Document of The World Bank Report No: 19788-GUI PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 13.8 MILLION (US$19.0 MILLION EQUIVALENT) TO THE REPUBLIC OF GUINEA FOR A CAPACITY BUILDING FOR SERVICE DELIVERY PROJECT IN SUPPORT OF THE FIRST PHASE OF THE CAPACITY BUILDING FOR SERVICE DELIVERY PROGRAM November 22, 1999 Capacity Buiiding Unit Co,nt,y Department 16 Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective November 22, 1999 Currency Unit = GNF GNF = US$0.000727 US$1 = GNF 1375.25 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Lending CAS Country Assistance Strategy CBSDP Capacity Building for Service Delivery Program CIDA Canadian International Development Agency CRD CommunautW Rurale de Developpement CU Communaute Urbaine DAAF Direction des Affaires Administratives and Financieres IDA International Development Association IMF International Monetary Fund LACI Loan Administration Change Initiative MIATD Ministry of Territorial Administration and Decentralization M&E Monitoring and Evaluation MEF Ministry of Economy and Finance MPC Ministry of Planning and Cooperation MEFP Ministry of Employment and Civil Service MTEF Medium Term Expenditure Framework NGO Non-Governmental Organization PDC Conseil Prefectoral de Developpement PEMAC Public Expenditure Adjustment Credit PIMC Project Inter-Ministerial Management Committee PAU Project Administration Unit POM Project Operational Manual PPA Primary Program Account PSC Project Steering Committee SAAF Service des Affaires Administratives et Financieres SOE Statement of Expenditure SPA Special Program Account SPISDF Sustainable Performance in Service Delivery Fund UJNDP United Nations Development Program USAID United States Agency for International Development VCSP Village Community Support Program Vice President Jean-Louis Sarbib Country Director Mamadou Dia Sector Manager Brian D. Levy Task Team Leader Rudy Chizungu Guinea Capacity Building for Service Delivery Program CONTENTS I. PROGRAM AND PROJECT DEVELOPMENT OBJECTIVES 2 A. Program purpose and phasing 2 B. Project development objectives and Key Performance Indicators (see Annex 1B) 3 C. Program description and performance triggers for subsequent loans 4 II. STRATEGIC CONTEXT 5 A. Sector-related Country Assistance Strategy (CAS) Goal supported by the project (See Annex 1B) 5 B. Main sector issues and Government strategy 6 C. Sector issues to be addressed by the project and strategic choices: 7 III. PROJECT DESCRIPTION SUMMARY 8 A. Project components 8 B. Key Policy and Institutional Reforms Supported by the Project 8 C. Benefits, beneficiaries and target population 9 IV. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS 9 A. Project Coordination and Management (See Annex 2) 9 B. Accounting, Financial Reporting and Auditing Arrangements (See Annex 8) 10 C. Monitoring, Evaluation and Reporting 10 V. PROJECT RATIONALE 11 A. Project alternatives considered and reasons for rejection 11 B. Major related projects financed by the Bank and other development agencies 11 C. Lessons learned and reflected in project design 1Z D. Indications of Borrower Commitment and Ownership 12 E. Value added of IDA Support 13 VI. SUMMARY PROJECT ANALYSIS 13 A. Economic 13 B. Financial 13 C. Technical 13 D. Institutional 13 E. Social 14 F. Environmental 14 G. Participatory Approach 14 VII. SUSTAINABILITY AND RIS]KS 15 A. Sustainability 15 B. Critical Risks 15 C. Potential Controversial Aspects 16 VIII. MAIN CREDIT CONDITIONS 16 A. Conditions for Board Presentation 16 B. Conditions for Effectiveness 16 C. Conditions for Disbursement of Performance Grants and Performance Award under the Sustainable Performance In Service Delivery Fund 16 D. Assurances Obtained at Negotiations 17 E. Readiness for Implementation 17 F. Compliance with Bank Policies 18 Annexes Annex IA. Letter of Decentralization Policy Annex lB. Project Design Summary Annex 2. Detailed Project Description Annex 3. Estimated Project Costs Sum-mary Annex 4. Cost-Effectiveness Analysis Annex 5. Financial Summary Annex 6 Procurement and Disbursement Arrangements Table A Project Costs by Procurementl; Arrangements Table B Thresholds for Procurement Methods and Prior Review Table C Allocation of Credit Proceeds Table D Estimated Disbursement of IDA Credit Annex 7. Project Processing Budget and Schedule Annex 8. Financial Management Annex 9. Documents in the Project file Annex 10. Statement of Loans and Credits Annex 11. Country at a Glance Map: IBRD No. 27220 1 Guinea Capacity Building for Service Delivery Project Project Appraisal Document Africa Regional Office Country Department 16 Date: November 22,1999 Task Team Leader/Task Manager: Rudy Chizungu Country Director: Mamadou Dia Sector Manager: Brian David Levy Project ID: Sector Public Sector Program Objective Category: Poverty Alleviation/ Economic Management GN-PE-49716 Management Lending Instriment: Adaptable Program Loan Program of Targeted Intervention: [X] Yes [ No Program Financing Data (US$M) Sources of Financing A PLs__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ Total Cost Government Others IDA First Phase: 2000 - 2003 21.0 2.0 N/A 19.0 Second Phase: 2004 -2007 55.0 4.5 10.0 40.5 Third Phase: 2008 -2011 75.0 5.5 20.0 49.5 Program TotalCost 151.0 12.0 30.0 109.0 Project (First Phase) Financing Data (uS$M) [] Loan [X I Credit |] Guarantee [ Other [Specify For Loans/Credits/Others: Amount (US$ m /SDRm): US$ 19.0/SDR 13.8m Grace period (years): 10 Years to maturity: 40 Commitment fee: 0.5% Service charge: 0.75% Financing plan (US$m): [] To be defined Source Local Foreign Total Goverm-ent 2.00 - 2.00 IDA 6.03 12.97 19.00 Total 8.03 12.97 21.00 Borrower: Government of Guinea Guarantor: NA Responsible agency: Ministry of Territorial Admninistration and Decentralization Estimated disbursements (BankFYUS$M): 1999 2000 2001 2002 2003 Annual 1.2 8.44 4.64 2.15 m56 Cumulative 1.2 9.64 14.2p 16.43 19.0 For Guarantees: N.A i n a Partial credit I w Partial esk Proposed coverage: Project sponsor: Nature of underlying fmnancing: Temis of financinLg: |INA Principal amount (UJS$m) IFir,al matiirity _ _~~~~~~ Amortization profi le Financing available with out guarantee: N/A if[] I Yes I [] TNO - If yes, estimated cost or matiarity: Estimated financing cost or maturity with guarantee: Expected effectiveness date: March 15, 2000 Expected closing date: June 30, 2004 2 I. PROGRAM AND PROJECT DEVELOPMENT OBJECTIVES A. Program purpose and phasing 1. The Capacity Building for Service Delivery Program (CBSDP) supports the Government of Guinea's effort to strengthen the ability anld accountability of public agencies to respond effectively and efficiently to the needs of the rural population that makes up 87 percent of the poor in Guinea. Improving the quality of service delivery in rural areas, through empowerment of local government and communities, is key to poverty reduction because local communities have generally been poorly served by the central bureaucracy. 2. To support the long-term goal of this program, it is necessary to use a lending instrument which has a comparable horizon. IDA financing of the program using the new Adaptable Program Lending (APL) instrument will provide a credible long-term commitment while allowing flexibility to adjust financing according to the size and scope of each phase. This approach will make it possible to review program implementation in line with the lessons learned during each phase, and the changing country context. 3. The first phase of the program will initiate, in a limited number of sectors and geographical areas, a process that will establish mechanisms for transferring resources and institutional accountability to decentralized agencies and entities, and for strengthening the ability of rural communities to manage their resources and take charge of their own needs. The second phase will expand these mechanisms to more sectors and areas, and at the same time wil:l deepen the devolution process at the local level. In the third phase, the program will move to cover the whole country and all sectors, and will expand the devolution process to the prefecture level. At the end of the program, the administrative and fiscal decentralization will be completed and the process of devolution will be sufficiently institutionalized to be self-sustaining when the CBSDP phases out. 3 The Three Phases of the Program Phase 1: FY 2000 - FY2003 - Implementation of Administrative and Fiscal Decentralization (US$ 21.0 Million) Objectives: Implement administrative and financial decentralization to improve the accountability and capacity of local governments and communities to deliver better services to the rural population; develop decentralized management systems at prefecture and CRD levels; establish effective communication channels between service providers and beneficiaries; improve leadership and management capabilities through extensive training; test performance-based incentives and initiate local devolution processes. Sites: 4 Prefectures in 4 regions, covering 24 rural development communities (CRDs). Sectors: 4 sectors: Primary Education, Health, Rural Development and to a limited extent, Justice. Expected Outcomes: Accountability of prefecture administration to CRDs and improved services in the four sectors through adoption of best practices. Phase 2: FY 2004 - FY 2007 - Completion of Devolution at CRD level (USS 55.0 Million) Objectives: Apply best practices and lessons learned from Phase I with regards to administrative and financial decentralization; deepen empowerment process and accountability of decentralized agencies to CRDs; continue to strengthen local capacity to provide better services to rural population; mainstream performance-based incentives. Sites: Expand to 12 more prefectures to a total of 16 prefectures, covering 60 CRDs. Sectors: Expand to 3 more sectors to a total of 7 sectors. Expected Outcomes: Strong management capabilities of CRD elected bodies and administrative apparatus and effective accountability of decentralized agencies in the 16 prefectures, measured in terms of efficiency and transparency of service delivery in the targeted sectors. Phase 3: FY 2008 - 2011 - Expansion of Devolution Process to Prefectures (USS 75.0 Million) Objectives: Consolidate the devolution process at CRD level and extend it to the prefectures; apply best practices and lessons learned from Phase 1 and Phase 2 to improve service delivery in all sectors and prefectures and CRDs. Sites: All 33 prefectures. Sectors: All sectors. Expected Outcomes: Rural poverty would be reduced by 70% of the baseline level, thanks to the indirect effects of improved service delivery and community empowerment; lean, competent and motivated local govemments and agencies responsive to the needs of the population and accountable to them. 4. At the beginning of each phase, a baseline survey will be carried out to determine the level of community empowerment and quality of services provided in the concerned sectors and pilot prefectures and CRDs. The selection of the pilot prefectures and CRDs will be made in coordination with other sector projects, in particular the Village Community Support Project, to take advantage of the synergy created by various decentralized institutional improvements. B. Project development objectives and Key Performance Indicators (see Annex IB) 5. The project aims at increasing the effectiveness of service delivery in primary education, basic health, rural development and paralegal services in four prefectures and 24 CRDs. This will be achieved by transferring the necessary financial, technical and institutional capacity to local governments and communities, and to move the prefecture administration from a command and control mode to a facilitating and catalyst mode. With regard to justice, the project will support the training of paralegal staff at the prefecture level and the definition of a reform program for the judicial sector. 4 6. At the end of the four years, the following are the expected outcomes: (i) 30% increase in access of the population to productive assets, and paralegal, social and physical services; (ii) 50% improvement in the satisfaction of targeted population wilih the quality of the services they receive in these sectors; (iii) 50% of sector problems and constraints identified at the beginning of the program will be resolved at the CRD level; (iv) 100 % of allocated sector budgets reach the service delivery level; (v) 100% of the Imp6t Minimum de Developpement Local (IMDL) or Head Tax managed locally by CRDs; and (vi) 20 % of project operating costs covered by national resources. At the end of each subsequent phase, it is expected that an increase of 35% of project operating costs would be covered by national resources. 7. On the process side, the following results are expected: (i) Prefecture Development Councils (PDC) with members elected by local communities and a representative of the prefecture administration; (ii) decentralized management systems at prefecture and CRD levels, with relevant staff properly trained in leadership, organization and management, budgetary and accounting procedures, and in communication and problem-solving through process facilitation; and (iii) successful testing of a performance incentive system to reward quality services. C. Program description and performance triggers for subsequent loans 8. CBSDP will be implemented over a 12-year period divided into three phases, beginning in Government fiscal year 2000. In line with the flexible approach under APL, the actual duration of each phase will depend on progress made. Subsequent credits will be extended in conformity with agreed milestones. They will also be based on an updating and re-appraisal of each successive phase. 