The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) AFRICA | Somalia | Governance Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2015 | Seq No: 6 | SUBMITTED | ISR38046 | Implementing Agencies: Federal Republic of Somalia, Ministry of Finance, Federal Republic of Somalia Key Dates Key Project Dates Bank Approval Date: 25-Jun-2015 Effectiveness Date: 02-Jul-2015 Planned Mid Term Review Date: 31-Oct-2017 Actual Mid-Term Review Date: 27-Nov-2017 Original Closing Date: 30-Jun-2020 Revised Closing Date: 30-Jun-2020 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Development Objective of the project is to support the government to provide credible and sustainable payroll and to establish the foundation for efficient budget execution and payment systems for the non-security sectors in FGS and eligible interim and emerging states. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured) To support the Federal Government of Somalia and Eligible Federal Member States to strengthen resource management systems, the inter-governmental fiscal framework, and service delivery systems in health and education. Components Table Name Recurrent cost finance to reform resource management sytems:(Cost $56.60 M) Strengthen inter-governmental fiscal relations:(Cost $1.80 M) Transfers for core government functions and foundational education and health service delivery mechanisms in eligible FMS:(Cost $54.70 M) Project Management and Coordination in the Federal Government and FMS:(Cost $6.90 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating High High Implementation Status and Key Decisions Component 1: Recurrent cost finance to reform resource management systems (US$56.6m) 9/19/2019 Page 1 of 8 The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) The mid year review held in June 2019 discussed and agreed the Participation Eligibility Criteria to be applied from July 2019 onwards. These are a simple and limited set of measures that both Federal Government of Somalia (FGS) and Federal Member States (FMS) must meet in order to continue benefiting from each project sub-component. The rationale for this is to promote basic system strengthening such as: inter-governmental relations, fiscal transparency and basic payroll and Public Financial Management (PFM) controls. These will now be incorporated into the RCRF Project Operations Manual (POM) and operationalized. The Participation Eligibility Criteria include new fiscal reporting requirements for both FGS and FMS. The FGS fiscal reporting Criteria are consistent with the FGS PFM Bill and PFM Acts (for Galmudug State of Somalia (GSS), Hirshabelle State of Somalia (HSS), Jubbaland state of Somalia (JSS), and South West State of Somalia (SWSS), requiring the Minister to produce a consolidated quarterly report comparing budget execution and revenue collections to the estimates contained in the budget, within forty-five days of the end of the quarter. Sub-component 1.1: Financing eligible civil service salaries. Sub-component 1.1 continues to provide a ‘baseline’ level of input-based financing of the FGS civil service wage bill. This financing supports the timely payment of civil service salaries over the three-year period (US$20 million in total). During 2019 there is US$7 million of baseline financing available to FGS and US$ 2.3 had been disbursed by June 11, 2019. Sub-component 1.2: Financing eligible salaries and allowances of the Capacity Injection Mechanism (CIM) recruits in FGS. Financing declines from US$2.6 million in 2019 and 2020 to US$1.4 million in 2021. The FGS will be taking responsibility for either co-financing an increasing share of the CIM payroll or scaling back expenditure on the program. This is an important commitment towards the long-term ownership and sustainability of the CIM. US$960,930 had been disbursed by June 11, 2019. The FGS Office of Accountant General has progressed work on bringing the CIM recruits onto the SFMIS payroll module and FGS assured the RCRF Mid-Year Review that August CIM payroll will be executed through this module. This will lower the administrative burden on the Ministry of Finance for CIM payroll processing. Sub-component 1.3: Financing eligible civil service salaries in FGS: reform benchmarks (DLIs) (US$30.0 million). A progress update was agreed on the implementation of RCRF reform benchmarks or “Disbursement Linked Indicators (DLIs)”. Most of the benchmarks/DLIs are jointly aligned with the European Union State and Resilience Building Contract (EU-SRBC). Component 2: Strengthen inter-governmental fiscal relations (forums and secretariat) Inter-governmental fiscal coordination has been somewhat limited during the reporting period due to tensions between the FGS and FMS. It has not been possible to convene a Finance Ministers’ Fiscal Forum (FMFF) meeting, meaning that the Inter-governmental Fiscal Transfers Policy Paper, reviewed at technical level in November 2018could not be approved at ministerial level (this is a joint RCRF/EU-SRBC reform benchmark). A