Document of The World Bank Report No: ICR2809 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-41370) ON A CREDIT IN THE AMOUNT OF SDR 2.5 MILLION (US$ 3.5 MILLION EQUIVALENT) TO GRENADA FOR A PUBLIC SECTOR MODERNIZATION TECHNICAL ASSISTANCE PROJECT September 26, 2013 Poverty Reduction and Economic Management Country Management Unit for the Caribbean Latin America and the Caribbean CURRENCY EQUIVALENTS (Exchange Rate Effective 06/03/2013) Currency Unit = Eastern Caribbean Dollar (XCD) 1.00 XCD = US$ 0.38 US$ 1.00 = 2.65 XCD FY14 ABBREVIATIONS AND ACRONYMS AG Attorney General CAIPO Corporate Affairs and Intellectual Property Office CARICAD Caribbean Center for Development Administration CAS Country Assistance Strategy CEO Chief Executive Officer DHR Department of Human Resources DPA Department of Public Administration EA Executive Agency ED Enhanced Department EGRIP E-Government for Regional Integration Project GDP Gross Domestic Product GIDC Grenada Industrial Development Corporation GLA Grenada Land Agency GOG Government of Grenada ICR Implementation Completion and Results Report ISR Implementation Status Report MOU Memorandum of Understanding OECS Organization of Eastern Caribbean States PAD Project Appraisal Document PCN Project Concept Document PCU Project Coordination Unit PDO Project Development Objective PSC Public Service Commission PSMP Public Sector Modernization Project PSRU Public Sector Reform Until RMU Reform Management Unit SBDC Small Business Development Center TL Team Leader WIPO World Intellectual Property Organization XDR Special Drawing Rights Vice President: HasanTuluy Country Director: Sophie Sirtaine Sector Manager: Arturo Herrera Project Team Leader: Kathy Lalazarian ICR Team Leader: Svetlana Proskurovska ii GRENADA Public Sector Modernization Technical Assistance Project CONTENTS Data Sheet A. Basic Information ……………………………………………………………………i B. Key Dates ……………………………………………………………………………i C. Ratings Summary ……………………………………………………………………i D. Sector and Theme Codes ……………………………………………………………ii E. Bank Staff …………………………………………………………………………. ii F. Results Framework Analysis ……………………………………………………….iii G. Ratings of Project Performance in ISRs …………………………………………..vii H. Restructuring ………………………………………………………………………viii I. Disbursement Graph ………………………………………………………………..ix 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 7 3. Assessment of Outcomes .......................................................................................... 16 4. Assessment of Risk to Development Outcome......................................................... 21 5. Assessment of Bank and Borrower Performance ..................................................... 23 6. Lessons Learned ....................................................................................................... 26 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 28 Annex 1. Project Costs and Financing .......................................................................... 29 Annex 2. Outputs by Component ................................................................................. 30 Annex 3. Economic and Financial Analysis ................................................................. 32 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 33 Annex 5. Beneficiary Survey Results ........................................................................... 35 Annex 6. Stakeholder Workshop Report and Results................................................... 36 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 37 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 39 Annex 9. List of Supporting Documents ...................................................................... 40 MAP ……………………………………………………………………………….….41 i DATASHEET A. Basic Information Public Sector Modernization Country: Grenada Project Name: Technical Assistance Credit Project ID: P082392 L/C/TF Number(s): IDA-41370 ICR Date: 09/17/2013 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: TAL Borrower: GRENADA Original Total XDR 2.50M Disbursed Amount: XDR 2.01M Commitment: Revised Amount: XDR 2.50M Environmental Category: C Implementing Agencies: Department of Public Administration, within the Prime Minister's Office Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 04/18/2005 Effectiveness: 04/26/2006 04/26/2006 10/01/2010 Appraisal: 10/31/2005 Restructuring(s): 10/31/2011 06/07/2012 Approval: 12/15/2005 Mid-term Review: 06/19/2008 03/24/2010 Closing: 12/31/2010 03/31/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Unsatisfactory i C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Moderately Satisfactory Unsatisfactory Implementing Moderately Quality of Supervision: Moderately Satisfactory Agency/Agencies: Unsatisfactory Overall Bank Overall Borrower Moderately Moderately Satisfactory Performance: Performance: Unsatisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 100 100 Theme Code (as % of total Bank financing) Administrative and civil service reform 33 65 Micro, Small and Medium Enterprise support 17 13 Public expenditure, financial management and 33 14 procurement Regional integration 17 8 E. Bank Staff Positions At ICR At Approval Vice President: Hasan A. Tuluy Pamela Cox Country Director: Sophie Sirtaine Caroline D. Anstey Sector Manager: Arturo Herrera Gutierrez Ronald E. Myers Project Team Leader: Kathy Lalazarian Lisa Bhansali ICR Team Leader: Svetlana I. Proskurovska ICR Primary Author: Svetlana I. Proskurovska ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of this project is to assist the Government of Grenada to begin the process of modernizing its public sector. This includes building the capacity to design and implement public sector modernization initiatives which would address "rightsizing" the public sector and determining which services would best be delivered by an Executive Agency or commercialization. The specific objectives of the project are to (i) improve service delivery in those agencies designated as Executive Agencies; (ii) introduce modern human resource management principles into the public sector; (iii) build the capacity of the Government to lead and implement modernization efforts; (iv) encourage sub-regional cooperation through the procurement of select goods and services; and (v) strengthen the enabling environment for small and micro businesses. Revised Project Development Objectives (as approved by original approving authority) The revised PDO is to assist the process of modernizing Grenada's public sector with a focus on improving public sector efficiency in service delivery and management, enhancing private sector collaboration in support of developing small businesses, and promoting regionalization initiatives. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years The number of days needed to register a business and receive a company Indicator 1 : certificate has decreased lowering the overall number of days to start a business (a new indicator approved at level 1 restructuring in October 2010) End target achieved. Processing a company's 10 days to register a Improved or at New Indicator, prospectus - 2 days, Value company and receive least introduced at registering any (Quantitative or company certificate and maintained at Level 1 other company or Qualitative) 20 days to complete all June 2011 Restructuring business names - 1 registration activities target levels day. Bills of sale are filled and registered in one day. Date achieved 06/01/2009 06/30/2012 03/08/2013 Comments 100% achievement of the revised DO target. New indicator introduced at Level 1 (incl. % restructuring in 2010. achievement) The number of days needed to register property deeds has decreased, lowering Indicator 2 : the number of days to register a property (introduced during Level 1 restructuring in October 2010) iii Maintained 2011 60 days to register Improved or at Doing Business New Indicator, Value property deeds, and 77 least levels of 47 days to introduced at (Quantitative or days to complete all maintained complete property Level 1 Qualitative) property registration June 2011 registration and 30 Restructuring activities target levels days to register deeds. Date achieved 06/01/2009 06/30/2012 03/08/2013 Comments (incl. % 100% achievement of the revised target. Source: Doing Business 2013. achievement) Economies of scale explored at OECS regional level through pooled procurement Indicator 3 : (new indicator introduced at Level 1 restructuring in October 2010) Initiated activities to strengthen the capacity and collaboration Pooled procurement Value As of Oct-2009 a MOU to has not been (Quantitative or on pooled procurement operationalize realized in the Qualitative) signed with St. Vincent pooled absence of the procurement revised law. with St. Vincent. Joint training completed Date achieved 09/02/2010 10/21/2010 03/08/2013 Comments 0%. Activities suspended as required amendment of procurement act first as a (incl. % legal basis to proceed. The act is still pending in June 2013 achievement) Progress with staffing the Public Sector Reform Unit with adequate number of Indicator 4 : qualified personnel by the end of the project. Progress with PSRU key 4 persons: 3 staff staffing with positions and the head of Value adequate number adequately Public Sector quantitative or PSRU employed 3 staff of qualified filled with Modernization Qualitative) personnel by the qualified Department are end of the project. personnel employed. Date achieved 12/15/2005 12/31/2010 06/30/2012 03/30/2013 While training and strategy for the Public Sector Modernization Division were Comments delivered, staff turnover undermined the continuity of capacity building. The (incl. % target was partially achieved: upon relocation, staff used new knowledge in achievement) public sector management The number of small businesses started (new indicator introduced at Level 1 Indicator 5 : restructuring in October 2010) Total of 30 42 GIDC trainees Value 20 GIDC trainees GIDC trainees commenced new quantitative or commenced new commenced businesses as of Qualitative) businesses new business December 2012 iv Date achieved 02/01/2010 06/30/2012 12/01/2012 Comments (incl. % 100% target achieved. achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Amalgamation of divisions into Enhanced Departments to align and coordinate Indicator 1: functions for deeds and land registry and corporate affairs and intellectual property (new, approved at Level 1 restructuring in October 2010) Formal Amended the Deeds and establishment of Land Registry Act (CAP Land Agency and Deeds and 79), enactment of the CAIPO pending the Value Land Registry Deeds and Lands Registry approval of related (quantitative Office and (Act #21, 2009), enacted acts by parliament. or Qualitative) CAIPO Corporate Affairs and Internal procedures operational Intellectual Property Act and information (#21, 2009). management have been modernized. Date achieved 09/02/2010 06/30/2012 03/08/2013 Comments Practically achieved. Enhanced departments (ED) de facto are operational. (incl. % Parliament vote to legally approve the status of new ED is pending. achievement) Increased staff with requisite defined skills and competencies compared to pre- Indicator 2: reform period in EDs (Modified indicator, approved at Level 1 restructuring in October 2010) 60% staff with requisite skills in Value 60% of staff 40% of staff with CAIPO, not (quantitative with requisite requisite skills applicable to the or Qualitative) defined skills Deeds and Land Registry Date achieved 06/01/2010 06/30/2012 03/08/2012 Comments (incl. % Partially achieved: target met fully for one Enhanced Department – CAIPO achievement) Active collaboration from the Public Services Commission to facilitate effective Indicator 3: management of new Government Enhanced Departments (new indicator, approved at Level 1 restructuring in October 2010) Legal, organizational and Legal, Following legal Value administrative changes to organizational establishment, the (quantitative facilitate alignment of and PSC will continue or Qualitative) new and pre-existing administrative supporting functions initiated changes under organizational and v implementatio personnel n and Public management Services practices of the Commission Enhanced supports Departments. effective management of Enhanced Departments Date achieved 09/02/2010 06/30/2012 03/30/2013 Comments The government is not decentralizing HR services; therefore, the PSC continues (incl. % to play its role in personnel management in the same vein as before the project. achievement) Indicator 4: Number of people trained at GIDC in business skills (changed) Regular 13 entrepreneurial skills conduct of workshops for 320 training and 1601 persons Value No original persons, 20 business sustained trained in (quantitative numerical target management courses for achievements entrepreneurial or Qualitative) was set up 271 persons. 250 trainees as of original skills developed business plans closing date of 12/31/2010 Date achieved 02/01/2010 12/31/2010 06/30/2012 03/08/2013 Comments 160 new businesses registered; 42 new businesses were set up by trained (incl. % entrepreneurs achievement) Amount invested in training (changed during Level 1 restructuring in October Indicator 5: 2010) Value No specific target No specific (quantitative EC$92,344 EC$234,327 was set target was set or Qualitative) Date achieved 02/01/2010 12/31/2010 06/30/2012 03/08/2013 Comments (incl. % Increase in investment in training achieved achievement) % of users of GIDC services (trainees and employers) indicate satisfaction with Indicator 6: the program Value (quantitative 0% 85% 100% or Qualitative) Date achieved 12/15/2005 12/31/2010 03/08/2013 Comments (incl. % Fully achieved achievement) Indicator 7: Signing Memorandum of Understanding on pooled procurement No agreement on pooled At least one MOU Value procurement between signed between (quantitative One MOU signed Grenada and any other Grenada and St, or Qualitative) OECS country is in place Vincent and the vi Grenadines Date achieved 12/15/2005 12/31/2010 03/31/2013 Comments Achieved. However, the MOU has never been implemented due to the lack of (incl. % proper legislation. However, the government is determined to pursue integration achievement) of procurement, once the procurement law is amended. Joint training/collaborative efforts undertaken to operationalize MOU on pooled Indicator 8: procurement Value At least one No joint actions related to No training was (quantitative joint training pooled procurement conducted or Qualitative) conducted Date achieved 12/15/2005 06/30/2012 03/30/2013 Comments The new procurement law that would enable the pooled procurement has not (incl. % been enacted. The training could not have been realized without the legal basis. achievement) PSRU staff and other civil servants, trained by CARICAD, report that they are Indicator 9: applying training to their work and satisfied with the results. 