9. Triggers and indicators have been developed to determine when certain milestones are reached. Benchmarks against which to measure progress in service delivery in pilot prefectures and CRDs are expressed in terms of both expected outcomes and processes. Key Performaince Indicators and Triggers Phase I 2000-2003 - US $ 21.0 million Triggers and . At least a 30 % increase of access of the population to productive, paralegal and social services, benchmarks and a 50% increase in their quality, compared to the baseline. for assessing . At least 100% of operating fiunds allocated to the targeted sectors (education, health, rural the program development, justice) reach the service delivery level and 100% of the "Impot Minimum de readiness to Ddveloppement Local" (IMDL) managed locally by CRDs. move to * At least 20 % of the project's operating costs are covered by national resources. subsequent . A Prefecture Development Council, composed of elected representatives of local communities phase and a representative from the prefecture administration, will be established and operational, with power to advise on cross-comlutnity development programs and budgets. . Effective decentralized management systems established and operational at the prefecture and CRD levels, with adequate and competent staff and equipment, as certified by the annual independent evaluations. . Participatory mechanisms fully operational at front-line service delivery structures, as certified by the baseline study. . At least 50% of community problems (education, health, agriculture and justice) in the targeted sectors resolved at CRD level. . The performance incentive system is established and its performance has been certified as successful by the independent evaluations. 5 Phase II 2004-2007 - US $ 55.0 million Triggers and . At least a 20 % increase in access to and 50% increase in the quality of the services delivered in the benchmarks 3 additional sectors, 12 prefectures and 60 CRDs, as compared to the baseline. for assessing . At least 100% of operating funds allocated to the three related sectors reach the service delivery subsequent level and 100% of the "Imp6t Minimum de Developpement Local" (1MDL) managed locally by phase CRDs. * At least 55 % of the project's operating costs are covered by national resources. . A Prefecture Development Council, composed of elected representatives from local communities, is established in each of the 12 prefectures with power to decide on cross-community (prefecture) programs and budgets. * Effective decentralized management systems operational at the prefecture and CRD levels, with adequate and competent staff and equipment, as certified by independent evaluations. . Participatory mechanisms fully operational at front-line stuctures, as certified by the baseline study. * At least 75% of commnunity problems in the related sectors resolved at CRD level. * Successful mainstreaming of the performance incentive system. Phase III 2008-2011- US$ 75.0million Criteria for * At least a 20 % increase in access and a 50% increase in the quality of the services delivered in the determining remaining sectors, prefectures and CRDs, compared to the baseline. whether the a At least an overall increase of 80% of access to and in quality of all services delivered to the rural program is population, as certified by the beneficiary survey. successful * At least 100% of all operating funds allocated to the sectors reach the service delivery level and 100% of the "Impbt Minimum de Developpement Locar' (IMDL) managed locally by CRDs. * At least 90 % of all program operating costs are covered by national resources. * Prefecture Development Councils, composed of elected representatives from local communities, are established in all prefectures with decision-making power over prefecture programs, budgets and staffing. * Effective decentralized managemenit systems are operational in all prefecture and CRDs, with adequate and competent staff and equipment, as certified by independent evaluations. * At least 90% of public agencies are under a performance-based incentive system. * At least 90% of the rural population is satisfied with the service delivery. * A competent elected body exists in each CRD; qualified staff paid out of CRD's own resources. * Participatory mechanisms effectively operational in all front-line sector structures. II. STRATEGIC CONTEXT A. Sector-related Country Assistance Strategy (CAS) Goal supported by the project (See Annex 1) 10. The Country Assistance Strategy (CAS) discussed by the Board on December 16, 1997, focuses on three strategic priorities to achieve its goal of poverty reduction: (i) promoting broad-based sustainable growth with a focus on the rural sector; (ii) improving social service delivery; and (iii) enhancing governance and institutional capacity, with emphasis on empowering communities and local government. 11. The proposed CBSDP fits the CAS framework in that it is an integral part of a decentralized three- pronged approach to service delivery for poverty reduction. This approach includes: (i) alignment of 6 resources supported by a Public Expenditure Management Adjustment Credit (PEMAC) to ensure that public expenditures do reflect developmenrt priorities; (ii) adaptation of service delivery to empower local communities supported by cross-sector and integrated projects; and (iii) alignment of human and institutional capacity. Hence, CBSDP builds the human and institutional foundation to sustain the achievements of the PEMAC, completed in December 1998, and other ongoing operations and sector activities, especially the Village Community Support Program (VCSP). B. Main sector issues and Government strategy 12. From independence in 1958 through 1984, the State had a high degree of control over the economy. This top-down approach resulted in economic stagnation and deterioration of basic infrastructure, and reduced the availability and quality of social services, especially in rural areas. With the advent of the Second Republic in 1984, a series of important institutional and policy reforms was adopted. Economic reforms sought to stabilize the macro-economic environment, disengage the State from production and commercial activities, liberalize markets and prices, and foster private sector growth. Institutional reforms focused on revising the legal framework for decentralization and updating the legislation pertaining to non-governmental organizations, cooperatives and other grassroots organizations. 13.. Largely due to these reforms, economic growth resumed at more than 4 percent per annum during 1986 -1990, and increased to 4.6 percent per annum since 1991, with per capita incomes growing at annual rates of 1.2 to 1.8 percent. Stabilization and adjustment policies supported by the IMF and the World Bank have helped reduce annual inflation from 37 percent in 1987 to less that 2 percent in 1997. The budget deficit has also been reduced from 10 percent of GDP in 1986 to 7 percent in 1996, and the balance of payments deficit dropped from 13 percent of GDP to less than 9 percent during the same period. In addition, under the PEMAC, the Government has increased the allocation of operating budgets to the four priority sectors from 25% of the total in 1997 to 30.5% in 1999. 14. Despite these successes, social indicators continue to stagnate and the country's ranking in terms of human development remains low, because of the following constraints: (a) fragmented sector policies and programs, excessive concentration of decision-making at central level, and limited capacity of local agencies at the prefecture and community levels, to provide services to rural communities; (b) insufficient resources at the service delivery level; (c) weak participation of local govermnent and communities in the identification, design and management of development programs and in the mobilization of local revenues and the management of community budgets; (d) lack of motivation on the part of staff in central departments to work in rural areas; and the (e) HIV/AIDS epidemic originally regarded as a health issue, but which has become a major development constraint. Although Guinea is among the SSA countries with low HIV/AIDS prevalence-2.09%-- infection AIDS is spreading among people between 15 and 49 years of age. In Guinea, as elsewhere in Africa, HIV prevalence is not uniformly distributed, with a high rate among females between the ages of 15 and 35, males between 15 and 49 years of age, commercial sex workers, people with STD, and military personnel. Involuntary migration, war, poor education and separation of families are catalysts of HIV infection. However, among men, HV infections are also high for wealthy and well educated middle age groups. Campaigns have been organized by the government and NGOs, with the support of extemal donors, to promote awareness on its prevention. Notwithstanding these eflorts progress has been slow. This is partly due to the low level of human, material and financial resources allocated to the health sector and the lack of an 7 adequate AIDS education and prevention strategy. Approaches that induce behavioral changes are essential and this requires the active involvement of various sectors in the development process. Among these capacity building, particularly in AIDS education and prevention at the national prefecture and community level is key. 15. To address the above constraints, the Government has committed to achieving full devolution of functions to the CRDs. The Government also aims at achieving administrative and fiscal decentralization, which is considered a prerequisite to the implementation of an effective devolution policy at the CRD level. The key features of the administrative decentralization strategy are: (a) establishing an effective funding mechanism that ensures the direct transfer of financial resources from central government to the services in the front line; (b) strengthening the accountability of government agencies to the ultimate beneficiaries and their ability to deliver services to the rural communities; (c) promoting genuine collaboration between service providers and beneficiaries in the resolution of constraints to service delivery, and empowering local communities to take charge of their needs; (d) making professional merit and service delivery performance key factors in determining rewards and sanctions in public sector entities; and (e) development of a multisectoral FLV/AIDS education and strategy and community based HIV/AIDS intervention through the CDR and Village Community Support Programs. C. Sector issues to be addressed by the project and strategic choices: 16. The CBSDP will directly address main sector issues by: (i) supporting the establishment of a mechanism for direct transfer of budgetary and financial resources to the front line; (ii) decentralizing the coordination of sector policies and programs to the prefecture and community levels, and strengthening the accountability and ability of central and decentralized agencies to provide support and services to local communities, (iii) involving beneficiaries and local communities in program design and implementation by improving information services and communication with them; and (iv) introducing a performance appraisal and incentive system to attract and reward high performing individuals and units at the CRD, prefecture and central departnents. 8 III. PROJECT DESCRIPTION SUMMARY A. Project components 17. The proposed project will include five components presented below with cost estimates. Details are presented in Annex 2. 1:~~Cmonn C:egr Inicaive: %E of - Bak % o2f Ba:nk-iDi: ;i:i |_ L Decentralizing public expenditures Instititional anid 3.66 1743 3.47 94.69 management behavioral changes IL Decentralizing institutional Institutional and 9.14 43.50 7.98 87.30 accountability and capacity to local behavioral changes agencies and entities m. Improving communication with the Institutional and .41 1.95 .36 87.80 beneficiaries behavioral changes IV. Introducing a performance incentive Institutional and 4.18 19.90 4.06 97.12 system behavioral changes V. Project coordination & management 3.61 17.19 3.13 86.70 Total 21.0 100 19.0 90.72 B. Key Policy and Institutional Refor.nns Supported by the Project 18. The project supports the main goals cf the National Development Strategy and the Government's focus on reducing rural poverty. The devolution strategy described in the Government's Letter of Rural Development Policy of December 30, 1998, involves the following reforms: (i) The re-focusing on rural communities, their local government authorities, community associations and private institutions, with a view to (a) strengthening the skills, capacity, and resources of rural communities so that they can respond to their needs; (b) establishing an operational framework for consensus-building and collective decision-making, bringing together all the players involved in community-based rural development, with an emphasis on vulnerable groups. (ii) The introduction of sector policie s and programs to strengthen community-based rural development with emphasis on cross-sector delivery integrating health, agricultural, infrastructure and social sector policies and programs. 19. To ensure that these reforms are effectively implemented and productive, CBSDP will carry out the following administrative and financial reforms: Revising and strengthening the institutional framework: Although the basic framework is in 9 place, there are gaps, ambiguities and inconsistencies among application texts that need to be clarified and harmonized, especially in view of decentralizing service delivery. Additional texts will be needed to clarify the roles of central and regional agencies in relation to those of prefectures and sub-prefectures, and the roles of the latter in relation to those of decentralized entities at the rural community level. Empowering local communities: While VCSP works to enhance the quality of representation of the elected CRD councils, CBSDP seeks to help decentralized agencies at the prefecture and community levels become responsive to the needs of local entities. Financial decentralization: While VCSP seeks to reform the system of inter-governmental transfers to broaden the fiscal base and improve tax collection at the CRD level, CBSDP will seek to help set up appropriate mechanisms for direct transferring of fiscal and budgetary resources to the front line. Improving accountability of administrative agencies. To remedy the lack of empathy and ability to respond to the needs and demands of the rural population, CBSDP will initiate an extensive program of education, information and training, and implement an incentive system geared toward rewarding behavioral and institutional changes aimed at improving service delivery. C. Benefits, beneficiaries and target population 20. Project financial and technical support will go primarily to agencies and entities at the prefecture and CRD levels. Some benefits will go to the relevant units in the eight core and sector ministries (Plan, Finance, Civil Service, Territorial Administration, Agriculture, Primary Education, Public Health, Justice) which will be called upon to provide resources and technical support to local governments and communities. Targeted beneficiaries will be the rural population, in particular users of services provided by primary schools, health centers, rural development extension services and paralegal services in the 4 pilot prefectures and 24 CRDs located in the four natural regions. The ultimate beneficiaries of the project are the rural poor. IV. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS A. Project Coordination and Management (See Annex 2) 21. Responsibility for project implementation is assigned to the Ministry of Economy and Finance for Component I; the Ministry of the Territorial Administration and Decentralization for Components II and III; and the Ministry of Employment and Civil Service for Component IV. A Project Inter-ministerial Management Committee (PIMC), composed of representatives of implementing agencies, was established on August 20, 1999 by an Arrete of the Prime Minister, as was a Steering Committee (PSC) chaired by the Prime Minister, with the Planning Minister as vice-chairman, and composed of the heads of all eight ministries concerned. 22. PSC is responsible for overall program coordination and oversight, while day-to-day coordination responsibility for project implementation rests with PIMC, which is chaired by the Minister of Territorial Administration and Decentralization, assisted by the Project Administration Unit (PAU). 23. PAU is responsible for (i) managing project funds; (ii) providing support to implementing agencies; (iii) monitoring progress and evaluating project impact; (iv) serving as the technical secretariat to PIMC; and (v) executing all procurement matters for all components. Details on the roles, organization are described in Annex 2. 10 B. Accounting, Financial Reporting2 and Auditing Arrangements (See Annex 8) 24. A Special Account has been set up for the entire project, and is managed bv the PAU. Four Advance Accounts, each not exceeding US$15,000 equivalent, will be established for the four pilot prefectures to facilitate small payments of goods and services purchased at this level; other advance accounts may be established later at the sub-prefecture level for the related CRDs as needed. Guidelines for the functioning of the Special Account and Advance Accounts are described in the Financial and Accounting section of the Project Operatioinal Manual. 25. Project accounts will be audited annually by an internationally recognized firm under terms and conditions satisfactory to IDA. Audit reports will be provided within six months of the close of the fiscal year. 26. The Government has agreed to set up appropriate financial management systems to produce periodic reports on project implementation according to the disbursement procedures provided under the Loan Administration Change Initiative (LACI). An action plan for setting up the new system within a period of 18 months following credit effectiveness has been established. Meanwhile, project financial management will follow the SOE-based model of other on-going Bank projects. C. Monitoring, Evaluation and Reporting 27. A computerized project management system will be established to assist the Govemment to monitor project physical and financial implementation at both the project and component levels. A project Monitoring and Evaluation team (M&E) will be established. Working closely with the existing National Division of Statistics (Direction Nationale de la Statistique) in the Planning Ministry, it will assist the Project Administrator and advise implementing agencies on their own monitoring activities. It will particularly be responsible for developing the program benchmarks and indicators as required, in collaboration with related sector units. 28. Project performance will be monitored under the supervision of the M&E team by assessing the quality of services delivered and progress achieved toward decentralization. An assessment of the level and quality of services and of the institutional set-up in the four pilot prefectures will be carried out at the beginning of the program, to serve as baseline. 29. Evaluation will be carried out as an independent activity and contracted out to qualified organizations, including universities and N(JOs, with the participation of the M&E team. Under the guidance of the Project Inter-ministerial Management Committee, PAU will prepare the terms of reference, contract for studies and surveys to assess the performance and impact of the project, and review their implications for the design and adjustrment of the program. Evaluation will address both project processes and impact and will systematically include assessments of beneficiary satisfaction. 30. A joint Government-IDA mid-term re-view will take place by the end of the second year. During this review, the progress toward the agreed benchmarks for key performance indicators will be assessed and necessary changes will be decided. 11 V. PROJECT RATIONALE A. Project alternatives considered and reasons for rejection 31. Three other approaches have been considered for the program: (a) As part of a macro structural adjustment program, whose short time frame would not fit the time requirement for institutional and behavioral changes; (b) Through a sector technical assistance prqject, which could not address the critical issues of cross- sector coordination and linkage between area administration and functional field offices; (c) Through a traditional public sector refonn program, in which case the usual top-down approach would not fit the service delivery focus and the decentralization policy. By focusing on service delivery at the grassroots and concentrating on a small number of functional and geographic areas, the project would not require excessive resource outlays and therefore have more chance to succeed. To identify which approach would work best, four types of CRD settings will be monitored (i) CRDs where both CBSDP and VCSP intervene together; (ii) CRDs where VCSP intervenes alone; (iii) CRD where CBSDP intervenes alone, and (iv) CRDs where neither VCSP nor CBSDP intervenes. The main focus of project interventions will be in CRDs where VCSP operates. B. Major related projects financed by the Bank and other development agencies S,,ss~e Praj~d . A ~~ ~mi -..... -.-. Implementation Development Progress (IP) Objective (DO) Bank-financed: Re-allocation of operating budgets Public Expenditure Management Completed HS towards priority sectors (education, Adjustment Credit (PEMAC) health, road maintenance and rural development). Capacity building for local governance. Village Community Support Project Approved Feb. 23, 1999 Agriculture Agriculture Services On-going Village Community Sup. It On-going Population, Health and Nutrition Health On-going HealthiNutrition Sector On-going Pop. & Reproduction Health Approved on Dec. 1, 1998 Education Education for All Planned Pre-Service Teacher Education Completed Legal and regulatory framework. Judicial Capacity Building Project Planned 12 Other Development Agencies: French Development Agency Institutional support to On-going decentralization CIDA Institutional support to technical Planned education EU Institutional support to secondaxy On-going town.s UNDP Support to local initiatives On-going USAID Democracy and governance On-going program IP/DO Ratings: HS (Highly Satisfactory); S (Satisfactory); U (Unsatisfactory); HU (Highly Unsatisfactory). C. Lessons learned and reflected in project design 32. Experience shows that institutional reforms require steadfast political commitment and high quality leadership, as well as strong ownership by beneficiaries and other stakeholders. In addition, effective service delivery requires well-targeted programs and decentralized implementation with clear performance indicators and benchmarks. Collaboration and effective coordination among donors are also crucial. 33. The project design has incorporated these lessons. Over 1,200 beneficiaries and service providers, elected officials, and NGOs operating in the four CRDs of the prefectures of Coyah and Mamou, as well as officials from eight ministries, two regions and two prefectures have participated in the preparation of the project. Two separate visits with key donors were made to identify areas of common interest and possible avenues for collaboration in the field. A meeting with national non-governmental associations to exchange information on activities and identify potential joint actions, and preliminary proposals for institutional reorientation were discussed with senior ministry officials at an inter-ministerial workshop in February 1999. Extensive reviews of project actions and implementing arrangements were also carried out during the May - June 1999 pre-appraisal mission, with officials of concerned central, regional and local agencies. A donors' meeting was organized on August 13, 1999 to review the conclusions of the appraisal mission. D. Indications of Borrower Commitment and Ownership 34. In its Letter of Decentralization Policy (Annex IA), the Government states its commitment to decentralize budgetary decisions, to improvie the accountability of prefecture agencies and empower the CRD entities in order to improve the delivery of public services. Key actions planned are: (i) a direct transfer of budgetary resources of high priority sectors to the front line, (ii) upgrading the professional qualifications of prefects and introducing participatory decision-making; (iii) re-structuring the mandate and structure of the Prefecture Developnment Council to become an elected body representing the interests of CRDs; and (iv) implementation of a performance-based incentive system to improve service delivery and responsiveness to the needs of t;he rural population. 13 E. Value added of IDA Support 35. Constraints and challenges to the effective delivery of public services have so far been handled in a centralized and uncoordinated fashion within sector ministries or donor-driven institutional mechanisms. This piece-meal approach has not brought significant and sustained results despite substantial investments. The proposed CBSD project wvill address the key institutional weaknesses and create an operating platform in which all other sector initiatives can fit in. Given the positive role it has played, using the participatory and bottom-up approach in defining the Country Assistance Strategy, its experience with the implementation of the Public Expenditures Adjustment Credit and with the decentralization of service delivery under VCSP, IDA is in a better position to assist Government in undertaking this institutional challenge. The Government is counting on IDA to be a central player in its capacity building program. VI. SUMMARY PROJECT ANALYSIS A. Economic 36. The proposed project, oriented toward capacity building, does not lend itself to detailed cost- benefit analysis and rate of return calculations. Nevertheless, because the project supports the improvement of public services, it is expected to have a positive net social and economic impact for poverty reduction. B. Financial 37. The fiscal impact of the project on both central and local government budgets would be measured in terms of non-wage net expenditures and revenues at the front line. In absolute terms, there should be no significant change in the amount of public finances during the project's life. Instead, decentralization and local community participation in public investments are expected to have a positive impact on the quality of public expenditures, including reduction of rent situations and related opportunity for corruption. A shift of responsibility from central departments to the front line, even if the overall amount remains the same would improve the impact. In addition, by helping the beneficiaries improve their prospects of increasing local incomes, the project would contribute to improving the financial benefits, which would largely offset any initial negative impact on central government's budget. C. Technical 38. Under the project, new concepts and best practices in institutional and behavioral changes in the public and private sectors would be introduced. Extensive process facilitation, staff education, on-the-job training with short-term technical assistance, study visits to other countries, and systematic in-country training will be provided. Whenever required and feasible, training of trainers will be carried out. D. Institutional 39. Development projects often rely on specific project units, which, after project life, stand conspicuously out of the institutional mainstream. The proposed project is designed to fit the existing implementation capacity of public agencies in Guinea at both central and field levels. Since four core and four line agencies will be involved in implementation, coordination will be the key for a successful execution of project activities. A Project Operational Manual has been prepared to help implementing agencies with management procedures and guidelines. Where specific organizational weaknesses require 14 support, short-term consulting services will be provided. In addition, by the planned effectiveness date of CBSD, both the Ministry of Planning and the Ministry of Territorial Administration will have gained additional experience through the implementation of VCSP. E. Social 40. Since the beneficiaries of the project are the rural population, the project has been designed to ensure that all four natural regions are covered. The proposed CBSDP takes special interest in eliciting and supporting the participation of members of all different social groups, particularly the vulnerable groups (e.g., women, youth, minority ethnic groups) in decision-making, through extensive information and communication with beneficiaries, and the requirement that local committees include members of those groups. F. Environmental 41. The proposed project is primarily an institutional capacity building operation and therefore no adverse environmental impact is foreseen. In accordance with the Association's operational directives on environmental assessments (OD 4.01, Annex E), the proposed project has been placed in category C and does not require an environmental assessment. G. Participatory Approach -I ldentiicatioPrepat"ion2 pilm-entation: Beneficiaries, Service providers COL COL NGOs, business, communities COL COL Academic Institutions CON COL Local Govemnment COL COL Central Governiment COL COL Other Donors CON COL COL=Collaboration, CON=Consultation Primary Beneficiaries and Other Affected Grqyp' 42. In preparing the CAS, the Government initiated a bottom-up consultative process in its formulation of the National Development Strategy. This involved over 3,000 consultations with beneficiaries and other stakeholders from civil society, village communities and women's groups in all four natural regions of the country. The design of this project has also involved active participation by rural communities, local governments, NGOs, officials of sub-prefectures, prefectures, regional authorities and central units of the eight ministries involved. 