technical Inter-Governmental Fiscal Federalism Committee (IGFCC) meeting was successfully held in Addis Ababa in June, at which technical agreement was reached between FGS, JSS, and PSS ministries of finance on the Customs Reform Action Plan, which was initially discussed at the IGFFC in Nairobi in July 2018, and was prepared with support from the World Bank and World Customs Organization (WCO) under the Department for International Development DfID Governance External Funded Output (EFO). Component 3: Transfers for core government functions and foundational education and health service delivery mechanisms in eligible FMS (US$54.7 million) Sub-component 3.1: Financing core government functions in FMS. During the first six months of 2019, this sub-component continued the financing of FMS recurrent costs: previously under Component 2, it was moved to Component 3 to consolidate fiscal transfers to FMS. At the Mid- Year Review progress on implementation of Sub-Component 3.1. was reviewed for the reporting period. The Puntland team confirmed that CIM recruits have been incorporated into the FMIS payroll module since April 2019. Galmudug State and South West State have both seen cashflow needs increase as their respective Civil Service Commissions have increased civil service recruitment in line with agreed budgets. The FGS and FMS External Assistance Fiduciary Section (EAFS) teams from ministries of finance have developed a proposal for training, which will be implemented during the second half of 2019. The RCRF task team is working together with the FMS ministries of finance and the UK/EU funded Public Finance Management in Somalia (PREMIS) programme team to develop a solution to enable FMS to access non-salary recurrent cost (NSRC) financing. Sub-component 3.2: Financing education service delivery. The RCRF education component made good progress in the first half on 2019, despite political tensions between the FGS and FMS Ministries of Education. The FGS and FMS Ministries of Education discussed during the RCRF Education Mid-Year Review jointly, implementation status and challenges for the RCRF Education Component. The technical discussions covered all Education sub-components with focus on implementation challenges and coordination. The newly recruited RCRF Education Coordinator, participated in her first RCRF Mid-Year Review. For the second half of 2019, the following challenges are anticipated: i) need to resolve implementation issues for RCRF Education component with urgency; ii) challenges best to be addressed in technical forum/Mid Year Review (MYR) RCRF; iii) need for constructive spirit to guide the technical and problem focused discussions; and iv) appreciation for additional support to Program Implementation Unit (PIU) to coordinate Education component. Sub-component 3.2.1: Teacher assessment and salary. To establish a baseline on teacher proficiency, the FGS Ministry of Education (MoE) will require all primary and secondary school teachers, beginning with those benefitting from salary payments under the RCRF, to take a test on basic literacy, numeracy, and pedagogy. The teacher testing sub-component progressed well during 2019. Highlights include the FGS-FMS Ministries of Education workshop on Teacher Testing. A World Bank international specialist provides global expertise to developing a testing instrument appropriate for the Somalia context. An initial teacher testing pilot for Benadir is planned during the month of July 2019, before a review and initial report on the testing exercise is expected in August. It is very encouraging to note the government’s commitment on this process. As a result, the 9/19/2019 Page 2 of 8 The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) original target of300 teachers will be exceeded. The FGS Ministry of Education will also share a timebound work plan on teacher testing with the respective FMS ministries of Education for further discussion. Sub-component 3.2.2: School supervision. The school supervision sub-component progressed at different speeds between the FGS and FMS Ministries of Education. With Ministries of Education in GSS, SWSS, and HSS focused on onboarding the teacher payroll to RCRF support, PSS, JSS, and FGS for BRA teachers, have made progress in identifying upcoming priorities for school supervision. Multiple support streams to school supervision from the international community fragment support to a comprehensive and government-led school supervision work program, and the teams suggested to map supervision support among the respective governments to provide more clarity on existing and envisioned support to school supervision. Further, some governments have started to develop operation and quality assurance manuals on supervision and will share these documents for technical review to align support behind governments’ reform initiatives. Sub-component 3.2.3: Education sector recurrent costs. The progress in this sub-component was substantial and recent discussions resulted in a