities in each of the subcomponents complement each other to provide the most effective results. Component 4: Program Management (US$3.5 million) 21. This component will provide project management support to the Ministry of Local Government (MoLG) for project implementation, as well as for support for regular project evaluations, including procurement and safeguards reviews, and financial reporting and auditing. The component will also support the communication and outreach efforts about the Project to all key stakeholders. The MoLG will put in place a dedicated Project Management Unit (PMU) comprised of specialists in project management, financial management, procurement, capacity building, communications and monitoring & evaluation. The PMU will be headed by a full-time Project Director to be seconded by the MoLG. The Terms of Reference (ToRs) for these key positions will be prepared and agreed to by project appraisal and the fully functional PMU is expected to be in place latest by project effectiveness. The PMU will report to the Project Steering Committee for all matters relating to project implementation. 22. Service Delivery Monitoring Surveys: As part of the monitoring and evaluation activities of this project, it is proposed to organize a Living Conditions Monitoring Survey (LCMS) once and periodical Service Delivery and Citizen Engagement Surveys. The LCMS will be a multi-topic household survey designed to produce statistically reliable estimates at the Council-level. It will address topics such as population and demography, living standards and poverty prevalence, and citizens’ access to and utilization of various public services. After program implementation gets underway, and with the primary purpose of monitoring proposed Results Indicators, shorter surveys focusing mainly on service delivery and citizen engagement will be implemented at the Council level twice during project duration (i.e. in the third and fifth years of project implementation). The PMU will coordinate with the Central Statistical Organization (CSO) for the planning and execution of these surveys. The findings of the survey results will be shared with the Technical Working Groups on Planning & Budgeting as well as on Capacity Building. In addition, the findings will be shared with all project stakeholders. (See the section on Results Monitoring and Evaluation Arrangements for more details). . . Feb 14, 2019 Page 10 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Assessment of Environmental and Social Risks and Impacts At appraisal stage, the screening for potential environmental and social risks and impacts has revealed that the project is not likely to result in adverse impacts on human population and surrounding environment. Potential risks and impacts arising from project implementation will include; (i) temporal disruptions in access to selected public spaces and services, (ii) community exposure to project related traffic and road safety risks, as well as disease caused by hazardous waste from construction or rehabilitation works, (iii) project workers not paid regularly as per acceptable labour management procedure (iv) possible exclusion of vulnerable groups in participating in the project, (v) occupation health and safety of workers and (vi) management of waste during rehabilitation and construction activities. Weak Client capacity in managing risks as per recently rolled out ESF is likely to impact project management of environmental and social risk on the project. Note: To view the Environmental and Social Risks and Impacts, please refer to the Appraisal Stage ESRS Document. . E. Implementation Institutional and Implementation Arrangements 23. The project will be implemented by the by the Ministry of Finance (MoF), the Decentralization Secretariat (DS), the Ministry of Local Governments (MoLG), the Office of the Auditor General and the Town Councils. The MoLG will be responsible for overall project management and will put in place a dedicated Project Management Unit (PMU). The PMU will coordinate with other Ministries and agencies for the implementation of the project component activities and delivery of results. The Ministry of Finance (through the Intergovernment Fiscal Relations Unit (IFRU) and the Office of the Accountant General) and the Office of the Auditor General will be responsible for delivery of results under Component One. The Decentralization Secretariat will be responsible for the management and quality assurance of the APA and the Performance Grant allocation. The MoLG will be responsible for the implementation of Component 3 and will be responsible for coordination with the Local Government Service Commission and the Local Government Training Institute. The project will be supervised by a Steering Committee, to be chaired by the Secretary to the Cabinet or his nominee and which will have representatives from all the Ministries and entities listed above as well as from local governments and Cooperating Partners providing support to Decentralization and PFM. The Steering Committee will meet once every calendar quarter to oversee project implementation progress. It will also report to the Decentralization Policy Implementation Committee (DPIC) chaired by the Secretary to the Cabinet that is responsible for the overall supervision of the Decentralization implementation in the country. The project will rely on existing institutional structures such as the Technical Working Groups (TWG) on Planning & Budgeting and Capacity Building. As part of the Feb 14, 2019 Page 11 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) communication strategy for the project, the PMU will organize communication and outreach workshops as part of project implementation to ensure that there is a common understanding about the project objectives and activities among the various stakeholders in the project. These proposed arrangements will be finalized by project appraisal. 24. Participating local governments will be responsible for the procurement of goods, works and services financed from the performance grant. Each local government will sign a participation agreement with the PMU outlining the requirements for the use of the grant (such as compliance with the Environmental and Social Management Framework [ESMF] and the financial management and procurement requirements). . CONTACT POINT World Bank Rama Krishnan Venkateswaran Lead Financial Management Specialist Miki Matsuura Public Sector Specialist Shomikho Raha Senior Public Sector Specialist Borrower/Client/Recipient Ministry of Finance Implementing Agencies Ministry of Finance Mukuli Chikuba Permanent Secretary, Ministry of Finance mukuli.chikuba@mof.gov.zm Ministry of Local Government (Overall Project Coordinator) Amos Malupenga Permanent Secretary malupenga@gmail.com Decentralization Secretariat Alfred Sakwiya Feb 14, 2019 Page 12 of 13 The World Bank Public Sector Governance for Service Delivery Program (P169384) Director sakwiyas@gmail.com Office of the Auditor General Davison Mendamenda Acting Auditor General auditorg@ago.gov.zm FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Rama Krishnan Venkateswaran Task Team Leader(s): Miki Matsuura Shomikho Raha Approved By Environmental and Social Standards Advisor: Practice Manager/Manager: Country Director: Paul Noumba Um 13-Jun-2019 Feb 14, 2019 Page 13 of 13