85% of trained Trained staff apply their effectively Value 85% of trained training to functions in (quantitative 0% apply their training their work and departments to or Qualitative) to their work are satisfied which they were with results rotated. Date achieved 12/15/2005 12/31/2010 06/30/2012 03/31/2013 Comments The authorities report that persons apply the training received in their new (incl. % positions to which they were moved by the PSC. achievement) Indicator 10: PSRU staff designing and implementing new modernization projects The Public Sector Modernization Modernization Division (formerly Value Target not efforts PSRU) leads HR (quantitative 3 projects established at continue with expenditure reviews or Qualitative) approval PSRU taking and legislation on the lead establishment of enhanced departments Date achieved 12/15/2005 12/31/2010 06/30/2012 03/31/2013 Comments The Government refers to the PS Modernization policy developed through the (incl. % project, however does not have a clear strategy. Therefore, the PS initiatives lack achievement) strategic focus. G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/21/2006 Satisfactory Satisfactory 0.00 2 12/02/2006 Satisfactory Satisfactory 0.35 vii 3 06/22/2007 Moderately Satisfactory Moderately Satisfactory 0.35 4 11/06/2007 Moderately Satisfactory Moderately Satisfactory 0.44 5 02/28/2008 Moderately Satisfactory Moderately Satisfactory 0.50 6 11/25/2008 Moderately Satisfactory Moderately Satisfactory 0.79 Moderately Moderately 7 06/18/2009 0.79 Unsatisfactory Unsatisfactory 8 12/14/2009 Unsatisfactory Unsatisfactory 0.79 Moderately 9 06/29/2010 Moderately Satisfactory 1.02 Unsatisfactory 10 01/19/2011 Moderately Satisfactory Moderately Satisfactory 1.13 11 07/13/2011 Moderately Satisfactory Moderately Satisfactory 1.41 Moderately Moderately 12 01/25/2012 1.41 Unsatisfactory Unsatisfactory Moderately 13 05/16/2012 Moderately Satisfactory 1.51 Unsatisfactory Moderately 14 04/10/2013 Moderately Satisfactory 2.84 Unsatisfactory H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Change of PDO, outcome 10/01/2010 Y MS MU 1.02 indicators, cost reallocation and extension 10/31/2011 MS MS 1.41 Reallocation of costs 06/07/2012 MU MS 1.66 Extension until March 31, 2013 If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Moderately Unsatisfactory Against Formally Revised PDO/Targets Moderately Satisfactory Overall (weighted) rating Moderately Satisfactory viii I. Disbursement Profile ix 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. At the time of project preparation, Grenada faced multiple development challenges that included: finding new sources of growth; addressing high public sector debt that reached 129 percent of GDP by the end of 2004, and protecting social gains made in the previous three decades against changing external environment. The costs of public services were high due to diseconomies of scale and the capacity of the public and private sector to accelerate growth was limited. Besides, the devastating 2004 Hurricane Ivan, followed by Hurricane Emily in 2005, caused enormous damage to the country, estimated above 200 per cent of GDP. The Government of Grenada saw public sector reform as a critical element needed to resume economic growth, achieve competitiveness and improve efficiency of public services. 2. Grenada, along with several other small island states in the Caribbean,is a member of the Organization of Eastern Caribbean States (OECS), which sought and still seeks to deepen sub-regional integration in the areas of central banking, training in public management and other areas. The project saw opportunities to broaden regional cooperation to encompass such other areas as: public procurement, and public sector transformation. The diagnostic work in the area of government institutional capacity identified a number of weaknesses, including: the lack of capacity and skills to design and implement public sector modernization strategies; an excessive public sector wage bill (11 percent of GDP); the lack of performance focus; and the unattractiveness of the public service employment. In the area of procurement, initial positive experience in joint regional procurement of pharmaceuticals held a promise of reducing the cost of procurement through expanding regional cooperation in procurement to other sectors as well. The growth of the local private sector, an engine for creating local employment and revenue, was weakened by the lack of entrepreneurial skills among the population, as diagnosed during project preparation. 3. Bank’s involvement in supporting public sector modernization was timely and in line with the Country Assistance Strategy (CAS, FY06-09). This involvement followed specific CAS directions: (i) strengthening public sector institutional capacity; (ii) promoting transparency and modernization of the public sector; and (iii) facilitating small businesses initiatives. These areas of engagement were seen as critical for promoting economic restructuring and fiscal adjustment. The Public Sector Modernization Project (PSMP) was complementary to other Bank and donor activities. 1.2 Original Project Development Objectives (PDO) and Key Indicators 4. The original objective of this project, as presented in PAD, was to assist the Government of Grenada to begin the process of modernizing its public sector. This included building the capacity to design and implement public sector modernization initiatives that would address "right-sizing" the public sector and determining which services would best be delivered by an Executive Agency (EA) type of organization or through commercialization. The specific objectives of the project were: (i) to improve service delivery in those agencies designated EAs; (ii) to introduce modern human 1 resource management principles into the public sector; (iii) to build the capacity of the Government to lead and implement modernization efforts; (iv) to encourage sub-regional cooperation through the procurement of select goods and services; and (v) to strengthen the enabling environment for small and micro businesses. 5. The key original project outcome indicators, as presented in PAD, included the following: a) Improved management capacity of the public sector to deliver services; b) More cost-effective and efficient public services; c) Increased capacity of the public sector to implement modernization projects; d) Stronger enabling environment for small business development; e) Sector Reform Unit: progress in staffing with adequate number of qualified personnel by the end of the project. Public Number of proposals prepared, accepted and under implementation; and f) Number of goods and services jointly procured. 1.3 Revised PDO, as approved by the Board of Directors, and Key Indicators, and reasons/justification 6. The revised and more specific PDO (approved by the Board in October 2010) was to assist the process of modernizing Grenada’s public sector with a focus on improving public sector efficiency in service delivery and management, enhancing private sector collaboration in support of developing small businesses, and promoting regional initiatives. The change has been made to bring consistency to the PDO statements in the PAD and Financing Agreement, dated April 26, 2006. Additionally, changes in Key Indicators reflected the Government’s decision to no longer pursue the establishment of Executive Agencies. 7. During the Level 1 (2010) restructuring the initial outcome indicators were dropped and replaced by new indicators. In particular, the first two PDO level indicators related to Component 1 that focused on increasing efficiencies in the public sector were aligned and made consistent with those of the Grenada Economic and Social Development Policy Loan (ESDPL, P117000) that was approved by the Board in June 2010. The new project closing date was set as June 30, 2012. The new outcome indicators appeared more realistic at the time of restructuring, more specific, and easier to measure. They are presented below. a) The number of days needed to register a business and receive a company certificate is decreased; and overall number of days to start a business decreased against the baseline. Target: 5 days to register a business and receive a company certificate and 15 days – total number of days to start a business 1. 1 Indicators a) and b) were aligned with Grenada Economic and Social DPL (P117000) that was delivered in June 2010. The ICR for the DPL recognized that PSMP was addressing the concerns raised with respect to public sector constraints. 2 b) The number of days needed to register property deeds has decreased, lowering the number of days to register a property. Target: at least 50% reduction in the number of days to register property deeds; number of days to register property decreased by 39% (or 47 days). c) Number of small businesses started. Target: total of 30 GIDC trainees commenced new businesses, or 50% increase from the February 2010 baseline of 20 new businesses opened by trained entrepreneurs. d) Economies of scale explored at OECS regional level through pooled procurement. Target: initiated activities to strengthen the capacity and collaboration to operationalize pooled procurement with St. Vincent, building on 2009 MOU on Pooled Procurement. e) Revised Indicator for Public Sector Reform Unit (PRSU): progress in staffing with adequate number of qualified personnel by the end of the project. 8. The driving reason for the adaptive restructuring was that the activities of Component 1 of the original project, aimed at the establishment of Executive Agencies, could not be implemented as planned. According to the Attorney General’s letter to the Bank, dated February 25, 2010, the Executive Agency Act of 2008 (section 11(1)) was found in contradiction with the Section 84(1) of the Constitution 2 . Specifically, the provision to decentralize the human resource management authority from the Public Service Commission 3 to the Chief Executive Officer of an agency was found unconstitutional. The World Bank sought and received an independent legal opinion on the legitimacy of the decentralization or delegation of personnel management from the Public Service Commission to public entities. This opinion confirmed the view expressed by the Attorney General of Grenada. 9. Originally, approximately 40 percent of the Credit proceeds were allocated to support the establishment of two Executive Agencies. When this became legally untenable, in 2009 the Government pursued, through amendments to the legislation, the separation of the Deeds and Land Registry from the Supreme Court Registry, which opened the way for setting up a separate Enhanced Department 4 responsible for Deeds and Land Registry. Additionally, legal separation of the Corporate Affairs and Intellectual Property Office (CAIPO) from the Supreme Court Registry enabled the 2 Art. 84.1 of the Constitution of Grenada vests powers to appoint, exercise disciplinary control, remove persons from office and grant leave in the Public Service Commission. However, Art. 84.2 allows the Public Service Commission to delegate in writing, with the consent of the Prime Minister, any of its powers defined in 84.1 subject to such conditions, as it thinks fit. Source: http://pdba.georgetown.edu/constitutions/grenada/gren73eng.html 3 On February 11, 2008, the Chief Personnel Officer of the Public Service Commission sent a Memorandum of Understanding to the Permanent Secretary of the Department of Human Resources, indicating its willingness to delegate the human resources function to the Chief Executive Officer of the planned Executive Agency. Source: Aide Memoire of February 20-23, 2008 4 Enhanced Departments conformed to the Constitution and included performance management elements. 3 Government to create a second Enhanced Department. These legal changes and Government’s expressed commitment to pursuing the establishment and institutional strengthening of the two registration services were the grounds for project restructuring. These legal changes were also among the prior actions under the ESDPL. Through this restructuring, which was closely aligned with the ESDPL, the resources for implementing the revised Component 1 were increased from $1.5 million to $1.73 million by means of funds reallocation from lower priority activities in other components. 1.4 Main Beneficiaries 10. The project targeted several internal beneficiaries and the ultimate beneficiary – the people of Grenada. The primary beneficiaries were: various institutions responsible for land and deeds and intellectual property registration services; the Small Business Development Center of the Grenada Industrial Development Corporation; the Public Sector Reform Unit of the Public Administration Department; and the Public Procurement Office (although the latter was not explicitly mentioned in the PAD). The list of beneficiaries for Component 1, titled Executive Agencies and Performance Management, included several responsible ministries: the Ministry of Legal Affairs (responsible for Supreme Court Registry), the Inland Revenue Division of the Ministry of Finance (responsible for Land Valuation), the Ministry of Agriculture, Lands, Forestry, Fisheries, Public Utilities and Energy, the Ministry of Finance (responsible for physical planning). The Grenada Industrial Development Corporation was responsible for Component 2. The Department of Public Administration (former Department of Human Resources) was an implementing agency for the project. 11. The general public was expected to benefit from better access and efficient registration of property deeds and land registration services. Indirectly, the general public was seen as the ultimate beneficiary of the pooled procurement, which was aimed at improving efficiencies and reducing the cost of procurement. A group of future entrepreneurs were expected to benefit from business development training, as well as from streamlining of business registration procedures. The Public Sector Reform Unit was expected to benefit from new knowledge imparted through training and advisory support from CARICAD in the area of designing and implementing reforms aimed at improving public services effectiveness and efficiency. 