concrete work plan to finalize the onboarding of teacher payrolls in HSS, GSS, and SWSS, strengthening the payroll management in JSS, FGS/BRA, and PSS, as well as advancing the discussions around onboarding supervision and quality assurance of staff eligible under this sub- component. On onboarding of remaining teacher payrolls, the governments of HSS, GSS, and SWSS, with the support of the Education coordinator, the World Bank, PREMIS and additional technical assistance where necessary, agreed on delivering a timebound action plan by early July. On onboarding supervision staff, all governments raised the importance of supporting supervision efforts through multi-layered supervision infrastructure and capacities. While some levels, such as Regional Environmental Officers REOs, are supported by other development partners, the importance of District Education Officers (DEOs) are obvious, and financing for these positions was requested through RCRF. Respective governments have advanced on this agenda at different speeds, and cross-FMS learning was fruitful during recent discussions, especially around pay scales, recruitment processes, and budget allocations. Sub-Component: 3.2.4: Education system strengthening. This sub-component provides technical and financial support to the FGS and FMS Ministries of Education to strengthen critical education sector systems and is progressing well with concrete investments identified and work plans agreed. The overall challenges identified include: i) the need to ensure Teacher Selection Criteria and policy are well documented for all governments; ii) the lack of effective teacher time and attendance system to improve quality and integrity of teacher payrolls; iii) the REO and DEO on boarding to civil service payrolls and integration into a structured process/ system of school and teacher supervision; iv) the urgency to lay foundations for Biometric registration of all Government teachers; and v) improve coordination and communication around system strengthening investments between FGS and FMS Ministries of Education. Recent discussions on system strengthening resulted in concrete timebound action plans developed to address these challenges. Sub-component 3.3: Laying foundations for health service delivery mechanisms. The health component is laying the foundations necessary to improve health service delivery and health outcomes through development of Female Health Workers (FHWs) cadres and strengthening of government’s stewardship and management capacities. Sub-component 3.3.1: Developing female health worker cadre. This sub-component is helping to make the initial investments in FHWs pioneered by other development partners and a more sustainable, on-system, government managed program, and the project is supporting the deployment of Female Health Workers across Somalia starting with three locations where female health worker cadres exist that have been trained according to the Government’s compendium. The roll out of the FHW is being led by the implementing governments with support from a single technical assistance agency referred to as Health Technical Partner (HTP). Governments are recruiting and will deploy an initial set of FHWs that have been trained as per the compendium. Simultaneously government should be developing a scale up plan for: (i) expanding the rollout to new Federal Member States; and (ii) deepening coverage in areas with existing cadres of female health workers. During the Mid-Year Review mission, the government counterparts noted that the planned roll out has been significantly delayed. Revising the planned implementation modality based on government feedback led to extensive technical discussions with different federal member states and partners. This has since been resolved and the planned rollout is now scheduled to take effect from January 1, 2020. Support from the Global Fund will continue to support the payment of salaries for existing Female Health Workers until the end of 2019. Key agreements have been reached on the more technical implementation dimensions of the program. On salaries, the FHWs will be paid a standard monthly wage as agreed with the governments. The salary payment will be done directly to the FHWs and FHWS bank accounts or mobile phones from the Federal Member States Ministry of Finance (FMS MOF) based on a payroll list provided by the Ministry of Health. On FHW/S hiring and recruitment, the initial list of FHWs and FHS to be hired under this program will be provided by the respective implementing governments and verified by the HTP, in preparation for the competitive recruitment of the HTP, the RCRF team and the government counterparts reviewed and agreed on the main aspects of the HTP terms of reference. On the review of the Compendium, the current outdated compendium is in need of urgent review, which the World Bank team offered to conduct and support via the Health Advisory Services and Analytics (ASA). On coordination and communication, of particular importance is the