43. Consultation has been extended through a collective problem-solving facilitation process, which is now being used by service providers and beneficiaries at the front line to identify and remove constraints affecting service delivery. It will continue to be used during project implementation. In addition, the results of periodic evaluation studies will be reviewed by all stakeholders. 15 VII. SUSTAINABILITY AND RISKS A. Sustainability 44. The project attempts to create the conditions for sustainability by: (a) developing in beneficiaries and service providers an ability to work together to resolve the problems and constraints, thereby reducing costs and enhancing local self-confidence; (b) setting up a systematic mechanism for direct transfer of budgetary and fiscal resources to local governments; (c) improving the revenue collection capabilities of prefectures and CRDs; and (d) implementing an affordable performance incentive system. B. Critical Risks (Reflecting assumptions in the fourth column of Annex IB): Risk Risk Rating Risk Minimization Measure Annex 1, cell 'from Outputs to Objective" Possibility of policy reversal M a) The implementation of policy decisions will be monitored by a Steering Committee chaired by the Prime Minister. b) Emphasis on building broad-based support for reforms through participation. Sudden deterioration in the security and political situation, M IDA closely monitors the situation in Liberia partly resulting from disturbance elsewhere in the sub-region and Sierra Leone. Annex 1, cell 'from Components to Outputs" Resistance on the part of some officials and civil servants who M a) Implementing an incentive system want to keep the status quo; b) Involving sector ministries in design and Uncoordinated actions among donors and IDA projects implementation c) Organizing joint government-donor program planning in project areas d) Developing local governments ability to coordinate donor activities Limited availability of resources S Maintain close contact with the IMF to ensure adequate resources mobilization and allocation. Legislative acts and executive orders slow to be taken by M The Prime Minister chairs the Steering relevant authorities Committee. Budget and resources for supervision will be insufficient to M Special supervision arrangements made and assist implementing agencies in responding to requirements budget provided, including possible funding arising from such an innovative program through donors. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 16 C. Potential Controversial Aspects 45. The CBSDP preparation process has been highly participatory. As a result, the risk of unforeseen controversial aspects has been reduced. Nevertheless, two key issues remain: (a) Given a history of centralized decision-making, it will take substantial time and effort to change the command and controi mentality into one of facilitator and catalyst. The project will provide opportunities for key officials to gain awareness and confidence in effecting behavior and organizational changes, through (i) extensive exposure, and coaching, to relevant governance concepts and experiences, (ii) exchange of ideas and sharing of experiences regarding change; and (iii) appropriate rewards for successful changes. (b) The difficulty to forego rent-seeking behavior in the civil service. The project relies on existing agencies to carry out project activities, and creates conditions for sustained impact. Yet, a major constraint is the reluctance of staff to work in rural areas. Under the project, (i) implementing agencies will assume project activities as regular responsibilities; (ii) a systematic performance appraisal system will be established to monitor their contribution; (iii) appropriate incentives will be designed; and (iv) a limited number of qualified young cadres will be contracted to work in rural areas. VIII. MAIN CREDIT CONDITIONS A. Conditions for Board Presentation 46. The Government of Guinea has submitted a signed letter of decentralization policy ("Lettre de Politique de Deconcentration et de Decentralisation ') satisfactory to IDA. B. Conditions for Effectiveness (a) the Borrower has opened the Project Account and has deposited in it an initial amount of US$300,000 equivalent as counterpart funds for the first year of the project; (b) the Borrower has adopted the Project Operational Manual, in forn and substance satisfactory to IDA; (c) the Borrower has appointed independent auditors to carry out annual audits of project accounts, with terms of reference and under conditions acceptable to IDA; (d) the Borrower has established an adequate financial management and accounting system, satisfactory to IDA; and (e) the Borrower has appointed the Project Administrator and key staff of the Project Adrninistration Unit with experience and qualifications acceptable to IDA. C. Conditions for Disbursement of Perfor-mance Grants and Performance Award under the Sustainable Performance In Service Deliver' Fund The Borrower has: (a) established a perfornance appraisal and incentive system satisfactory to IDA, including the creation of the Sustainable Performance In Service Delivery Fund (SPISDF) with criteria and standards for distribution and a legal, institutional framework and a manual of operating procedures satisfactory to IDA; and (b) deposited an amount of US$50,000 equivalent as contribution to SPISDF. 17 D. Assurances Obtained at Negotiations The following assurances were obtained during negotiations: (a) the Borrower will deposit to the Project Account, following the initial amount of US$300,000 equivalent as counterpart fund for the first year of the project, an amount equivalent to US$275,000 every six months thereafter to cover recurrent costs of project annual work program; (b) the Borrower will funmish to IDA: (i) by December I of each year, the draft budget for the next Project Year; and (ii) by February 15 of each year, an annual report setting forth the results of project implementation during the preceding period; (c) the Borrower will carry out with IDA: (i) by March 15 of each year, an annual review of the project to assess the progress made during the previous year, determine appropriate actions, and define the work program for the following year; and (ii) by March 15, 2002, a mid-term review of the progress achieved in the implementation of the Project, with the participation of relevant non- governmental organizations and Project beneficiaries; (d) The Borrower will manage the project according to the principles and procedures described in the Project Operational Manual, and any modifications thereof will have to be agreed by IDA; (e) the Borrower will maintain the Project Steering Committee, the Inter-ministerial Management Committee and the Project Administration Unit throughout the project implementation period, with membership, functions and key staff at all times satisfactory to IDA. Any change of the Project Administrator will have to be agreed by IDA; (f) the Borrower will adopt, by August 31, 2000, a performance incentive system, with criteria and standards for grants and awards distribution, and a legal and institutional framework and operating procedures of the Sustainable Performance in Service Delivery Fund, acceptable to IDA; and (g) the Borrower will take necessary actions to adapt measures and implement actions indicated in the Letter of Decentralization Policy. E. Readiness for Implementation (a) The four-year program implementation plan, including the first year program and budget, has been prepared; and (b) The procurement plan for the first year activities is completed. 18 F. Compliance with Bank Policies The project complies with all applicable Bank policies. [signature] Task Team Leader! Task Manager: Rudy i gu [signature] Ii Sector Manager: ir . Levy [signature] M o Dia Country Director: Mamao Dia 19 Annex IA: Letter of Decentralization Policy Guinea: Capacity Building for Service Delivery Project REPUBLIC OF GUINEA LETTER OF DECENTRALIZATION POLICY Deepening the decentralization processes and strengthening the legitimacy of the State for a better delivery of public services to the rural population 20 INTRODUCTION Economic and social progress greatly depends onl the Government's economic policy and on the quality of public services provided to the population. For this reason, the Government endeavors to improve public service performance and to promote the citizens' participatioii in order to better serve the beneficiaries at the grassroots. The Intemational Development Association (IDA) is joining forces in this effort and is intending to support the Government through the financing of a program of capacity building for improved service delivery in three phases over a 12-year period. The first phase is the program is the Capacity Building for Service Delivery Project (CBSDP). This Letter on Administrative Decentralization Policy is prepared under the auspices of this pilot project. II. CONTEXT The advent of the Second Republic, on April 03, 1984, marked a radical change in the State/Citizen relationship and in the way the country's social and economic development was promoted and managed. The all-powerful and omnipresent State had to yield to a <(State in the service of developmentv>, operating as a partner with the civil society, in the framework of a liberal economic environment, through decentralized and contractual planning, and whose relationships had to be govemed by the provisions of a law-abiding State. A series of economic policy and institutional reforms was adopted in order to materialize this new vision. In the area of economic reforms, the main achievements are: (i) the liberalization of the economy; (ii) the setting up of a legal framework for a market economy, and (iii) the restoration of the key macro- economic balances. Inflation was brought down from 38% per year in 1987 to 2% in 1997; the budget deficit has gone from 9.8% of the GDP in 1986 down to 7.2% in 1996, and the deficit of current accounts has been reduced from 13.4% of the GDP in 1988 down to 8.9% in 1995. Furthermore, these reforms have promoted economic growth, as the GDP in real terms increased by an average of 4% per year since 1986, and by 4.6% since 1991. Additional macro-economic policy and budgetary reforms have been pursued since 1996 and have brought positive results, notably in the private sector, which has shown very encouraging progress. In the area of institutional reform, the decentralization policy, adopted in 1985, and deepened since 1992, has allowed: (i) the setting up of decentralized entities in urban areas (38 urban communes, and the city of Conakry with a special status), and in rural areas (303 development rural communities all over the country); (ii) a growing involvement of these decentralized entities in local development. The statutory framework of associations has also been updated by allowing a greater freedom of association and by simplifying their organization and operation, which has accounted for the proliferation of non-governmental associative structures at the grassroots. Despite these achievements, the results in terns of the fight against poverty and of improving the citizens' standard of living, particularly that of the roiral populations, remain problematic. Poverty indicators are hardly improved, with nearly 40% of the population living at the threshold of absolute poverty. Thus, 21 economic performance remains fragile, because of persistent institutional constraints of which the most severe stem from the weaknesses of public administration itself, III. CONSTRAINTS The retrospective study of achievements reveals that the primary obstacle to the pursuing of a self- propelling and balanced development lies in excessive centralization of the decision-making power and resources, and weak capacity of rural communities to manage their own resources and affairs as well as to make their needs known at the level of the local administration. An action- research conducted in April 1998 in a number of prefectures, sub-prefectures and development rural communities in Lower and Middle Guinea have revealed that these areas' population enormously suffers from lack of access to effective public services, because of: (1) poor communication between public service providers and their beneficiaries; (2) limited cooperation between the different technical services of the