12. During the restructuring the beneficiaries of the projects remained the same. 1.5 Original Components 13. Component 1 – Executive Agencies and Performance Management: This component sought to support the preparation and creation of two Executive Agencies through the reorganization and merger of a number of government functions. The project assumed that through Executive Agencies the efficiency of resource management would improve compared to the quality of services delivered through fragmented institutional arrangements in various ministries and departments. Two new agencies were identified as a target for the project: (i) Grenada Land Agency (GLA) and (ii) Companies and 4 Intellectual Property Office (CAIPO). The estimated original cost of this component was $1.635 million (47 percent of project cost) 5. 14. Component 2 - Strengthening the Grenada Industrial Development Corporation (GIDC): The component was planned to support the strengthening of a Small Business Development Center of GIDC through technical assistance and training to the small and micro segments of the business community. The component also envisaged remodeling of the premises, acquiring a mini-van to commute to remote parishes, implementing the train-the-trainer program, logistically supporting the provision of training to future entrepreneurs, and technical assistance in private sector development. The original size of Component 2 was $550,000 (16 percent of project cost). 15. Component 3 - Regional Initiatives: Component 3 included two parts: (a) preparation and implementation of pooled procurement with at least one OECS member; and (b) technical assistance to PSRU to support regional integration efforts in the area of public sector management transformation, to be provided by CARICAD. The original budget for regional initiatives was determined at the level of $490,000 (14 percent of project cost). 16. Component 4 – Strengthening the Public Sector Reform Unit and Project Administration: The dual purpose of this component was: to (a) support the PSRU in managing public sector modernization program; and (b) support project management and project audit. The PSRU was expected to receive technical assistance and training in the public sector modernization, project management, monitoring and evaluation, information technology development, human resources management and communication strategies, as well as to provide basic office equipment. The Project Coordination Unit was expected to receive technical assistance and training in procurement, records management, annual audits, and basic office equipment. The amount allocated to this component was $815,000 (23 percent of project cost). 1.6 Revised Components 17. Project components were revised and amended (adapted to the new circumstances of project external environment) during the Level 1 restructuring in October 2010. The following changes were made: 18. Component 1 - Enhanced Departments and Public Sector Performance Management: This component no longer pursued the creation of Executive Agencies. Instead, the project aimed at conversion of selected Government functions through the establishment of two new Enhanced Departments – (i) Deeds and Land Registry and (ii) Corporate Affairs and Intellectual Property Office. 5 The amounts presented in this section reflect the provisions in the PAD. These differ from the amounts for the initial allocation to components, as presented in table 1 below. This reflects differences in information presented in various Bank documents. 5 19. Component 2 - Strengthening the Grenada Industrial Development Corporation (GIDC): This component did not change, as it was nearly completed at the time of restructuring. 20. Component 3 – Regional Initiatives: Given the completion of the CARICAD Diagnostic Review to guide public sector modernization reforms by the time of restructuring, the component was refocused on implementation of a regional pooled procurement scheme. The new activities included: (i) analysis of training needs; (ii) training to facilitate regional pooled procurement implementation; and (iii) design of a regional pilot procurement payment and inventory management system. 21. Component 4 – Capacity Building for Public Sector Reform Unit and Project Administration 6: Component 4 was scaled down by removing the following activities, for which grant financing (IDF) became available: (i) consultancy services of a local IT specialist in the PSRU; and (ii) consultancy services for monitoring and evaluation. The funds for the cancelled activities were reallocated to finance the project administration function in view of the project extension for additional 18 months (and the subsequent extension for additional nine months). 22. The project proceeds were reallocated to increase funding for the establishment of the Enhanced Departments and implement improvements in procedures and digitalization of maps and records, computerization of record making, and providing on-line services. The reallocation of funds is presented in Table 1. Table 1.Allocation of Project Costs by Component 7 # Components Original ($ Mln) Revised ($Mln) 1 Enhanced Departments and Performance Management 1.50 1.731 2 Strengthening the GIDC 0.50 0.455 3 Regional Initiatives 0.40 0.281 4 PSRU and Project Administration 0.76 0.693 Total Baseline Cost 3.16 3.16 Contingencies 0.34 0.34 Total Project Costs 3.50 3.50 Source: Restructuring Paper, Level 1. Oct. 2010 1.7 Other significant changes 23. The restructuring brought about the refocusing of project priorities toward Component 1, with the aim to rationalize service provision through restructuring of deeds, 6 The Restructuring Paper of 09/02/2010 erroneously refers to component 4 as Public Sector Reform Unit and Regional Initiatives. The amended Financing Agreement (source: conformed copy of October 14, 2010) introduces the title for Part 4 as “Capacity Building for the Public Sector Reform Unit and Project Administration”. 7 The allocation of credit proceeds by component reflects the allocation presented in the Project Appraisal Document, approved by the Board. 6 land, companies, and intellectual property registration. The project budget was adjusted accordingly, considering that some activities were eligible for financing under the IDF grant operation. The project was extended originally for 18 months, setting a new closing date of June 31, 2012. Subsequently in June 2012, during the third restructuring the project was extended for an additional nine months to enable completion of the initiated activities under Component 1, including those of civil works, and development and implementation of the information system for land and property registration, among the most important. 24. During the second Level 2 restructuring in October 2011credit proceeds were reallocated again, as presented in Table 2. The reallocation was necessary to finance key activities supporting the proper functioning of the new Enhanced Departments. Table 2. Reallocation of expenditure by category of expenditure 8 NR. CATEGORY OF APPROVED REVISED EXPENDITURE XDRMln USD Mln XDRMln USD Mln 1. Goods, training works and 1.634 2.447 1.669 2.543 consultant’s services for the Project with the exception of Parts 1(B) and 3(A) (ii) 2. Goods and works for Part 1(B) 0.368 0.450 0.590 0.899 3. Consultants’ service for Part 3 (A) 0.093 0.130 0.040 0.061 (ii) 4. Operating Expenses 0.162 0.133 0.151 0.230* 5. Unallocated 0.243 0.340 0.050 0.076 Total 2.5 3.500 2.5 3.810 Source: Restructuring Paper 2, Oct. 2011, PAD and Client Connection* (as of Sept.17, 2013) 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 25. Following the approval of the Project Concept Note (PCN) on April 18, 2005, the project was negotiated six months later and approved on December 15, 2005. In line with the CAS 2001-2004 priorities, the project design had a dual focus: one – on strengthening public sector management; the other – on exploring and harnessing opportunities for economies of scale through sub-regional cooperation. In the absence of a national strategy document at the time of preparation, specific areas for technical assistance were evolving since the first project identification mission in June 2004. At PCN stage, the preliminary project design was somewhat broader than that at approval. It was focused on (i) strengthening human resources and financial management (including rightsizing of the 8 The presentation of the change of allocation of the credit by component was done in XDR, rather than in US Dollar equivalent, to reflect the allocation in XDR presented in the Financing Agreement of April 26, 2006. 7 public sector and strengthening expenditure management), (ii) improving selected public services through establishing executive agencies and strengthening performance management, (iii) reducing the size of the public sector through commercializing services by means of contracting out; (iv) strengthening Public Sector Reform Unit in designing and coordinating reforms; and (v) exploring efficiency in procurement through implementing pooled procurement of selected goods and services with at least one of the OECS countries. 26. During the quality control at PCN stage, peer reviewers’ comments supported the focus on service delivery improvements and private sector development as opposed to a “whole of government” approach to public sector modernization. The Public Sector Reform Unit (PSRU) was not considered as capable of leading a comprehensive public modernization effort, as it lacked capacity and clout due the relatively low hierarchical status. The reviewers cautioned against mainstreaming performance management from the initial pilot too quickly, as these reforms usually take many years to accomplish. While admitting desirability of the regional integration of OECS states in pooled procurement, the review identified the need for influential leadership to bring about such a change. Finally, it was recognized that the Ministry of Finance, by the virtue of having much more clout than the PSRU, should be mobilized to drive the change. 27. At the design stage, the Bank team engaged with the client in discussions on key reform areas, e.g., setting up Executive Agencies (EAs) and implementing pooled procurement. The discussions highlighted some areas of concern with regard to establishing executive agencies. Permanent Secretaries pointed out legal and regulatory constraints related to the proposed delegation of managerial autonomy to Chief Executive Officer of an agency, highlighted the need to resolve personnel management and pension issues in cases of termination of posts or separation of public officials from the office, and suggested to define clear reporting mechanisms between the agency’s CEO and the responsible minister. While these concerns were documented in the mission’s Aide Memoire of May 2005, they were not substantially addressed in the project design. 28. At appraisal, the project identified three major risks: (i) weak implementation capacity of the PSRU (understaffed, lacking skills, and lacking political clout); (ii) potentially unfavorable political economy context; and (iii) weak capacity of GIDC to build constituency within the private sector in support of reforms. The project offered mitigation measures, such as technical assistance, political commitment of the Prime Minister, a communication program, and targeted engagement with the private sector through a Chamber of Commerce. The overall risk of the project was rated as moderate. 29. The PAD has not reflected the concerns, expressed at the Quality Enhancement Review stage by Sr. Legal Counsel, related to the consistency of the establishment of Executive Agencies with the country’s public administration and legal framework. Prior to the submission of the Minutes of Decision Meeting, held on October 6, 2005, the Bank has obtained a report by a PHRD project preparation grant consultant 9, in which potential 9 Ms. Michael Wearnee, the Consultant earlier supporting establishment of Executive Agencies in Jamaica. 8 constitutional problems with establishing the Executive Agencies were highlighted. The report suggested that the Executive Agency Act could help resolve the issue of delegation of the human resource management function to the Chief Executive Officer, and advised to support the Government during implementation in resolving the issue of termination of public office position during the establishment of Executive Agencies. These recommendations, including the review of the constitutional and legal issues, were subsequently included in the Schedule 1 of the Financing Agreement (description of the project Part 1). 30. The obstacles to achieving the original development objective materialized in the areas that previously were not identified in the PAD as risky. Specifically, the project design assumed legal feasibility of divesting personnel management authority from the Public Service Commission (PSC) to CEOs of Executive Agencies (EA). However, the delegation of the human resource management function was contested by the Attorney General (AG) 10, which led to the suspension of the implementation of Component 1 for over a year. As a result, the Government decided to find alternatives to an EA status and set up government departments, further referred to as Enhanced Departments, with PSC in control of human resource management. One way of avoiding such complication during project implementation was to reach an agreement with the Borrower on the constitutionality of the proposed institutional change during the design stage. This had not been done. 31. With regard to pooled procurement, the recommendations for strengthening the institutional system to manage pooled procurement, developed under the PHRD grant, were not addressed in the design, possibly due to budget constraints. This may have contributed to the lack of drive and ownership of this objective at the technical level during the implementation. Following the signing of a Memorandum of Understanding on pooled procurement between Grenada and St. Vincent and the Grenadines in October 2009 and identifying suitable goods and services for such pooled procurement, further activities were suspended in the face of legal obstacles, as Public Procurement Acts in both countries required amendments, which had not been enacted during the project lifetime. While the legal obstacles were not insurmountable, the Government did not pursue this issue with required vigor and determination. Also Parliament prorogation in July 2012 prevented any legislative action prior to the project closure. At the time of ICR mission, the new Public Procurement Act was still being finalized by the Government. 