coordination between FGS and FMS Ministries of Health and coordination with other development partners supporting the FHWs program. In strengthening coordination, efforts will made to use established coordination mechanisms and to avoid setting up new ones just for the FHWs program. The recruitment of the RCRF Health Focal Point has been concluded. Sub-component 3.3.2: Strengthening government capability for contract management, monitoring, and coordination. To fully realize the potential of trained FHWs and service providers to improve access and quality of essential health services, the Government must be able to coordinate partners, coordinate across government agencies and levels, monitor results, and hold contractors accountable for implementation progress and results. The first stage of this component has conducted capacity assessments in the three governments that will initially implement the FHW program. The assessment framework has been discussed amongst government, including how the capacity building initiatives derived from the assessments will inform the implementation of the FHW program and the roles and responsibilities of the involved partners. Constructive sessions were held with each of the FGS, Puntland and Galmudug teams to: 1) validate Capacity Assessment observations and verify that key 9/19/2019 Page 3 of 8 The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) findings were understood and factually correct; and 2) communicate the assessment scores for each programmatic and organizational element. The Capacity Assessment team is finalizing the three Capacity Assessments and will deliver these for Bank and Governments’ review and information to discuss next steps. Component 4: Project management and coordination in FGS and FMS. In accordance with the revised POM, the RCRF Project Management Team (PMT) is required to meet quarterly and follow a set agenda. During the period under report the PMT met once, demonstrating that intergovernmental coordination is possible when framed around a solid technical agenda, the RCRF team met in Garowe for the fourth RCRF PMT. The PMT meetings are now solidly institutionalized and follow an agenda set out in the Project Operations Manual (POM). The key purpose of the meeting is to find collective solutions to existing challenges and bottlenecks, as well as to plan for strategic reviews. It is encouraging to note that project implementation has improved significantly over the past year with the number of bottlenecks issues greatly reduced. The meetings provide an opportunity for FMS more seasoned in RCRF to guide and help the recently onboarded states. In June 2019 the project held its Mid-Year Review in Addis Ababa in Ethiopia. The meeting was framed around a series of technical discussions that cover Health, Education, Finance, and included a dedicated European Union (EU) session on the State and Resilience Building Contract (SRBC), and an Intergovernmental Fiscal Federalism Technical Committee meeting. The Multi-Partner Fund (MPF) Monitoring Agent team and UK/EU funded PREMIS team both provided technical support to the discussions. The International Monetary Fund (IMF) Resident Representative also attended as an observer to the Finance discussions. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial High High Macroeconomic High High High Sector Strategies and Policies Substantial Moderate Moderate Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary High High High Environment and Social Low Low Low Stakeholders Substantial Substantial Substantial Other High Substantial High Overall High High High Results PDO Indicators by Objectives / Outcomes Recurrent cost finance to reform resource management systems IN00728709 ►Share of civil servants' salaries financed by government (Percentage, Custom) 9/19/2019 Page 4 of 8 The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) Baseline Actual (Previous) Actual (Current) End Target Value 40.00 40.70 80.00 40.00 Date 31-Dec-2018 31-Dec-2018 30-Jun-2019 30-Jun-2022 IN00728727 ►Percentage of eligible civil servants salaries paid on time (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 8.00 12.00 67.00 22.00 Date 31-Dec-2018 31-Dec-2018 30-Jun-2019 30-Jun-2022 Strengthen inter-governmental fiscal relations IN00728710 ►Inter-governmental transfers to eligible FMS (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 87.20 45.50 45.00 Date 31-Dec-2018 31-Dec-2018 30-Jun-2019 30-Jun-2022 This indicator can only be fully assessed at end the end of each, starting with Year 1 or FY2019 (i.e. after December 31st 2019) as it requires a comparison between total resources transferred to FMS in baseline year (2018) against subsequent years (Year 1 is 2019, Year 2 is 2020, Year 3 is 2021). As an interim Comments: assessment, for the September 2019 ISR, based on outturn at end June 2019, and assuming this execution rate is continued throughout the second half of 2019, results in an increase from 2018 to 2019 of 45.5% in transfers to FMS. Transfers for