prefecture administration; (3) lack of financial and human resources ; and (4) lack of criteria and standards of performance, of technical support and systematic monitoring by central departments. Thus the decentralized entities at the communal level have not been able to receive the support and the encouragement necessary to develop their own governance capacity. IV. GOVERNMENT OBJECTIVES AND STRATEGIES To ensure a balanced and durable development, it is imperative that rural communities be capable of providing for their own needs, which requires initially financial support from the central government and technical support from the prefecture administration. In the Community Development Policy Letter dated December 30, 1998, the Government already pronounced itself in favor of decentralization actions and their implementation at the level of rural communities. The implementation of these actions is supported by the ongoing Village Community Support Program. By this Development Policy Letter, the Government is committing itself to rapidly and effectively achieve real decentralization. Such a policy was underlined, in clear terms and without ambiguity, by the President of the Republic, in his inauguration speech on January 29, 1998. In presenting the main themes of the government program for the new five-year term, the President asserted that he would see to: * improving the quality and the effectiveness of public services; * a deepening of decentralization; and * training and the perfecting of economic operators. This commitment by the President of the Republic, which embodies the strategic objectives of the National Development Plan (Guxine 1 'an 2010), is reasserting once again the Govemrnent's fundamental 22 concem about providing quality public services to the population and the vital importance given to pursuing the ongoing decentralization policy. To achieve the assigned objectives, the Government is committing itself to undertaking and strengthening reform measures in the following areas: 1. Pursue in earnest the decentralization policy started at the level of rural communities and urban communes. The idea is to provide these communities with sufficient decision-making capacity to allow them to manage their own needs and resources, and to represent the interests of the community vis-a-vis local governments. 2. Implement a decentralization policy, especially at the level of the prefecture administration, which consists firstly in transferring financial and budgetary resources to rural communities and to prefectures to help these entities meet the population's needs. 3. Improve communication and create consultation and representatipn mechanisms to allow public service beneficiaries and rural community representatives to participate in the decision-making process conceming community affairs. 4. Set-up an appraisal and incentive syste:m to reward deserving performance by entities and individuals in terms of public service delivery. To put this strategy into practice, the Govern ment is setting up a 12-year reform program, with a four-year pilot phase during which diverse advocated measures will be applied in a number of locations and sectors, with the goal of eventually extending successful experiences to the entire country and to other sectors. The dates scheduled for the adoption of specific, actions relating to the implementation of these measures are indicated below. V. KEY FEATURES OF THE ADMINISTRATIVE DECENTRALIZATION POLICY The devolution must subscribe to the principle of uniqueness and faimess of the State at all levels. It must guarantee the coherence of sector and global policies of the State while promoting the openness to the opinions and needs of the population through deliberative councils and representative bodies as governed by the law. The main lines of implementation of the devolution policy must adequately respond to these concerns. They relate as well to the roles to be assigned to different administrative levels, and the provision of financial and human resources, as to the organization and management systems of these decentralized governments and entities. A.- Roles of the Administration The Government is committing itself to review the existing institutional framework in order to clarify and adapt the roles of the different levels of the administration according to the effectiveness of service delivery and to the decentralization requirements. At the end of a reflection and consultation process with concerned agencies and entities, a text will be adopted not later than June 30, 2000, to materialize the new vision, whose main elements are outlined below. 23 1. The Sub-Prefecture Administration As the third and last level of administration, the sub-prefecture is the local setting for the implementation of the State's development policies and administrative actions. As such, the Sub-Prefect is the guarantor of the respect by the communities of the republican rules and regulations and coordinates the activities of public agencies operating on his territory, so that community needs for their services are adequately met. To improve the effectiveness of the coordination action of the sub-prefects, a study will be initiated to identify various options and their implications with a view to extend the area of each sub-prefecture to include more than one CRD. A government decision will be taken to this end not later than June 30, 2000. 2. The Prefecture Administration As the second level and pivotal point of the decentralization policy, the prefecture administration ensures the implementation of national policies and programs in its territory. As such, the Prefect represents both the Government and each of the ministers. He looks after the application of legal texts and regulations, while ensuring their adaptation to the needs of the population and to the particular conditions of his territory. He is responsible for the well-being of the population living in his territory and is accountable to the central government as well as to the representatives of local communities for the quality of services provided by the prefecture agents. To help the Prefect assume his role of rural development catalyst, a Development Prefectural Council (CPD) will be established, comprising members elected by the local communities and assuming the role of a deliberative body, with consultative or decision-making powers depending on the economic and social conditions of the communities. A statutory text will be adopted not later than July 30, 2000, to modify the present provisions in line with the mandate and the composition of the CPD. Moreover, considering the vital role that the Prefect plays in the coordination of the implementation of the development policies and programs in his territory, the Government will see to it, in the selection of candidates for that position, that professional competence criteria are given preeminence. An official text to that effect will be adopted not later than April 30, 2000. 3. The Regional Administration As the first decentralized level, the regional administration is in charge of monitoring the implementation of national policies and programs by the prefectures falling under its purview. In this connection, it ensures the coordination of inspection and of technical support provided to the prefectural administration by central departments. 4. The Central Administration The central administration assumes a role of orientation, promotion, support and control toward all decentralized administrations. Thus, this role includes firstly the definition and the diffusion of functional criteria and technical norms relating to different national programs, and to the regulations, that the decentralized administrations are in charge of implementing. The central administration must also monitor the application of these criteria and norms by the decentralized agencies and provide technical support together with necessary resources and means. 24 Through a participatory process with concerned agencies and entities, the central administration determines the missions and the organization of decentralized agencies at the regional, prefecture and sub- prefecture levels. It evaluates needs, mobilizes means, and provides resources to the decentralized entities, for investment as well as for recurrent cDsts, either in the form of grants, or through a revenue sharing scheme. The central administration assumes its responsibilities with regard to policy formulation, implementation monitoring and their articulation at every level, as well as the harmonization and coordination of all sector programs both at the level of the regions and that of the prefectures. It exercises its responsibilities as a facilitator and a coordinator. B.- The provision of financial and human resources The CRDs and the prefectures have each at their disposal their own budget, which is funded by their own revenues and by grants from the national buidget. The Government is committing itself to transfer directly to CRDs the totality of the returns from thelmp6t Minimum de Developpement Local (Head Tax), starting in January 2001 for the pilot prefectures, and to take necessary steps, including the adjusting of the budgetary classification, to ensure autonomy of management by CRDs. In this context, a statutory text indicating the modalities for the transfer, management and control of the use of these resources will be adopted by relevant authorities not later than July 30, 2000. The Government is also committing itself to provide the prefecture administration with adequate budgetary and human resources and with authority over the different technical and mixed agencies that are operating in its territory. This authority ancl these means are provided on the basis of program proposals for activities justified according to the population 's needs. A performance-based budgeting system will be set up at the level of prefectures and CRDs, not later than October 31, 2000. A staff training plan and a contractual personnel recruiting plan to staff vacant key positions at the local level will be prepared in order to improve the capabilities of the agencies and entities involved. Government intends to establish such plans not later than May 31, 2000. C.- Implementation of appropriate organization and management systems In the area of organization and management, the following principles will be respected: 1. The structures of decentralized agencies must not be simple replicas of the central level. While respecting the overall pattern and the hierarchical lines, they must have their own organization and capacities. To this effect, a system of planning and programming of inter-sector activities will be established at the level of the prefecture not later than August 3 0, 2000. 2. The prefecture administration will be given the authority to coordinate the activities of the diverse decentralized agencies and the local entities which operate in the prefecture territory. A statutory text with regard to the delegation of certain decisions conceming the administrative and financial management of the technical staff operating in the prefectures will be adopted not later than June 30, 2000, in order to allow prefecture authorities to achieve a better coordination of technical services to CRDs and to the population. 25 3. Administrative and financial management systems (e.g., budget and assets management, communication and information systems) will be set up at the level of prefectures and communities not later than August 31, 2000, to ensure transparent management and effective use of resources. 4. A system of incentives to the best performances will be introduced in order to reward deserving individuals and organizational units at three levels, central, prefecture and rural community, on the basis of services provided. The definition of such a system is scheduled for August 31, 2000. The allocation of resources to support the pilot project will facilitate the progressive introduction of the expected changes. At the beginning, the four prefectures of Coyah, Mamou, Faranah and Macenta and three priority sectors, Primary Education, Basic Health, and Rural Development, and to some extent Justice, will benefit from project support. The results, in terms of improving the quality of public services and the governance capacity of the communities, will be assessed at the end of four years. If the results are positive, the changes will be gradually extended to all prefectures and sectors, so that, by the end of the 12-year period, the same procedures are applied to the entire country. Performance indicators in every field will be set up at the begimning of the pilot phase to serve as a basis for the evaluation of the results at the end of the program. These performance indicators will attest to the progress and success of the program, and thus justify the passing to the next phase. VI. POLITICAL COORDINATION AND RESPONSIBILITY SHARING 1. Devolution and Decentralization Inter-Ministerial Committee The Government assumes general responsibility for the implementation of this policy through a Devolution and Decentralization Inter-Ministerial Committee, placed under the authority of the Prime Minister. This committee will promote the application of the legal provisions, the coordination between decentralization and devolution policies, the orientation of related actions and programs, the transfer of resources to the front lines and the monitoring of implementation and the evaluation of results. This Committee is supported by a Technical Management Committee made up of competent representatives from the departments responsible for the implementation of refonn actions. The responsibilities for implementation, monitoring and evaluation of refonn activities in various functional areas under the pilot project will be assumed by the Ministries of Territorial Administration and Decentralization, Plan and Cooperation, Economy and Finance, Employment and Public Service, as well as by the related sector Ministries in accordance with their interventions at the local level. 