10 The legislative review of constitutionality of delegating human resources management authority to agency’s CEO was lengthy. It was carried out by the AG and three constitutional lawyers. The official legal opinion, issued by the AG on February 25, 2010, stated that the Executive Agencies Act was incompatible with the constitutional provisions (Art.84.1) in relation to the legality of delegation by the PSC of its functions to Agency CEO. Such ‘blanket delegation’ through a law would contradict the constitutionally, provided discretion of the PSC to decide conditions of delegation. During the ICR mission, interviewed officials were of a view that the legal opinion was only one interpretation of the intent of the Constitution. 9 32. During the implementation of Component 1 after project restructuring, a need for modernizing the core registration and data management instruments, not recognized at the design stage, was identified. During the early implementation stages, the focus was solely on institutional and management aspects of public services, while technical studies on requirements for effective registration were postponed. Such technical studies were realized only after project restructuring of October 2010. To deliver efficient services, the new Grenada Land Agency required updated and digitalized maps, digital land parcels’ and deeds records, application software for storing and retrieving information, and a geodetic system to build a national cadaster, none of which had been identified during the design. Additional technical assistance, unforeseen and not budgeted in PAD, was required to enable effective and efficient land registration services. 33. Design omissions caused implementation delays, led to the examination of legality of the proposed delegation of personnel management responsibility to agency chief executive officers, necessitated restructuring of the project to align objectives with the constitutional provisions, required reallocation of resources to Component 1 from other Components, and caused significant reduction in the scope of results achieved. However, the appraisal summary had not identified any of those technical issues that almost derailed the project implementation. 34. In summary, the general choice of key project areas was justified by the need and an opportunity to improve services and reduce costs for the government and the public. However, implementation challenges, risks, and performance indicators were not sufficiently analyzed. Design omissions presented serious challenges and demanded strategic decision making during implementation to avoid dropping the project. 2.2 Implementation 35. During 2006-2009 the project implementation status gradually regressed from satisfactory (S) to unsatisfactory (U) rating passing through moderately satisfactory (MS) and then moderately unsatisfactory (MU) phases. The departure of the Project Manager (consultant) in June 2008 left a void in project management for 19 months. This was an especially critical period in project implementation, as the Trade Unions and then the Attorney General initiated legal contestation of the legality of the Executive Agency Act. This period was marked by the deepest plunge in ranking of the project implementation status and the ranking of likelihood of attaining the development objective. As early as in May 2007, a project consultant produced a legal opinion on the introduction of Executive Agencies in Grenada. This opinion advised that Executive Agencies should be part of the public service, as the Constitution allowed for the Delegation of the authority over the management of public servants to a public official, which should itself be appointed by the Public Service Commission. Another issue reflected in the opinion was that the transformation of the Government Department into an Executive Agency would not imply that the public officers of the Departments were to change their legal status unless found insufficiently qualified and could not be employed in the public service elsewhere. The opinion on the latter issue had important fiscal implications, as the Government could not afford paying severance payment to all public officers of the Departments during the organizational change following the establishment of the EAs. 10 36. The Bank team closely followed the formation of the official opinion regarding the constitutionality of the EAs. Following the Consultant’s opinion of May 2007, the Bank formally asked the Government to make a decision and submit to the Bank a Government Legal Opinion and identify the way forward. The October 2007 Aide Memoire, Team Leader’s Letter to the Minister of Finance in December 2007, Aide Memoires February 2008, and of October 2008, the letter of March 2009 reiterate the Bank’s request to issue an official Legal Opinion by the Government, that have not been done until February 25, 2010. Meanwhile, the Bank team tried to share experience of Executive Agencies from other countries through a presentation to the Government (August 2008), a study visit of the Grenadian government delegation to Jamaica to visit the Land Agency, a visit of the Bank’s Sector Manager in October 2008 who presented lessons from international experiences more broadly. In spite of these efforts, the Government was divided on the issue of Executive Agencies, with part of the Government not accepting the idea of delegation of managerial responsibilities in the area of human resources management to Chief Executive Officers. Although the Public Services Commission did not raise issues on delegation, the legal community in Grenada seemed to be strongly opposed to that. Political support of the new Government, sworn in in July 2008, did not back up the EA issue with determination, which caused delays and eventually a search for alternative solutions to the original objective of improving performance of the government regulatory services. 37. On October 2, 2009, the Government submitted a request for project restructuring, confirming its commitments to the development objective and suggesting changes in project strategy and implementation, as approved by the Project Steering Committee. 38. Unable to legally establish new Executive Agencies due to the declared constitutional restrictions (see Paras 29, 30, and 35), but still committed to improving public sector management, the Government opted for establishing Enhanced Departments (EDs) that would still be part of the Government (without separate legal personality), with centralized appointment of agency personnel by the Public Service Commission, and with the authority to charge fees for registration services. While new EDs envisaged reduced managerial flexibility, compared to that of EAs, performance improvements were expected to be achieved through consolidation of related functions under a single management, thus enabling streamlined and faster service delivery. The Government’s restructuring proposal included details of the functional allocation, information requirements related to a cadaster, and other information. 39. A few months after the receipt of the restructuring request, the Bank received the legal opinion from Grenada’s Attorney General along with a confirmation that a new Project Manager had been appointed. A new Team Leader was also assigned to the Project shortly thereafter and a Bank mission was deployed to Grenada in March 2010 to assess the feasibility of turning the project around and achieve positive impact. The Bank team and the Borrower conducted a detailed analysis of the progress, challenges and opportunities for attaining intended results of improving public sector performance and facilitating growth of small businesses in Grenada. The Bank team strengthened its technical team by hiring an urban specialist to review the feasibility of, and technical requirements for, the establishment of Grenada Land Agency. Based on detailed technical 11 analysis and responding to Government’s request to save the project, the Bank team decided on project restructuring. In October 2010, the Bank approved Level 1 project restructuring with modifications in: (i) the development objective; (ii) key results indicators; (iii) the allocation of funds among components; and (iv) the closing date. The project was extended for 18 months with the new closing date of June 30, 2012. Before the restructuring, the project disbursed approximately $1.02 Million and committed $0.62 Million, in total less than half of the Credit. 40. The most important reason behind the first restructuring was an effort to overcome constitutional challenges that first interrupted and then prevented the establishment of Executive Agencies. Upon revising the plan for establishing government departments instead of the EAs, the estimated total cost of implementation of Component 1 increased above the original estimates. The revised cost covered updating maps, digitalizing paper records, designing geodetic network, procuring equipment for GLA, and purchasing and refurbishing new premises to house both EDs 11. In order to finance new activities, funds were reallocated from other components, considered less critical to PDO. Following the first restructuring, project implementation ratings moved to the positive MS territory again, only to be followed by a drop to moderately unsatisfactory (MU) status due to the lack of measurable progress, especially with regard to pooled procurement activities that were stalled. Despite delivery of the useful outputs, e.g., (i) a review of the Public Sector Reform Unit’s job descriptions, competencies, and (ii) training by CARICAD, the capacity building of PSRU was undermined by staff turnover through mandatory rotation administered by the Public Service Commission. 41. In April 2012, only about two months within the project closing date, the progress with attaining results was still behind expectations. The information technology services (for (i) establishing a data center for the land registry and (ii) developing an application for capturing and search of registered deeds) were not yet procured. The committed and disbursed amounts totaled 59 per cent of the project proceeds, indicating a strong need for an additional project extension. In June 2012, the project was extended for a second time from June 30, 2012 to March 31, 2013, the extension totaling 27 months from the original project closing date of December 2010. 42. The project closed on March 31, 2013. In spite of considerable work done to implement the two Enhanced Departments, the latter have not been formally established, albeit these are presently functioning as de facto Enhanced Departments (led by the acting management team). The enabling bills establishing Grenada Land Agency and the Corporate Affairs and Intellectual Property Office had not been passed by Parliament due to its prorogation since June 2012 until the general elections in February 2013. Consequently, the organizational and staff remuneration structure, although developed, 11 Initially, the Government wished to house both EDs GLA and CAIPO in new premises. However, the Government was able to purchase only one building, that for CAIPO. The constituent departments of the GLA are expected to be housed in separate locations, with information exchange network. This is a suboptimal decision, which may be reconsidered in the future, especially when GLA is legally established. 12 could not have been approved and implemented. Hiring Directors and key personnel of the new Enhanced Departments could not have been done pending the approval of the legal and regulatory framework. The acquired building that would house CAIPO had not been fully refurbished, preventing department’s move to the new premises. These shortcomings in achieving results warranted the final rating of the Implementation Status and Results Report (ISR) as Moderately Unsatisfactory (MU). Regretfully, the project suffered from an inactive Parliament, resulting in the laws defining new Departments not having been enacted at the time of ICR mission. Thus project objectives under Components 1 and 3 (Executive Departments and Pooled Procurement) could not have been fully achieved. 43. In the area of promoting Small Business Development by Grenada Industrial Development Corporation, a policy and strategy on supporting small businesses, training in entrepreneurial skills to potential entrepreneurs, and business development were provided, resulting in opening new small businesses by trained persons (41 in 2009 and 25 in 2010). Other results, related to renovation and refurbishment of the Small Business Center and purchasing a vehicle, were delivered, thus facilitating the provision of training by the GIDC trained staff and international experts. 44. Project delays resulted in some activities being completed just before the closure, which reduced opportunities for early post-implementation support, as in the case of the new information system for land registration. Luckily, the project financed an IT consultant 12, whose contract ended in March 2013, still continues voluntarily supporting information system’s development for the future Grenada Land Agency (GLA). The proposed organizational, management and personnel changes for GLA have not been implemented either, as described in paragraph 40. Consequently, planned performance improvements through a more efficient organization and management of Enhanced Departments still remain the goal to be achieved. The project has not been able to utilize all the credit funds: an estimated amount of $0.748 million remains undisbursed, as of September 17, 2013 (the disbursement period ended on July 31, 2013). 45. In retrospect, the fact that the project was saved from the 2008-2009 stalemate is positive, as the project has created a foundation for improvements in property and business registration, supported small business development, and contributed to capacity building in public sector management. Managerial improvements that were expected to lead to better public service delivery still are to be addressed, when the two EDs are fully established, both legally and organizationally. The foundation for improved public service delivery is still delicate, requiring support for full institutionalization and integration of separate outputs into a measurable and sustainable impact. Both Bank investment operation 13 and a proposed Development Policy Operation support the 12 This consultant was responsible for development of a web platform for GLA services, deployment of eLandsells application, supporting ICT infrastructure development for GLA and training staff to use new tools. 