core Govt functions and foundational education and health service delivery mechanisms IN00728726 ►Eligible FMS/BRA conducting proficiency testing of teachers as an annual exercise establishing minimum competency level of teachers (DLI 7) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 3.00 Date 31-Dec-2018 31-Dec-2018 30-Jun-2019 30-Jun-2022 Intermediate Results Indicators by Components Recurrent cost finance to reform resource management systems IN00728731 ►Monthly payroll reports published on MOF website (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 4.00 12.00 5.00 12.00 9/19/2019 Page 5 of 8 The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) Date 31-Dec-2018 31-Dec-2018 30-Jun-2019 30-Jun-2022 IN00728735 ►Strengthened payment process for operational expenditures (DLI 4) (Percent) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All government payments for salaries, transfers and capital expenditures to be Cash advances are Cash advances are executed as payments Cash advances to MDAs progressing to MDAs progressing to MDAs to Bank accounts Value 50% of operating with 37.3% of operating with 29.7% of directly to vendors, expenditures. expenditures operating expenses with the exception of: petty cash, travel advances, security sector and contingency (per Appropriation Act) Date 31-Dec-2018 31-Dec-2018 30-Jun-2019 30-Jun-2022 Strengthen inter-governmental fiscal relations IN00728730 ►Inter-governmental forums held annually (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3.00 8.00 1.00 4.00 Date 31-Dec-2018 31-Dec-2018 30-Jun-2019 30-Jun-2022 IN00728734 ►Strengthen FGS transfers to FMS (DLI6) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 2018 fiscal transfers to FMS budgeted at USD 12m, with USD 5.4m for Met. Execution rate for block transfers under fiscal transfers to FMS 10701 Ministry of Interior 2018 fiscal transfers to for H1 2019 (January – FGS fiscal transfers and Federal Affairs (USD FMS budgeted at USD June) of 104.7% of execution rate to FMS 1.8m each for Galmudug, 12m, with USD 5.4m for budgeted level equal to or greater Value South West, and block transfers under exceeds execution than the outturn rate Hirshabelle). Interior Ministry of Interior and rate for domestic for domestic revenues transfers transitioned Federal Affairs revenue for H1 at (Year 3) from cash to electronic 104.6% of budgeted funds transfers (EFT) level direct to recipient Single Treasury Accounts during 2018. Date 31-Jul-2018 31-Jul-2018 30-Jun-2019 30-Jun-2022 Transfers for core Govt functions & foundational education & health service delivery mechanisms IN00728728 ►Strengthen school supervision (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 9/19/2019 Page 6 of 8 The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) Some FMS including Puntland have started Lack of a coherent Lack of a coherent to develop operations system for school system for school Satisfactory and quality assurance supervision, with supervision, with completion of full manuals on Value inadequate financing to inadequate financing to round of supervision supervision. Puntland enable FMS education enable FMS education activities in eligible has also developed a ministries to fulfil this ministries to fulfil this FMS comprehensive annual function function costed supervision workplan. Date 31-Dec-2018 19-Mar-2019 30-Jun-2019 30-Jun-2022 IN00728729 ►Contract Management Unit established and fully staffed according to organogram (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 31-Dec-2018 19-Mar-2019 30-Jun-2019 30-Jun-2022 IN00728732 ►Women of child bearing age (15-59 years) and children 0-59 months referred to health facilities by Female Health Workers (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 10.00 Date 31-Dec-2018 19-Mar-2019 30-Jun-2019 30-Jun-2022 IN00728733 ►Female Health Workers selected according to guidelines, trained, and actively providing services (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 750.00 Date 31-Dec-2018 19-Mar-2019 30-Jun-2019 30-Jun-2022 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P154875 IDA-D3780 Effective USD 60.00 60.00 0.00 11.05 47.92 18% P154875 TF-A0534 Effective USD 51.00 51.00 0.00 51.00 0.00 100% P154875 TF-A6971 Effective USD 35.00 35.00 0.00 35.00 0.00 100% Key Dates (by loan) 9/19/2019 Page 7 of 8 The World Bank Implementation Status & Results Report Somalia Recurrent Cost & Reform Financing Project - Phase 2 (P154875) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P154875 IDA-D3780 Effective 25-Sep-2018 31-Oct-2018 05-Feb-2019 30-Jun-2022 30-Jun-2022 P154875 TF-A0534 Effective 29-Jun-2015 29-Jun-2015 02-Jul-2015 30-Jun-2020 30-Jun-2020 P154875 TF-A6971 Effective 15-Feb-2018 12-Mar-2018 12-Mar-2018 30-Jun-2020 30-Jun-2020 Cumulative Disbursements Restructuring History Level 2 Approved on 06-Mar-2018 ,Level 2 Approved on 07-Jun-2018 ,Level 2 Approved on 29-Jun-2018 Related Project(s) P167224-Recurrent Cost & Reform Financing Project - Additional Financing 9/19/2019 Page 8 of 8