2. The Ministry of Territorial Administration and Decentralization The Ministry of Territorial Administration and Decentralization is in charge of the implementation of the Government policy in the area of devolution and decentralization. It is responsible for the coordination of efforts of other ministries in the context of the Technical Management Committee and will submit a periodic report to the Devolution and Decentralization Inter-Ministerial Committee on the results achieved in terms of improving the quality of services and of developing the govemance capacity of rural communities. 26 Moreover, this Ministry is in charge of promoting and monitoring the execution of actions relating to the review of the institutional framework, to the implementation of organization and management systems at the prefecture and CRD levels, and to the improving of the selection criteria of the prefectures' senior staff.. 3. The Ministry of Planning and Cooperation The Ministry of Planning is in charge of the orienltation of the rationalization efforts of the development policies and strategies, of the selection of public investment projects at the grassroots, and of the evaluation of their impact. It provides technical support to decentralized administrations, in areas concerning project identification and analysis as well as the collection and the management of statistical data relating to performance indicators. It will have to participate in the implementation of the Government policy on human and institutional capacity building in line with the national capacity building initiative (PACT). 4. The Ministry of Economy and Finance The Ministry of Economy and Finance nnust better consider the needs at the grassroots through a fair allocation of significant budget resources to decentralized communities and the ones under devolution, and ensure that allocated resources reach the grassroots. It will also see to it that the spending procedure -- commitment, authorization of payment, liquidation and actual payment -- is simplified and shortened, while ensuring effective control and transparency in the use of resources by local entities and the decentralized agencies. The measures concerning the transfer of" resources to the CRDs and the improvement of budgetary management systems are the responsibility of the Ministry of Economy and Finance. 5. The Ministry of Employment and Public Service The Ministry of Employment and Public Service is in charge of defining the criteria and norms relating to the administrative organization and to the utilization of the State employees, and of taking care of their application. In this connection, it is required to provide technical support in the search for structures, procedures and staffing susceptible of brirging a substantial and lasting improvement to public service delivery. In collaboration with the involved ministries, the Ministry of Employment and Public Service sets up performance criteria and norms to be promoted in the context of the reform program, for each one of the three levels: (i) central and regional, (ii) prefecture and sub-prefecture, and (iii) community and host structure. It will also propose the different categories and forms of incentives as well as the procedures of award and management for the Performance Incentive Fund, which is a fund set forth in the framework of the pilot project to test the validity of proposed incentive measures. 6. Related Sector Ministries The other Ministries, notably Agriculture, Pre-University Education, Health, and to some extent Justice, will have to ensure, during the pilot project phase, that their intervention at the grassroots is in keeping with the standpoint outlined in the present Letter. Furthermore, they will see to it that these interventions are progressively improved through a more adequate technical support, and of the harmnonizing of these 27 actions with those of other interventions in the same sector, as well as with those in other sectors, in order to optimize the limited resources and intensify the impact. The delegation to the prefecture authorities of the decisions relating to certain acts of management of technical staff is part of the responsibilities of these ministries. VII. OPERATING PLAN AND MONITORING The ultimate objective pursued by the decentralization and devolution policy is to render local communities capable of taking charge of themselves in the long run, in order to reduce poverty and improve the well-being of the population. The Government will do all in its power to induce the concerned ministries, through the strategies and actions formulated in this Letter, to pursue the reflections, each in its sector, and to prepare a plan of operations to implement these actions as part of the pilot project. Reports on the monitoring and evaluation of the results of these actions will be periodically submitted to the appreciation of the Council of the Ministers. Signed by: El H.TH.M. Cellou DIALLO Minister of Plan and Cooperation Conakry, Guinea November 9, 1999 28 Annex 113: Project Design Summary Guinea: Capacity Building for Service Delivery Project Narrative Summary Key Performance Indicators Monitoring and Critical Assumptions Evaluation Sector-related CAS Goals: 1. Improvement in key * Poverty studies and * Political stability Reduce poverty, promote sustainable poverty indices (e.g. surveys * No heavy influx of growth, and increase the well-being of increase rural GDP per * Annual UNDP refugees causing the rural population through improving capita, :food security, Human economic crisis and the delivery of public services and the literacy, incidence of Development social unrest empowerment of local institutions and disease, infant and child Reports communities mortaliy) * National statistics 2. Mobilization of national * National and local and local resources for budgets rural development Long-term Development Objectives: I . At least 70% of central * National and local * Government remains * Strengthen centralized and governrment budgetary budgets tracking committed to decentralized administrative system allocations to sectors go * Surveys of decentralization and to provide effective public services to the rural communities beneficiaries and empowerment of to the rural population 2. 90% of public agencies service providers rural communities * Empower local institutions to take are under a performance- * Annual project * More progressive and charge of their own needs based appraisal system reports proactive non- 3. 50% increase in the e Project reviews and goverrunental sector. quality of services evaluation studies Phase 1: Putting in place a decentralized provided service delivery system and community 4. 70% of local programs empowerment plan in four pilot originate from and funded prefectures involving 24 CRDs and by local communities focusing on four sectors --- education, 5. 20% of the program health, rural development and justice; recurrent costs are testing a decentralized performance financed by national incentive system resources Phase H1: Extending the decentralized service delivery system to 12 other prefectures involving 60 CRDs and focusing on three additional sectors; deepening the community empowerment processes and implementing the performance incentive system Phase III: consolidating the decentralized service delivery system and the local empowerment processes; extending their application to the remaining 17 prefectures and 207 CRDs and focusing on the remaining sectors; completing the decentralization processes at the CRD and prefecture levels. Project Objective: By the end of the 4t year Set-up and implement an administrative 1. 30% increase in access to * VCSP and other * Government and financial decentralization system to productive assets, sector progress and committed to deliver better public services to rural paralegal, social and impact reports institutional and communities and to empower local physical services * Citizen satisfaction behavioral changes 29 Narrative Summary Key Performance Indicators Monitoring and Critical Assumptions Evaluation elected entities 2. 50% improvement in the surveys * Cooperation and quality of services * External financial support from donors provided audits and other Bank sector 3. 50% of sector problems * Periodic reports by projects and constraints identified CRDs and service at the front line are providers resolved between * Mid-term and end of beneficiaries and service Phase I evaluations providers and by the local elected entities at CRD level. Project Components Project Outputs 1. 70% of budgetary * National and local * GOG committed to I.- Decentralizing public expenditure resources allocated to budgets transfer budgetary management to ensure adequate and priority sectors is * Semester and and fiscal resources timely funding of public services at the transferred directly to the annual progress to delivery point and front line service delivery front line reports and communities and CRDs evaluations * Resources available 2. Guidelines for multi-year * Budget tracking programming (MTEF) and surveys bottom-up performance budgeting established 3. 20% of project operating costs covered by national resources 4. Prefecture and CRD staff capable of preparing, implementing and monitoring their budgets, as certified by idendent evaluators. II. Decentralizing institutional 1. Legislative and executive * Texts passed by * Legislation adopted accountability and capacity for service orders related to National Assembly * Executive orders delivery to local agencies and decentralization process and/or signed by issued by relevant communities reviewed, updated, and relevant authorities authorities passed by the National * Manuals of I . Revise the roles, structures, and Assembly if required procedures staffmg pattern of central 2. Key staff in relevant * Training reports departments, regional authorities, departments and units * Periodic progress prefecture administration and CRDs trained in new roles reports to support the decentralization 3. Decentralized service strategy delivery and management 2. Strengthen the ability of central systems set up at departments, sector agencies, prefecture and CRD levels regional authorities, prefecture 4. Key staff in relevant administration to support and to be sectors and decentralized accountable to local communities. services and entities 3. Strengthen the capacity of CRDs to trained in leadership and provide services to rural populations management for and to represent their interests at the decentralization Prefecture Development Council. 5. Prefecture Development Councils established and fully operational, as 30 Narrative Summary Key Performance Indicators Monitoring and Critical Assumptions Evaluation certified by the baseline study IV. Introducing a performance-based I. Manual of procedures * Surveys of service * GFOG committed to incentive system established for the providers institutionalize a Sustainable Performance * Periodic reports and reward system based In Service Delivery Fund evaluations on service delivered 2. 10% of this Fund, * Manuals of performance provided by the procedures counterpart budget has * National budget been paid. Project Components, Sub-components: Project Inputs * Financial reports and audits I.- Decentralizing public expenditure 1.- US$3.66million * CBSDP progress management reports * Annual budget and work program * National and local budgets 2.- Decentralizing institutional 2.- US$9.14 million accountability and capacity for service delivery to local governments and communities 2.1 .-Revise the policy and institutional framework of central departments, regional authorities, prefecture administration and CRDs. 2.2.-Strengthen the decentralized structures to play their catalyst and empowering role toward CRDs 2.3.- Strengthen the management capacity of CRDs to provide adequate services to the rural populations 3.- .Improving communication with 3.- US$.41 million beneficiaries 4.- Introducing a performance incentive 4.- US$4.1 8 million system 4.1 .-Setting-up a performance appraisal and incentive system 4.2.- Operating a Performance Improvement Fund 5.- Program coordinationand 5.- US$3.61 million management 5. 1.- Establishment of a project administration unit 5.2.- Developing the monitoring and evaluation system 5.3.