13 Grenada Regional Disaster Vulnerability Reduction Project (P117871) 13 Grenada Land Agency establishment and strengthening. The commitment of the Prime Minister 14 to public sector modernization agenda gives hope that the Government will build upon project contributions to achieve more effective and efficient public sector management. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 46. The originally approved performance indicators for the development objective were characterized by being very broad, general, ambitious and difficult to measure. An example of such indicator could be ‘increased capacity of the public sector to implement modernizations projects’. The indicator of capacity to implement reforms was expected to measure the progress in increasing staffing with adequate number of qualified personnel. This indicator could be used to demonstrate Government’s commitment to the public sector reform; however, can hardly be attributable to the project. Some of the outcome indicators for components were input-oriented, for example, ‘amount invested in training’. During Level 1 restructuring, the PDO indicators were amended to align them with the refocused components and make them more measurable. 47. The original intermediate indicators in most cases lacked the baseline, making progress measuring difficult. Selected indicators were difficult to interpret, e.g., ‘satisfaction levels from results of customer surveys undertaken at end of each year’. The indicator omitted to identify the area in which satisfaction would be measured. As a result of such deficiencies in the result framework, during the first phase of the project, the Bank and the government measured the progress in implementing activities against the project implementation plan, rather than results. 48. The introduction of revised monitoring indicators at restructuring allowed for a more meaningful monitoring of the progress toward achievement of development objectives. Only a limited number of the original indicators proved to be useful for monitoring the progress toward a revised development objective. Following the restructuring, the project’s progress toward achieving PDO, based on Project Manager’s reports and mission findings, was duly captured in Bank’s Aide Memoires, recorded in ISRs, and filed. The analysis of the project ratings in ISR suggests that they represent an adequate assessment of project performance. 2.4 Safeguard and Fiduciary Compliance 49. No applicable safeguards or fiduciary compliance issues were identified. 2.5 Post-completion Operation/Next Phase 14 The Prime Minister Hon. Keith Mitchell was reelected for the third time in February 2013 after his two term service as Prime Minister during 1999-2008. 14 50. Although the project is closed, there are a number of post-completion activities that the Government is planning to undertake. Some of these will be supported by other ongoing Bank financed operations, especially related to Component 1. a. Establishment of Enhanced Departments and Performance Management: • The proposed Policy Development Operation may support the following measures: o Parliamentary approval of a legislative package that includes the Grenada Land Agency Act, technical regulations, amendments in laws related to land regulation and registration; and o Approval by the Cabinet of a regulation, developed under the project, on the organizational structure, job descriptions, remuneration scale for public servants and contractual employees for the new Grenada Land Agency. • The ongoing Regional Disaster Vulnerability Reduction Project, APL 1, will support: o Developing capacity for maintenance and upgrade of the information system for land management; and o Implementing a geodetic system and creating a National Cadaster. • The Government of Grenada with direct involvement of the Public Service Commission will oversee and support the following activities: o Competitive selection and appointment of the key managerial staff, including the Head of Agency and directors of departments; o Implementation of the new organizational structure, hiring of staff, introducing performance management practices; and o Integrating business processes of the land survey, physical planning, valuation, recording proprietors in the tax database, property registration and information search, and integrating respective information subsystems into one system. b. Strengthening the Grenada Industrial Development Corporation • The GIDC is contemplating the upgrading of the approach on stimulating development of micro and small enterprises, developed under the project. Presently the GIDC is developing a proposal for a follow up program, which is likely to include: o Implementing an integrated information management system to support business processes aimed at business development; o Introducing training for potential new entrepreneurs in technical areas that would support business start-ups in creative and transformational sectors; o Competency training for GIDC staff targeting strategies to create employment opportunities for young workforce, especially university graduates; o Providing advisory services and support for young business start-ups; o Establishing funds accessible for the potential business start-ups; and 15 o Developing a network of regional service centers to support entrepreneurs. c. Regional Initiatives • Finalizing the Public Procurement Bill and submitting for Government approval and adoption by Parliament; and • Developing a process and institutional capacity for pooled procurement for identified goods and services. d. Strengthening Capacity of Department of Public Administration and its Public Sector Reform Management Unit • The Government requested Bank assistance in supporting, among other issues, the following: o Developing a National Performance Framework and Strategy; o Streamlining staffing and conducting job evaluation; and o Developing service standards for selected service areas. 51. Presently, the ongoing Regional Disaster Vulnerability Reduction Project (P117871) could build on and advance in further use of the tools developed under the PSMP for the GLA. During the Bank mission for the preparation of ICR, the team met with the Prime Minister, who confirmed his Government’s commitment to public service modernization and targeted strengthening of the entities charged with designing and coordinating the implementation of public sector reforms. Moreover, the Prime Minister expressed a request for continuation of Bank support to the public sector modernization agenda. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 52. Project objectives have been and continue to be highly relevant to the country and regional priorities. Likewise, they are well aligned with the Bank’s assistance strategy. The current Regional Partnership Strategy for the Organization of Eastern Caribbean States for the Period 2010-2014 15 defines two development assistance pillars: (i) building resilience; and (ii) enhancing competitiveness and stimulating sustainable growth. Project has contributed to both pillars. Under the first pillar, the project objectives supported the Result Area 1 of promoting debt and fiscal sustainability through supporting growth of micro and small businesses under Component 2. Component 1, in turn, contributed to the 15 Regional Partnership Strategy for the Organization of Eastern Caribbean States for the Period 2010-2014. Report No53762-LAC. 16 Result Area 5 of Pillar 2 improving access to quality public services through improving the performance of the Grenada Land Agency and Corporate Affairs and Intellectual Property Office. 53. Project design was targeted at (i) improvements in public sector management and service delivery and (ii) facilitation of private sector development. However, the design could have benefited from a more detailed analysis of potential implementation obstacles – legal, cultural, managerial, or technical – that caused problems and impacted outcomes. Specifically, some important inflection points that undermined the progress toward the development objective could have been identified and analyzed at the design stage. The necessary but overlooked enabling factors include: legal viability of Executive Agencies; enabling legislation for pooled procurement; critical technical instruments for efficient service delivery by GLA; or more strategic public servants’ rotation that would not have undermined capacity building efforts. 3.2 Achievement of Project Development Objectives (PDO) 54. The revised project development objective was to assist the process of modernizing Grenada’s public sector with a focus on improving public sector efficiency in service delivery and management, enhancing private sector collaboration in support of developing small businesses and promoting regionalization initiatives. 55. Under Component 1, representing approximately 60 percent of IDA disbursements, the project planned to achieve efficient service delivery and management through creating two Enhanced Departments, as approved at Level 1 restructuring in 2010, and to implement efficient organizational management systems, including introduction of performance management procedures. The outcome was expected to be measured by a reduction in a number of days needed to (i) register a company, (ii) register property deeds, and (iii) complete property registration. At exit, the target values of these aforementioned PDO level indicators have been achieved, as described in the Datasheet, albeit sustainability concerns remain. With regard to a reduction of time spent for business registration (link: http://www.caipo.gov.gd) the outcome should be attributed to two sources of support: the PSMP and WIPO (World Intellectual Property Organization). The former, PSMP, initiated separation of CAIPO from the Supreme Court Registry, procured a building for CAIPO, and partially completed building refurbishment. All the functional and technical advice was provided by WIPO, which strongly contributed to improvement of the time needed for improvement. Yet up until the ICR mission, the CAIPO was physically housed in the premises linked to the Supreme Court, and its legislation was pending approval by the new Parliament. 56. With regard to Grenada Land Agency, considerable contribution was made by the project to improving the registration of deeds and land through digitalizing maps, designing a geodetic system, computerizing the processes at valuation department and registration department, providing necessary equipment for land survey and preparation of digitalized survey plans and digitalized registration records. The bulk of some 170,000 registration documents dating from 1930’s has been digitalized and is made available on the internet as a customer service. The new application for Deeds and Land Registration 17 uses a search engine for scanned documents by name, number of deed for viewing (free) and/or printing (for a fee). A newly established Data Center administers digital records with the web access provided internally for relevant staff and externally to the public. 57. Modern equipment procured under the project, office equipment, survey scanners, big laser printers, etc., enabled producing digitalized information Geo Node, as usual business practice. All Departments that will constitute the Grenada Land Agency have been connected through fiber-optic connection to enable information sharing and to facilitate future streamlining of business processes related to and preceding the registration. All this presents a significant transformation in functioning of the relevant departments, which has an additional positive impact on spatial planning and efficient control of land use. Statistics on land use has become available, which enabled more effective zone planning. This has a positive impact for planning of commercial and residential zones, allowing for better assessment of investment opportunities. Basic paper maps of the GLA have been replaced by satellite imagery, which helped to monitor data for Regional Disaster Office on inland flooding (drainage channels), coastal erosion, and landslides. The latter activities were closely coordinated with the other Bank supported operation – Regional Disaster Vulnerability Reduction Project, APL1 (RVDRP). Specifically, the RDVRP will support development of Local Area Plans with zone specific design. 58. A website of the Grenada Land Agency (GLA) has been created (www.gov.gd/landagency), still waiting to go live, as the adoption by Parliament of GLA Act and Regulations are still pending. The website has links to services to be provided on line; an option of face-to-face service provision continues to be available. All these important developments contributed to service improvements, even though not originally envisaged by the project. Yet the legal establishment of two Enhanced Departments with strengthened management systems is pending. The organizational design, staffing, management structure, job descriptions, hiring requirements, remuneration framework were developed and will be put in place after the approval of the GLA Act. The Cabinet at the time of the mission was preparing to table at the reelected Parliament the reconfirmed package of legislation on establishing the Enhanced Departments, which may be further supported by the Development Policy Operation. 59. In the area of small business development, which accounts for 13 percent of IDA disbursements, the outcome was expected to be measured by a number of new small businesses established as a result of training in entrepreneurship and business development. At exit, the target value of 30 GIDC trainees commencing new businesses was achieved. However, in the absence of an information management system, and only relying on the feedback from the former trainees, the Center for Small Business Development reports that the conservatively estimated number of businesses opened by trained entrepreneurs was 41 in 2008 and 25 in 2010. The latest numbers are not available, as these have not been monitored by GIDC. 60. In the area of regional initiatives, which account for 3 percent of IDA disbursements, the target value for demonstrating the desired outcome of economies of scale being explored through pooled procurement was the initiation of activities to strengthen the collaboration to operationalize the MOU on pooled procurement with St. 18 Vincent. Beyond the signing of the MOU in October 2009, no further progress was made under the project. No activities were undertaken to implement the MOU, as it required the enactment of a procurement law, which was expected as of the restructuring in October 2010, but never materialized in the end. 61. With respect to the PSRU and Project Administration component, which accounts for 24 percent of IDA disbursements, the desired outcomes were achieved. However, the capacity to design and implement reforms by the Public Sector Reform Units, later renamed Reform Management Unit (RMU), has been constrained by staff rotation 16to other departments. Although staff was trained and a PSRU strategy developed, the current RMU capacity is still insufficient to drive public sector modernization activities. 