- Preparation of the judicial reforrn program 31 Annex 2: Detailed Project Description Guinea: Capacity Building for Service Delivery Project The project deals with the first four years (Phase I) of the 12-year Capacity Building for Service Delivery Program (CBSDP). The focus will be on primarv education, basic health, agricultural extension and paralegal services, and will cover four prefectures, one in each natural region, and 24 Rural Development Communities (CRD). Other areas may be added subject to IDA agreement. Project Component 1 - Decentralizing Public Expenditure Management (US$3.66million) This component seeks to consolidate and deepen the budgetary reforms undertaken since 1996 to ensure that the needs of rural populations will be taken into account in the allocation process and that budgetary resources will reach the service delivery front line. It centers on two primary objectives: (i) promoting fiscal decentralization by shifting responsibilities for expenditures and revenues management to local governments and communities (prefectures and CRDs); and (ii) assisting local governments in implementing a bottom-up performance budgeting approach and promoting decentralized resource mobilization. Concerning the first objective, the centralization of expenditure management in the line/sector ministries, the absence of clear rules for revenue and expenditure assignments, weak financial management and monitoring of public expenditures have led to the bulk of budgetary resources being spent at the central level. Beginning with the 1999 budget, an effort has been made to provide a more detailed breakdown of certain budget items in selected line ministries. During subsequent phases of CBSDP when the capacity for financial management will have been established at both the prefecture and CRD levels, prefectures will then be given a more important coordinating role and can then take over the implementation of the budget at the prefecture level for important sector ministries such as social sector and rural development. With regard to revenues, the proposed reform will also proceed in phases. During the first year of the CBSD project, CRDs will be allowed, in the four pilot prefectures, to keep the totality of the head tax, which is now collected by them, but with the proviso that revenues be shared with prefectures, sub- prefectures and districts according to a fixed fornula. This measure will hopefully improve the incentive for a more diligent collection of the head tax, thus raising the amount of resources made available to CRDs. As for the prefectures, in addition to their share in the budget of the Ministry of Territorial Administration and Decentralization to which they are now connected, the four pilot prefectures will receive a transfer of budgetary resources equivalent to their current share of the head tax. At the same time, CRDs will, with the assistance provided by the VCSP, develop their capacity to mobilize additional resources from other taxes, fees and fines. They also have the prospect of direct transfer of resources from the central budget when their capacity to manage resources in a transparent and effective manner is ascertained. To ensure that budgetary resources allocated to high priority sectors will reach the front line, two measures will be supported under this component: (a) Introducing a bottom-up, integrated performance budgeting system starting from the service delivery front line, going up through the CRD, prefecture, sector DAAF up to the central budget agency. This system may be a viewed as an extension of the on-going MTEF approach, and will 32 help provide data on the real needs of local communities for the budgetary decision-making process at the central level. Some elements of this approach have already been introduced at the service delivery front line in a number of CRD in the prefectures of Coyah and Mamou during the preparation of CBSDP. (b) Strengthening the tracking and mnonitoring of budget transfer and impact at the local level Through independent surveys and monitoring, Government will ensure that the resources allocated to priority sectors not only reach the front line of service delivery but also can determine the impact of such funcling on the level and quality of services delivered. This is the kind of information that an internal monitoring system, beset with weaknesses, cannot provide. This component will also support (i) the consolidation of the MTEF to ensure that budgetary resources will continue to be allocated according to development priorities. (ii) the operation and maintenance of an up-to-date performing computerized financial information system, and (iii) the setting up and strengthening of decentralized budgetary and financial management systems at the prefecture and CRD levels. Activities to be financed under this compor.ent include: (a) producing operating manuals on the MTEF approach, and on bottom-up, performance budget preparation and implementation procedures; (b) setting up a decentralized budgeting system at the prefecture and CRD levels; (c) adopting new rules of budget classification to include more details of budgetary resources accruing to prefecture and CRD levels; (d) strengthening financial management urnits in sector ministries (DAAF) and prefecture (SAAF); (e) strengthening financial management in project implementing agencies, to meet the disbursement requirements of the Loan Administration Change Initiative (LACI); (f) developing performance indicators to monitor progress and impact of various policy changes and investment programs on the economy arLd rural poverty. This component will finance intemational and national consultants to provide technical support and to carry out implementation studies, staff training and workshops on budget and financial management, micro computers and server systems and critical operating costs. The primary beneficiaries are the Ministry of Economy and Finance (MEF), the Ministry of Planning and Cooperation, and the strategy and financial management units in the sector mi:nistries. Financing will also be provided for policy studies to link investment and recurrent budgets, to establish incentive systems for Customs and Tax agencies, to define a system of aid coordination, and to carry out audits of four state enterprises staked out for privatization. Primary responsibility for the implementation of this component is vested in the Ministry of Economy and Finance. 33 Project Component 2 - Decentralizing institutional accountability and capacity for service delivery to Local Governments and Communities. (US$ 9.14 million) The Govemment has long recognized the need to involve the population, in particular the rural poor, in the development processes. A devolution policy was adopted in 1985. A number of legislative and executive orders were adopted in 1986; others in 1992, on the organization and operation of urban and rural communities, responsible for electing their representatives and managing their own affairs. Efforts have been deployed to increase their involvement in the satisfaction of local needs. Progress in general has been slow. The lack of effective support from area government representatives, especially prefecture authorities, has been considered a key constraint. The Government has decided to address this issue by adopting a policy of administrative decentralization, consisting in holding the Prefect accountable for coordinating the delivery of public services to the local elected entities. He is to be accountable to the central government and eventually to local government, through the Prefecture Development Council (PDC), for ensuring that the needs of the rural population for public services are met. This may be done either directly through the relevant technical units and /or by the work of their elected representatives whose empowerment will be supported by prefecture authorities. The project will assist the Government in its effort to change the prefecture administration into a prime mover and catalyst of local communities empowerment, and to make that administration accountable to both the central government and the CRDs for the provision of security, order as well as technical support in the delivery of public services to the population. Actions to undertake under this component will include: (a) the revision of the institutional framework in order to achieve decentralization at the prefecture level and the devolution at the CRD level. This will involve clarification of the roles played by various agencies, and the elimination of ambiguity and conflict between central, regional, and prefecture administrations. The changes will need to be accepted and internalized which only an extensive participatory process is likely to work. The proposed project will provide support for MATD to manage that process so that the outcome will be acceptable to all concerned, and therefore workable. (b) the strengthening of the ability of strategy and financial units in ministerial, regional and prefecture levels to provide effective support to the CRDs; including the establishment of decentralized delivery and management systems at the prefecture and CRD levels. (c) the improvement of the leadership and management capacity of CRD elected officials and administrative staff. This support will be provided as an addition to other supports given under VCSP and by other donors. In general, the training provided by other programs tends to focus on the "technical skills". CBSDP will focus on helping local leaders and senior staff gain confidence in themselves and acquire the necessary tools to influence people and make a difference. The project will finance international and national consultants to help carry out organizational diagnoses, set up management systems, train key staff in leadership and general management and other staff in relevant subjects such as planning and budgeting, project identification and preparation, program monitoring and evaluation. The component will also finance data processing material and equipment, rehabilitation of prefecture and sub-prefecture physical infrastructures, and critical operating costs. The primary beneficiaries of this component are four prefectures, and the 24 sub-prefectures andCRDs. 34 Regional Govemor Offices, and relevant units in the Ministry of Territorial Administration and Decentralization (MATD) whose capacity for monitoring prefecture performance will also be strengthened through leadership and managemenit training. MATD is responsible for coordinating the implementation of this component. Project Component 3 - Improving Communication with the Beneficiaries (US$.41 rnillion) This component seeks to promote the active participation of the beneficiaries in the delivery of needed services, by improving communication and by a public informnation program. Poor communication between service providers and the beneficiaries has been a major hurdle to effective service delivery. An action-research carried out in four primary schools and four health centers in the prefectures of Coyah and Mamou in March - April 1998 showed that 30% of the problems cited by both beneficiaries and service providers stemimed from a lack of communication between them, while an additional 40% derived from the absence of effective communication lines between theCRDs and prefecture agencies. Since 1997, the Government has made notable efforts to consult the civil society. starting with the extensive, nation-wide consultation of the population in the definition of the country's long-tern development priorities. For many years, systematic information and communication programs have also been promoted under various donor-assisted sector projects. Despite the progress made, communication with the beneficiaries still requires considerable improvement. This component will focus on strengthening the lines of communication: (a) at the service delivery point, between providers and beneficiaries through the improvement of participatory mechanisms such as school PTAs, health center management committees and farmers groups: and (b) at the prefecture level, through the activities of the Prefecture Development Council (PDC), which will act as a full partner of the Prefect with regard to decisions affecting local communities. Tllis Council ('Conseil prefectoral de developpement") was created by Ordinance No. 079/PRG/86 of March 25, 1986, which recognizes the right of local communities for self governance. It is currently chaired by the Prefect and composed of both government officials and representatives from civil society including NGOs, small business, labor unions, and the CRDs. Until now these councils generally exist on paper, or have been used by prefecture authorities as a means for passing on official instructions. The Government intends to change this situation and has stated its commitment in the LDP to make the Prefecture Development Council a community elected body with authority initially to review proposed programs and budgets but which will gradually become decision-making bodies with approval authority. This component will support (a) the strengthening of participatory mechanisms at the CR1D and service delivery levels; (b) the establishment of PDCs with a new mandate, composition and operating procedures, and the provision of training for council members; and (c) the training of 40 facilitators- trainers to help front line services with collective problem solving. In addition, the component will help define a public infonnation strategy and implement a public information program. Training of local officials and staff in effective communicaticin, team work and problem solving will also be provided. Technical assistance from local consultants 'will be funded to help define and establish the information and communication program, prepare operating procedures, and train staff in communication skills. Communication equipment and materials including micro-computers will be provided to MATD central 35 units, regional offices and prefecture and CRDs. The implementation of this component is also vested in MATD. Project Component 4 - Introducing a Performance Incentive System (US$4.18 million) This component aims at ensuring the successful implementation of project activities and preparing the way for sustaining project actions and impact in the long run, by providing the civil service with a workable and affordable performance appraisal and incentive system. A major roadblock to improving service delivery is the lack of appropriate performance appraisal and incentives to reward superior achievement. An attempt was made by the then Ministry of Administrative Reform to correct this situation as part of a comprehensive administrative reform program launched in December 1985. Several texts were issued in 1988-1990 to define new performance appraisal procedures and a set of rewards. These did not seem to fit either the political context or the institutional environment; therefore, the new system has not been implemented. Since then, a number of efforts have been undertaken to provide incentives, generally as stop-gap, isolated measures taken under donor-assisted and NGO-operated projects. Some of them seem to work well, such as the schemes used in thePlan Guin6e and by CLUSA (an American NGO financed by USAID). During the preparation of the proposed project, a quick interview of some 30 professional staff from five ministries and two prefectures in 1998 gave the following information: (a) their monthly household expenditures exceeded their individual earnings-- by 50 to 300 percent; (b) the lack of means to carry out their basic tasks, such as transportation, paper and pencils, were cited as significant de-motivating factors; and (c) about a third of those interviewed stated that they would be interested in settling in the private sector. Additional data collected during the pre-appraisal mission in 1999 on the current incentive systems showed