62. Taking into consideration the achievements of most of the target values of the PDO-level indicators and the amount disbursed against the components that related to these achievements, it is reasonable to conclude that the project generally achieved its desired outcomes at exit. However, given the shortcoming mentioned and remaining sustainability concerns, the outcome rating is hereby rated as moderately satisfactory 17. 3.3 Efficiency 63. As it is often the case with the majority of projects supporting institutional reforms, the assessment of efficiency is a challenge, compared to assessing efficiency of a production cycle, which lends itself to the cost-benefit analysis more readily. Yet, cumulatively, the relatively small investment of approximately $3 Million under the project is likely to cause future savings offsetting the expenditure in the medium term through higher efficiency of registration services. 64. Importantly, the quality of services provided to the citizens, when the restructuring of the two Enhanced Departments will have been completed, will be substantially higher (due to electronic access, improved accuracy or records, shorter response time), as the on-line access will have been fully implemented. Also, better designed processes will help link property records with the Inland Revenue database, improving the reliability of taxpayer records. All these service quality improvements, achieved thanks to implemented technological advances, have already radically transformed the efficiency and reliability or recording and retrieving information that due to improved interconnectivity can be accessed and used by private citizens and businesses, as well as government agencies for a variety of purposes. Therefore, the benefits will be higher than simple cost savings for both the government and the society. The Grenada 16 This rotation is consistent with the law and the role of the Public Service Commission, but its impact on achievement of PDO and the lessons for aligning personnel management with the needs of the public service have not been taken into consideration. 17 This MS rating is better than the MU rating for the outcome in the last archived ISRs #12-14, and is based on improved prospects of sustainability given the commitments to continue public sector reform expressed by the new Prime Minister (letter to the Country Director of June 12, 2013). 19 Land Agency through introducing a fee structure for electronic services is hoping to compensate the cost of producing information and partially compensate operating costs of the agency. Investment in people – business training – will result in increased employment, economic activity and tax revenue. 65. It is challenging to measure efficiency of investment in cases when the planned reforms have not been fully accomplished to yield the efficiency savings for the government. More accurate estimation of efficiency would be possible when the speed, costs and quality of the registration services could be measured. Given that the reform is still unfolding such measurements are not possible to make. 66. Unfortunately, protracted delays in project implementation have somewhat negatively impacted the efficiency of the investment by delaying results. Challenging political situation in the country, discussed elsewhere in this report, to a large extent had significant impact on overall efficiency of the project. 3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory 67. As discussed in paragraph 62, it is a challenge to assign an adequate rating for the PDO because the progress under various objectives was uneven. Yet the project unmistakably has created an excellent basis for better quality of two important government services related to property rights and business development. Grenada Investment Development Corporation developed capacity to promote small business development through developing entrepreneurial skills. Capacity in public sector reform management was improved, although low staffing (during the new hiring freeze) and staff in the end constrained government ability to effectively pursue public sector reform initiatives without external support. While pooled procurement has not been realized, the Government progressed to this goal in two important ways: (i) signed a Memorandum of Understanding with St. Vincent, (ii) conducted a revision of the procurement act to enable such practice. 68. Considering the obvious positive outcomes – (i) establishing core capabilities for modern business, deeds and land registration processes, and (ii) creating opportunities for entrepreneurial training and creating new small businesses – the achievement of the project development objective is rated as moderately satisfactory (MS). The argument against a moderately unsatisfactory (MU) rating, in spite of the failure to initiate implementation of regional pooled procurement, is that the bulk of project disbursements of 73 percent supported the important results achieved under Components 1 and 2. Expenditure on other objectives, related to regional pooled procurement in particular, amounted to only 3 percent (approximately $0.1 million) of the credit. Project restructuring of October 2010 placed priority attention and caused priority effort under components 1 and 2, which have delivered moderately satisfactory results. 69. Finally, considering the high relevance of the PDO and expected efficiency gain and improved service delivery, the MS rating gives a more appropriate reflection of overall project outcomes. 20 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 70. The overarching themes of the project are: improved government services, facilitated small business development, and capacity building. The small business development contributed to poverty reduction and social development by creating new employment and generating revenue for the government in the form of taxes. (b) Institutional Change/Strengthening 71. Establishment of enhanced departments, strengthening management systems, using new technology and upgraded procedures – all that represents significant institutional change that is expected to lead to better performance and more effective and efficient services to the population. While the full institutional change has not been achieved, the foundation for it has been laid. (c) Other Unintended Outcomes and Impacts (positive or negative) 72. Strengthening of the technological tools for the Grenada Land Agency was not an intended outcome. However, when identified as a critical factor of improved performance during the project, some of the resources were allocated to development of these tools related methodologies, and capacity building. As a result, positive impact of the new tools (digital maps, digital deeds and land registration records, on line services) is already felt as processes are being modernized and the quality of services is improving. 4. Assessment of Risk to Development Outcome Rating: Moderate 73. There is high likelihood of approving the Grenada Land Agency (GLA) Act and CAIPO Act by the new Parliament in 2013. The Prime Minister is supportive of these initiatives and Parliament has a strong pro-government majority. Implementation of institutional changes upon unification of various departments into a single GLA may require additional technical assistance, as the capacity of the new management team is not known. Sustained small business development would require expanding the focus of training from general entrepreneurial skills to technical areas that would support a more diversified distribution of businesses among sectors, more toward innovative sectors. Also the lack of start-up capital and collateral requirements significantly restrict a number of new business start-ups. The Government does not have resources to support financing through a grant scheme; external financing is required. In the area of pooled procurement, the risks are higher, as the Government needs to finalize the Procurement Act that enables pooled procurement and ensure strong leadership during implementation. External assistance may be required. 74. There are several risks to Development Objective, as analyzed in Table 3. The risks vary in severity. The overall risk is assessed as Moderate because it mostly reflects the risk to the main project outcome – establishment of Enhanced Departments and 21 improving performance management. While the improvement of performance in the two new EDs definitely requires time and ideally consultancy support, the gradual introduction of performance management culture by the Cabinet Office through monitoring performance indicators and performance agreements with Permanent Secretaries and Directors of departments provides an important enabling environment for strengthening performance of the new EDs. Table 3. Analysis of Sustainability of DO Text of PDO Required Action Risk Comments (revised) 1. Improving • Approval of the legal M • The legal package is prepared public service package establishing two and is likely to be supported by efficiency in enhanced departments: GLA the new Government and the areas of and CAIPO Parliament business, deeds • Hiring Directors and core L • Hiring should be done upon and land managers enactment of the legal package registration • Implementing enhanced • Although all supporting internal management M guidelines have been systems developed, implementation • Integrating information requires technical support management subsystems for M • While presently GLA does not land planning, valuation and have capable staff to enhance registration and integrate systems, the ongoing SEMCAR program could help mitigate this risk 2. Support of • New training module on M • GIDC requires technical small business technical skills is needed to assistance to develop such development achieve impact in innovative training areas 3. Promoting • The enabling legislation – S • The support to Procurement Act regional the revised Procurement Act was expected to be delivered by integration – should be enacted the EGRIP project, but (pooled • Strong leadership and cancelled due to insufficient procurement) coordination are required to S funds and time implement pooled • So far leadership in this area procurement has not been strong 4. Capacity to • Longer continuity of trained • Additional technical assistance design and public servants in the M would be required to invest in manage public Reform Management Unit is capacity building sector needed to allow for • Public Services Commission modernization sustainable capacity building should revise the rotation policy initiatives with the Department of Public Administration 22 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 75. While areas of Bank engagement were relevant to the Country Strategy and Bank’s CAS, the analysis of future implementation challenges for achieving results under Components 1 and 3 during appraisal was insufficient. The risks to achievement of development objectives were not adequately identified due to incomplete analysis of legal feasibility of the proposed institutional changes (decentralization of the human resource management practices, or introduction of a pooled procurement practices). The impact of the less than satisfactory performance at the design stage was that the project entered an impasse in 2008, causing implementation delays, low disbursement rate, radical project restructuring, and in the end failure to achieve originally approved development objectives. Additionally, the original performance indicators were not sufficiently outcome-oriented and the baseline for measurement was not established. This led to the major overhaul of the project in October 2010. (b) Quality of Supervision Rating: Moderately Satisfactory 76. Two Team Leaders (TLs), other than the TL responsible for project design, supported project implementation. During the first phase of the project (before restructuring), the Government initiated activities under all components, while the Bank team closely monitored those and facilitated progress to achieving the PDO. When it became clear in 2009-2010 that the establishment of Executive Agencies was not feasible because of the identified constitutional constraints, the new TL, who assumed the responsibility for project supervision in early 2010, mobilized necessary consultancy (Land Consultant to advise the Bank on GLA establishment) and engaged with the Government to confirm its commitment to project objectives and find a realistic path for achieving improved performance in the land, business and intellectual property registration within the constitutional provisions. The project experienced a remarkable turnaround following the 2010 restructuring, when stagnation in implementing a new organizational form (EAs) was replaced by a renewed purpose of consolidating separate departments under two Enhanced Departments, and by enriched context of transformation based on the use of modern technologies for efficient service delivery. Bank responsiveness to Government requests, proactivity in restructuring, and implementation support contributed to substantial achievement of the revised PDO in the subsequent phases. 77. From the fiduciary perspective, the project financial management was satisfactory to the Bank, which was reflected in unqualified project Audit Reports. Similarly, no major issues were identified in supporting project procurement, as Bank’s prior procurement review was conducted in a timely fashion. 23 78. The Bank team kept a record of implementation progress and progress toward achievement of development objective in a timely manner. Missions’ Aide Memoires and Implementation Status and Results Reports provide a clear picture of the progress in project implementation. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 79. Although Bank’s performance was mixed – weaker at the design and quality-at- entry stage, and stronger at the implementation stage – the project laid a good basis for strengthening service delivery in business and property registration, and facilitation of small business development. The Bank acted proactively in finding solutions to emerging problems that had not been identified at the design stage. Also critical was the restructuring of the project, as well as supporting the Government in achieving important outputs that set in motion public sector modernization in selected areas. While the PDO has not been fully achieved, to a large extent this was caused by the complex situation in the Government that was beyond Bank team’s control. Following the change of the Government in 2008, the constitutionality of the approved Executive Agency Act was challenged. During the last 12 months of the project implementation, Parliament prorogation prevented the approval of the laws that would establish the new Enhanced Departments. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 80. Overall, the government was committed to improving the quality of services and facilitating private sector growth. However, the project was implemented in a challenging political environment that limited the support to the reforms, especially by the legislative branch. From the beginning, the Government was strongly committed to the project objectives, and implementation proceeded as planned. With the 2008 elections, the project experienced a number of leadership changes, including those of the key officials responsible for project implementation. The new administration challenged the constitutionality of the action undertaken by the previous administration in relation to establishment of Executive Agencies, causing implementation delays and project restructuring. Parliament prorogation in July 2012 prevented the project from establishing Enhanced Departments – Grenada Land Agency (GLA) and CAIPO – despite the efforts of the Executive to implement necessary legal reforms that would have enabled the establishment of these departments. As a result, the project has been more successful in achieving technical improvements that did not require political and legislative decision- making. Although pooled procurement has been already successfully implemented by Grenada with other OECS countries in the pharmaceutical area, this process was not institutionalized due to the failure to enact the new Procurement Act. Given that the Executive did not have control over the political situation and had to focus on what could 24 be achieved within the existing legislative framework, the overall rating for government performance is MS. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 81. The Department of Human Resources, later renamed as Department of Public Administration (DPA), was the project implementing agency. The role of DPA was to drive the project, proactively address emerging issues and facilitate their resolution through the Project Steering Committee. During the implementation of PSMP, DPA was also involved in implementing an IDF grant on Strengthening Personnel Expenditure Management, which fully achieved its objectives. 82. Other implementing/beneficiary agencies included the following: Grenada Investment Development Corporation (implementing small business development), Ministry of Finance (pooled procurement), and various departments related to land registration (Lands and Survey Division, Valuation Division, Physical Planning Unit, and Supreme Court Registry). The Public Sector Reform Unit (later renamed Reform Management Unit) of the DPA was also one of the beneficiaries. Given the variety of stakeholders, effective implementation depended on coordination and effective monitoring from DPA. 83. Reportedly, DPA played a strong role in the coordination of activities, and anticipation, identification and resolution of emerging issues; however, the role of DPA in the second part of the project was not sufficiently proactive. There is no strong evidence that the Project Steering Committee, which according to the Financing Agreement was responsible for oversight of the implementation and ensuring the delivery of the Project outputs and attainment of Project outcomes, fulfilled its role effectively. 84. As a result, the focus on project performance shifted from the Implementing Agency to the Project Manager, the Project Coordinator and the Project Coordination Unit. During the critical period for the project in 2008-2010, the Project Manager’s post was vacant for almost two years, creating an impasse and severe risks for project continuity. The bulk of responsibility for moving project forward was placed on the Project Coordination Unit in addition to its core role of administration fiduciary functions. Insufficient communication from the Implementing Agency with the stakeholders on project implementation procedures, as specified in the Financing Agreement, negatively impacted the performance of beneficiaries during the preparation of the consultant’s Terms of References and technical specifications for acquisition of goods under the project. At project exit and at the time of ICR preparation, the Implementing Agency did not have a clear plan for sustaining the project outcomes that would lead to better public service performance. Notwithstanding these shortcomings, the Prime Minister has expressed commitment to continue pursuing public sector modernization. 25 (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 85. Moderately Unsatisfactory rating reflects significant shortcomings in the performance of the Implementing Agency as well as the lack of strong leadership from the Steering Committee. Such Borrower performance resulted in failure to fully achieve project outcomes, in spite of the total extension of the project implementation period for a cumulative 27 month period (from December 31, 2010 to March 31, 2013). The lack of proactivity on the part of the Implementing Agency and beneficiary agencies, weak central leadership and coordination caused delays that ran into the political deadlock in mid-2012 and made approval of enabling legislation unattainable. 6. Lessons Learned 86. The following lessons represent a summary of insights shared by the Borrower and observations made by Bank staff. • Implementation of institutional reforms, related to the change of legal status of government entities, needs assessment of the constitutional and legal provisions, specifically if related to personnel management, at the design stage. This is especially true in countries with central personnel management. Failure to do so may lead to impediments to achievement of goals. Similarly to the lessons learned under the Structural Adjustment Lending, this project confirms that operations that require legal action have much higher risk of failure, as the legislative process is by and large outside of the control of the Executive. In Grenada, only few officials fully accepted the introduction of the managerial discretion in hiring, firing, promoting and disciplining employees of the proposed Executive Agencies. For the majority of the public service such change was too radical to contemplate at this stage of development. The Constitution, which some external legal experts interpreted as allowing such delegation of managerial discretion, was found by the local distinguished lawyers (former and current Attorney Generals) as prohibiting to divest the authority of the Public Service Commission to Chief Executive Officers of Executive Agencies. • Institutional changes in government entities aimed at improvement of service delivery require an assessment of legal, organizational and technical issues related to the business processes. Achievement of service performance by only concentrating on organizational form and managerial arrangements without attention to the business processes is unlikely to result in improved services. As it happened during PSMP implementation, the PAD did not clearly reflect the need for technological and information management improvements, nor did it identify the costs for such procedural and technological upgrade. This led to the restructuring of cost allocation among the components to enable the improvements in the quality of services at the Grenada Land Agency. 26 • Political commitment to project objectives is important to facilitate a legal reform that underlies institutional changes. Following the change of the administration, the commitment to the project at the highest levels of authority has weakened. Indecision on the part of the Government in relation to establishment of EAs resulted in the stalemate during June 2008 – February 2010. • The leadership and commitment to project development objectives on the part of the implementing agency is the critical factor of success. However, if the implementing agency shows little interest and is not proactive in driving project performance in areas not directly under its organizational purview, the implementation process will be challenged, even in the presence of an active Project Manager and/or Project Coordinator. The doubts over the appropriate allocation of responsibility for project management to the Department of Public Administration were voiced during the QER review of the project. The reviewers saw potential risks in ensuring decisive and effective management of the project with multiple stakeholders by the Public Sector Reform Unit (PSRU, later renamed as Reform Management Unit). This unit has a relatively low hierarchical status needed to command discipline during the implementation. The author of this ICR agrees with the suggestion, which has not been realized, that the responsibility for project management should have been placed with the Ministry of Finance. The PSRU could still have been actively engaged at the technical level and support overall decision making with technical expertise. • All project beneficiaries need to have a good understanding of project implementation procedures, which may differ from those of the government. The Bank could reach out to beneficiary entities by helping them understand and comply with project implementation procedures. As pointed out by the Project Coordinator, beneficiary entities had been slow to provide inputs to the procurement process and were not sufficiently knowledgeable in Bank procurement guidelines regarding the selection of consultants or vendors. This contributed to procurement delays. • In the circumstances of limited financing and constrained administration, coherence in Bank interventions, particularly in small and capacity constrained countries, could improve synergies and development effectiveness of the Bank in those countries. In Grenada, this was demonstrated through coordination among the PSMP and two other concurrent projects: E-Government for Regional Integration Program (approved May 2008) and Regional Disaster Vulnerability Reduction Project (approved June 2011), and the Economic and Social DPL (approved June 2010). • Bank procurement rules do not work well in small island states, e.g. in the Grenada’s small labor market, where specific skills are scarce in the local labor market to allow for effective competitive selection process. In several instances, the PCU reported difficulties in identifying sufficient number of contenders to comply with rules set in the Consultant Guidelines. The procurement team in coordination with the CMU reviewed the rationale for potential exceptions that 27 can be applied when appropriate justification for inability to comply in full with the procurement rules have been provided by the Borrower. 7. Comments on Issues Raised by Borrower/Implementing Agencies (a) Borrower/implementing agencies 87. In OECS countries Bank procurement rules may be difficult to comply with in case of selection of local consultants with specific qualifications. Given the small size of the labor market, flexibility in procurement may be warranted to avoid delays in selection. 88. The delays in procurement were partly due to the beneficiary agencies’ insufficient understanding of Bank procurement rules. More support to implementing agencies was required to define technical specifications for procurement of new equipment. The Bank team offered advice on technical specifications upon Borrower’s request. 89. With respect to the Borrower’s criticism of the Bank’s slow response to the restructuring request submitted initially in October 2009, it is true that the restructuring was approved by the Bank only a year after. The Bank, as conveyed to the Government, had to fulfill its due diligence responsibilities before the restructuring could be approved. Moreover, at the time of the request, there was no Project Manager. The new Project Manager was only hired in February 2010. Furthermore, the legal opinion on the constitutionality of the Executive Agencies from the Attorney General was received only in late February 2010. Immediately thereafter a restructuring mission was deployed by the Bank to assess the feasibility of resuscitating a problem project. Furthermore, since the restructuring request also included an 18 month extension, certain pre-conditions had to be fulfilled by the Government before the restructuring could be fully appraised and presented to the Bank’s Board for consideration and approval. (b) Cofinanciers 90. Not applicable. The project was financed through IDA Credit only. 28 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) 18 Total Baseline Cost 3.50 3.04 80 1. Enhanced Departments 1.50 1.82 122 and Perf. Management 2. Strengthening the GIDC 0.50 0.38 76 3. Regional Initiatives 0.40 0.10 25 4. Strengthening PSRU 0.76 0.74 97 Physical Contingencies 0.34 Price Contingencies 0.00 0.00 0.00 Total Project Costs 3.50 3.04 87 Front-end fee PPF 0.00 0.00 0.00 Front-end fee IBRD 0.00 0.00 0.00 Total Financing Required 3.50 3.04 87 (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 0.00 0.00 0.00 International Development 3.50 3.81 108.85 Association (IDA) 18 The actual expenditure by component was provided by the Project Coordination Unit and the information regarding the total disbursements was obtained from Client Connection (as of August 6, 2013). At the moment of finalizing the ICR (September 17, 2013) the total disbursement in US$ stood of $3.061 million. It was not possible to make an accurate estimation of disbursement by component from Client Connection, as it presents the summary of disbursement by category only. The total undisbursed amount is $747,936.20. 29 Annex 2. Outputs by Component The following outputs have been achieved by component: 1. Executive Agencies and Public Sector Performance Management a. Analysis to enable Land and Deeds registration as a one stop shop has been done. b. Draft Law on Grenada Land Agency (GLA) and amendments to other laws that would enable setting up GLA. c. Draft Law on CAIPO developed. d. Partial refurbishment of a building to house CAIPO completed. Explanation: initial assessment of the scope of refurbishing has been incomplete; the government identified additional electric wiring works to be completed outside the project, using government funds. e. Organizational structure, job descriptions and internal management processes have been developed. f. Data Center in Deeds and Land Registry was established, server installed and operational. Additional equipment purchased includes: PCs, laptops, scanners, printers, photocopier, and GPS system. Physical fiber optic connections for distributed network architecture have almost been completed among the relevant GLA departments: Lands and Survey, Valuation, Registration, and Physical Planning. g. Records of land titles (deeds) have been largely digitalized and are accessible on line through a search function. Access to the web site www.grenadasites.gov is enabled, both internally and externally. h. Maps have been digitalized. i. Equipment has been purchased to support daily operations: conducting land surveys, creating (digital) land survey plans. j. Property Valuation Department has been computerized (software and hardware procured and installed). k. For Physical Planning Department the following improvements achieved: data sets for planning have been updated; general use equipment (GPS, computers and software) and specific land survey equipment procured. Training on surveys conducted and training on digitalizing records also delivered. 30 l. Website for GLA has been created allowing for reviewing property registration documents on line. m. Capacity has been built: training materials for maintaining the website www.eLandsells.gov prepared. 2. Strengthening GIDC a. A Training Center in GIDC has been established, including construction and equipment purchase. b. A vehicle for transporting trainees from distant parishes to the Center was purchased. c. Training for prospective entrepreneurs has been developed, including training materials. d. Small business strategy has been developed and adopted. e. Training has started and continues. Training program varies by objective and can last from 1-2 days to 2-3 weeks. The project supported training for the total amount of US$ 85,256. The total number of trained persons is 1,261 during 2008-2010. In 2010 – 25 persons trained started their business. The lack of information system and a follow up mechanisms does not allow assessing the total cumulative impact of training on starting of new businesses. 3. Regional Initiatives a. Analysis of the items for pooled procurement has been conducted. b. Memorandum of Understanding with St. Vincent on pooled procurement has been prepared and signed. c. Pooled procurement was not implemented, as Procurement legislation (adopted in 2010 in Grenada) in neither of the two countries had provisions for pooled procurement. Procedures for pooled procurement have not been developed. The revision of the Procurement Law in Grenada had started, but has not been enacted by Parliament. 4. Capacity Building for the Public Sector Reform Unit and Project Administration a. With the support of CARICAD a strategy of public sector modernization has been developed and staff of the PSRU trained. Training in project management and monitoring and evaluation was delivered. Staff turnover has not contributed to sustaining the PSRU capacity to implement reforms. b. Support to project management has been provided through training and financing the key fiduciary personnel, equipment and incremental operational expenditure. 31 Annex 3. Economic and Financial Analysis 1. The economic rate of return for this project was not calculated at the appraisal stage, referring to the difficulty to quantify project benefits and exact rates of return. The PAD refers to positive fiscal impact that the project would generate through improved quality of services. 2. Gains were expected from streamlining government functions converted into Executive Agencies, including improving effectiveness and efficiency of service delivery to citizens, strengthening business skills of entrepreneurs in small and micro enterprises, value for money in government procurement through pooled procurement, and building capacity of the Public Sector Reform Unit. 3. The assessment of the project achievements and impacts suggests that only once Grenada Land Agency and CAIPO have been fully established, some reasonable efficiency improvement will have been detected. However, the project does not have right indicators to measure economic efficiency and impact. It is difficult to appraise the financial impact of the improved service response times. Qualitatively, it is reasonable to assume that the project has contributed significantly to improving the quality of services of the Grenada Land Agency through digitalization of its intermediate and final products, making records available on line for viewing and printing (for a fee). 4. Creating a training center in Grenada Investment Development Corporation (GIDC) has helped selected persons to set up their own business. The GIDC was only able to confirm that 25 trained persons have opened their businesses. This contributed to increasing employment, as well as increasing revenues through taxes. The consolidated financial impact of these activities cannot be determined, as GIDC has not monitored the numbers of new entrepreneurs after their having received the project supported training. 5. As expected regional pooled procurement has not been realized, no savings from procurement of scale have been gained. 6. The capacity of the Reform Management Unit to lead the public sector modernization remains limited, as explained in the main text. 7. In conclusion, the project contributed to improving the effectiveness and efficiency of the public sector management. However, since not all the planned results have been achieved, the real project impact has been lower than expected. 32 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Lisa Bhansali Adviser LCSOS Team Leader Enzo De Laurentiis Manager EASR1 Lisa Lui Lead Counsel LEGOP Rachel McColgan-Arnold Chair, Staff Association WBGSA Patricia E. Mendez Senior Executive Assistant LCSPR Emmanuel N. Njomo Consultant LCSFM Milena Sanchez de Boado Consultant LCSPS Sharon D. Spriggs Program Assistant LCSIS Supervision/ICR Roberto Panzardi Sr. Public Sector Specialist AFTP3 Team Leader Kathy Lalazarian Sr. Public Sector Specialist LCSPS Team Leader Gisela Durand Consultant AFTFE Jose Eduardo Gutierrez Ossio Senior Public Sector Specialist LCSPS Svetlana V. Klimenko Sr Financial Management Special LCSFM Financial Mgmt Lisa Lui Lead Counsel LEGOP Patricia E. Macgowan Consultant LCSPT Carmen Machicado Operations Officer LCSPS Nicholas Paul Manning Adviser PRMPS Emmanuel N. Njomo Consultant LCSFM May Cabilas Olalia Senior Operations Officer LCSPS Milena Sanchez de Boado Consultant LCSPS Mario Francisco Sangines Senior Public Sector Specialist ECSPE Stefka Slavova Senior Economist CICBR Evelyn Villatoro Senior Procurement Specialist EASR1 Svetlana Proskurovska Senior Public Sector Specialist LCSPS ICR TL Plamen Stoyanov Kirov Senior Procurement Specialist LSCPT Procurement (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY03 2.36 13.83 FY04 12.45 74.51 FY05 12.44 116.01 33 FY06 12.34 91.84 Total: 39.59 296.19 Supervision/ICR FY06 10.39 66.73 FY07 19.11 100.86 FY08 10.46 67.52 FY09 10.95 79.77 FY10 30.92 118.29 FY11 23.19 102.98 FY12 9.81 82.17 FY13 10.63 48.44 Total: 125.46 666.76 34 Annex 5. Beneficiary Survey Results No survey of client satisfaction was conducted. 35 Annex 6. Stakeholder Workshop Report and Results No Stakeholder workshop was conducted. 36 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 1. The Borrower’s ICR lists project achievement, challenges and reasons for the failure to achieve planned results. Assessment of Results 2. Regarding the establishment of the Enhanced Departments, the ICR notes that the separation of land function and the Registry, and Corporate Affairs and Intellectual Property functions was performed promptly and led to considerable efficiency gains in service delivery times. However, the ICR mentions challenges in amalgamation of the various land functions that stemmed from the approach taken at the design stage. Attention was focused on institutional form, at the expense of designing a program of developing critical “tools, processes and resources that were necessary to enable the modern conduct of the mandates of the land functions”. The omissions during the design led to project restructuring in 2010. 3. The abandonment of the goal of pooled procurement was explained by the legal constraints that precluded from implementing an MOU with St. Vincent on pooled procurement of selected goods and services. 4. The ICR supports the relevance of the objectives of component 2 by the need to support growth of employment through creating micro and small businesses. The Borrower assesses the achievement of objectives under this component at 95 percent. 5. Concerning component 4, the project lists completed activities to strengthen the capacity of the Reform Management Unit, including a strategy for RMU development until 2016. Knowledge events to build capacity have been also delivered. The Government ICR though does not assess the impact of these activities on the capacity of RMU to develop and lead initiatives in public sector modernization. Government Performance 6. The ICR mentions high level government commitment to the reform agenda, but notes bureaucratic inertia as a factor delaying the implementation. The departure of the former Project Manager and lengthy procedures to replace him was seen as a factor undermining the implementation momentum during 2009-2010. 7. More timely inputs and specification for procurement processes from the beneficiaries, and better monitoring of activities would have prevented implementation delays. 8. The ICR acknowledged that 2008 general elections contributed to delays in implementation as the Government assessed the legality of establishing the Executive Agencies. Bank Performance 9. Bank’s performance was criticized for the design that set goals (setting of executive agencies) that could not have been implemented due to the constitutional challenges. Besides, the lack of attention to the needed technical and procedural improvements to enable effective and efficient land management and registration is seen as a substantial shortcoming of the design. 37 10. The Bank was also criticized for the slow response to restructuring request (2010) 19 , and requests for no objections. The procurement practices are perceived as inflexible at times, and not attuned to the actual labor market realities of the small states. Lessons Learnt 11. The focus on institutional aspects at the designed stage proved to be inadequate without due attention to digitalizing maps, establishing geodetic system, or digitalizing registry records, etc. Ensuing redesign of the activity resulted in implementation delays. 12. Implementation progress is predicated on seamless coordination of the Project Manager, Project Coordination Unit and the Bank. This coordination was not effective, often ensuing delays, inter alia, due to excessive response time from the Bank in selected cases. Results Sustainability 13. The list of actions expected by the Government to improve results’ sustainability includes: • Approval of the GLA Act by Parliament and related legislation; • Appointment of the Director of the GLA to lead and manage the transition and amalgamation process; and • Launch of the available e-services in land registration (eLandGrenada, eLandMap, eLandRegistry, and eLandSales). Future expansion of the digitalized services includes: eLandPermit and eLandPlan. Borrower Comments on ICR 14. The Borrower was asked to provide comments on the draft ICR following the virtual QER review. The ICR was shared with the Project Coordinator on August 9, 2013. No comments were received by the Bank as of September 17, 2003. 19 With respect to the Borrower's criticism of the Bank's slow response to the restructuring request submitted initially in October 2009, it is true that the restructuring was approved by the Bank only a year after. The Bank, as conveyed to the Government, had to fulfill its due diligence responsibilities before the restructuring could be approved. Moreover, at the time of the request, there was no Project Manager. The new Project Manager was only hired in February 2010. Immediately thereafter a restructuring mission was deployed by the Bank to assess the feasibility of resuscitating a problem project. Furthermore, since the restructuring request also included an 18 months extension, certain pre-conditions had to be fulfilled by the Government before the restructuring could be fully appraised and presented to the Bank's Board for consideration and approval. 38 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 39 Annex 9. List of Supporting Documents 1. Borrower’s ICR of March 31, 2013 2. PSMP Procurement Plan 3. PSMP Summary of Expenditures 4. PSMP PAD 5. PSMP Financing Agreement 6. Restructuring papers 1-3 7. ISRs 8. Aide Mémoires 40 IBRD 33412 61°45' 61°30' SAINT VINCENT AND THE S GRENADINES E I N Petit Martinique GRENADA D 12°30' 12°30' A Hillsborough N Grand Bay E CARRIACOU R Carriacou G Saline Island Frigate Island Large Island E Caribbean H Sea T Diamond Island Les Tantes Ronde Island Caille Island London Bridge 12°15' 12°15' Sauteurs Caille Island Levera Sandy Island Pond Grenada SAINT Bay Bird Island 0 1 2 3 4 5 6 Kilometers ck t ri Victoria MARK t. P a Lake SAINT S S t. Antoine 0 1 2 3 4 5 6 Miles Ma PATRICK rks Gouyave Tivoli Mt. Saint This map was produced by the Map Design Unit of The World Bank. Catherine The boundaries, colors, denominations and any other information (840 m) 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 SAINT Paradise endorsement or acceptance of such boundaries. Grand Roy Great River JOHN Gr eat Bay Grenville 61°30' Grenville SAINT Bay Beau s ANDREW Marquis Grenada GR E N A D A Grand ej ur Étang o South Vendôme East Mt. SAINT (716 m) GEORGE SAINT SELECTED CITIES AND TOWNS ST. GEORGE'S Belmont DAVID Saint David's PARISH CAPITALS Grand Anse Corinth NATIONAL CAPITAL Bay RIVERS Calivigny Point MAIN ROADS Salines 12°00' PARISH BOUNDARIES Glove Island INTERNATIONAL BOUNDARIES 61°45' DECEMBER 2004