that there was a variety of incentives that could potentially result in improved service delivery, and that a combination of monetarv and non-monetary rewards, granted to groups as well as to individuals should be considered. These rewards may range from specific sums of money at one end to the psychic rewards of simple recognition by a superior at the other end, and in-between a variety of awards, including the provision of materials and logistics, and training opportunities overseas. From the sketchy data thus far collected, it appears that the performance improvement issue hinges upon the existence of a positive organizational climate, which stems from a combination of factors, including an appropriate reward system (monetary and non-monetary), the provision of a minimum of working conditions, and the quality of leadership and management provided by heads of unit. It appears also that the nature of the award does make a difference and a combination of incentives may be desirable. The Govemment intends to carry out an in-depth study to define appropriate performance in service delivery incentive system along the lines indicated below, and to test its validity in the four related sectors within the pilot prefectures and 24 CRDs. (a) Establishment of a Sustainable Performance In Service Delivery Fund (SPISDF) to reward prefectures, CRDs and districts, and related central and sector units and individuals for superior performance. Rewards will be tied to the attainment of specific service delivery benchmarks, as determined by beneficiary satisfaction surveys, and, where feasible, the achievement of agreed work plans. The eligibility criteria and standards as well as the legal and institutional framework for the Fund, including a manual of operating procedures, will be defined and initially used in three CRDs; 36 (b) Performance grants awarded to prefectures,CRDs and districts, will be for the purpose of financing perfonnance improvement sub-projects. They will be disbursed subject to submission by beneficiaries of a sub-project designed to fuirther improve the effectiveness in service delivery. The PAU will enter a Performance Grant Agreement with the beneficiaries, under terms and conditions including the obligation to carry out the performance improvement sub-project in accordance with the manual of procedures of the SPISDF. (c) With regard to the CRDs, there will be consultation with related communities to determine meaningful awards in light of their service delivery needs. At the level of the prefectures (sub- prefectures included), once a given prefecture is deemed to have attained the required level of excellence to merit an increased budget allocation, the related Prefet and his management team will be consulted and requested to submit a proposal for a sub-project to be implemented with resources provided by IDA. This approach will facilitate subsequent tracking of the use of IDA finds. (d) SPISDF will include two parts: Part (i) supported by IDA, to be used to finance performance improvements sub-projects proposed by prefectures, CRDs and districts; Part (b) co-funded by the Government and IDA, to finance monetary and non-monetary awards, including goods and training, to deserving individuals, teams and administrative and decentralized units. SPISDF will be financed by the contributions from the Government and IDA during this first phase. It will start with an IDA contribution of US$3.0 million, which will cover the Performance Grants and 90 percent of the Performance Awards. Government's contribution of 10 percent of the Performance Awards will be drawn from counterpart budgetary resources. The Govemment intends to adopt the performance incentive system, based on the establishment of the SPISDF and including the necessary legal, institutional and operational framework, no later than August 3 1, 2000. The terms of reference for the study to define the timing, management and operating procedures of the incentive system and SPISDF will be established are expected to be completed by December 30, 1999. The project supports the definition and testing of the performance incentive system during this phase, including the financing of the work of an inter-sector study group established under the leadership of the Ministry of Employment and Civil Service (MEFP).This group will be supported by short-term intemational and national consultants, overseas study visits, workshops and seminars to discuss and review findings and proposals, and some equipment, materials and operating funds. MEFP is responsible for coordinating the implementation of this component. Project Component 5 - Project Coordination and Management (US$3.61 million) The overall coordination, management and acdministration of the Project are entrusted to three structures: a steering committee, an inter-ministerial management committee, and a project administration unit. Project Steering Committee The overall coordination and oversight of project implementation is the responsibility of a steering committee (PSC), created by anArrete of the Prime Minister dated August 20, 1999. PSC is chaired by the Prime Minister and has the authority to: (i') approve the project annual work programs and budgets; (ii) 37 review the implementation progress towards achievement of project's objectives; and (iii) issue general guidelines for project implementation and decide on major corrective actions. PSC will meet at least twice a year or any time as necessary upon the invitation of its Chairman. PSC's members include: (1) the Minister of Planning and Cooperation, Vice-Chair; (2) the Minister of Territorial Administration and Decentralization; (3) the Minister of Economy and Finance; (4) the Minister of Employment and Civil Service; and (5) the Ministers of Pre-university, Health, Agriculture and Livestock, and Justice. Project Inter-ministerial Management Committee The day- to-day coordination and monitoring of project implementation activities is entrusted to an Inter-ministerial Management Committee, created in August 20, 1999 by anotherArrete of the Prime Minister, and chaired by the Minister of Territorial Administration and Decentralization, who is also the rapporteur at the PSC. PIMC is composed of representatives from each of the 4 agencies responsible for the implementation of project components: (1) Ministry of Plan and Cooperation, (2) Ministry of Economy and Finance, (3) Ministry of Employment and Civil Service, and (4) Ministry of Territorial Administration and Decentralization. It will meet at least twice a month to review the project's overall implementation progress and to take appropriate decisions to ensure the smooth and timely coordination of different components. Performance allowances for component coordinators will be paid from counterpart funds; the salaries of their support staff will be included in project recurrent costs. The Project Administration Unit Support to implementing agencies will be provided by a Project Administration Unit (PAU), which serves as the secretariat to the PIMC. It is a light structure whose primary responsibility is to provide technical and financial expertise to implementing agencies, especially in the areas of procurement, disbursement, financial accounting, project monitoring and evaluation, including the operations of the Sustainable Performance in Service Delivery Fund. In addition, it will assure overall financial management, accounting, procurement and reporting. PAU will also be responsible to government and IDA for the regular preparation and submission of project reports. PAU is headed by an Administrator, who is assisted by an Administrative and Financial Officer, a Procurement Specialist, and an Accountant and a Monitoring and Evaluation Specialist. The key functions of the PAU are summarized below: Programming and budgeting As the secretariat to the Inter-ministerial Management Committee, PAU is responsible for preparing consolidated annual work program and budget proposals. These will be based on the annual programs and budgets prepared by the implementing agencies of project components. The consolidated programs and budgets will be submitted to the Project Steering Committee for approval. 38 Financial management and accountnLg A special account will be established for the project, with secondary/advance accounts established at each prefecture, to facilitate efficient implementation of decentralized activities. The Project Operational Manual will describe the workings of these primary and secondary accounts and their relationship and accountability. The agencies involved in implementing the different components will maintain their separate financial records in compliance with generally accepted accounting principles and will prepare separate financial statements. Audits of the PAU accounts will be carried out annually by independent external auditors. A plan to strengthen Goveniment's ability to provide periodic reports on project implementation performance within the 18 months following credit effectiveness, in accordance with the Loan Administration Change Initiative (LACI) has been established. Pending the establishment of such a system, an interim procedure will be implemented, modeled after the current systems used by other IDA projects in Guinea, to ensure proper handlingI, of IDA credit proceeds. Details on the procedures of project financial management and accounting according to LACI are described in the Financial Section of the Project Operational Manual. Monitoring and Evaluation The objective of the Monitoring and Evaluation (M&E) team is to respond to the internal management and supervision needs of implementing agencies responsible for different project components, the government and IDA. As such, the M&E team will, on a regular basis, provide pertinent information on performance indicators, trends, and triggers for passing from one phase to the next. Monitoring will be developed and carried out by the implementing agencies with assistance from the M&E Team, in coordination with IDA. The monitoring system will be organized as a network with each implementing agency in charge of monitoring its own activities. A consolidated computerized system integrating data on physical implementation with those on financial implementation will be established. M&E activities will be coordinated by a Monitoring & Evaluation team, which in reinforcement of the "Direction Nationale de la Statistique", will be in charge of (i) developing and exploiting a data collection system appropriate to establish performance indicators for each project component; (ii) compiling and consolidating, on a quarterly basis, all relevant information including data related to expenditures and disbursements, and (iii) preparing consolidated quarterly implementation reports for the overall project. The M&E team will also be responsible for advising implementing agencies on matters related to the computerization of project information systems and for operating and maintaining the computerized integrated monitoring system which will be set up with assistance from external consultants. Evaluation, on the other hand, will be conducted annually by independent external service providers to focus on assessing: (i) the impact of project activities on the beneficiaries; and (ii) the progress in institutional improvements. These two evaluations would be based on the data provided by the M&E team as well as by surveys and interviews of beneficiaries and other participants. These evaluations would highlight lessons learned that would be used to improve the effectiveness of project implementation, to make adjustments to the Operational Manual as necessary, and to identify actions and measures to be considered for Phase II. A mid-term review and an end- of - project evaluation will be conducted jointly by the Government and IDA. This component will finance the costs to staff, equip, and operate the PAU office, short - term consultant service to provide technical support in some specific areas cutting across components, system development to establish a computerized integrated project management system, and for studies to define 39 a capacity building program for the judicial sector, as well as to prepare Phase II. It will also finance equipment to strengthen the capacity of the 'Direction Nationale de la Statistique" in the development of macro indicators and benchmarks. Detailed descriptions of the structures, their mandates and operating procedures and relationships among various agencies and units will be described in the Project Operational Manual, which will have a special section on Financial Procedures to be prepared by the PAU financial specialists under the supervision of the IDA Financial Management Specialist at the Resident Mission. 40 Annex 3: Estimated Project Costs Summary Guinea: Capacity Building for Service Delivery Project Project Component Local [Foreign I Total 1I:. ;tDceiifhzi- ub1ic expenditures tmanagement 1.i5 1.57 3.11 2.D ecentralizinginbstitutional accotablitnd capacityfort 2.80 4.97 7.77 swerice delivery'to loI Agoveinmentsland communities 3l. yIprovingcommuication With beneficiaries 0.10 0.25 0.35 4. higtrdcing a perforniancpiincentv system 1.35 2.20 3.55 5. Project coordination and.management 1.20 1.87 3.07 Totahl Basetline CosilX t l:|:T :0): Xl :0}:; :6.99 10.86 17.85 Phj; :;;;Ayrlysical; Contingencies:VW: t WaQ: -X:X:; X VX: :::; :X: :X: :X: :: X ::: :: C? :0.69 1.09 1.78 Price Contingencies 0.35 0.55 0.90 L Total Preojec Cost ]03 12. 97 -21 .0-_ 41 Annex 4: Cost-Effectiveness Analysis Guinea: Capacity Building for Service Delivery Project I. A capacity building project of this nature is not amenable to traditional, quantitative cost benefit analysis. Therefore, a qualitative discussion of its economic rationale is presented below. Linkage with country assistance strategy and macro/sector framework 2. The Project fits fully with country and sector priorities outlined in the current Country Assistance Strategy which focuses on (i) promotion of a broad-based private sector led growth with a focus on the rural area, (ii) enhanced service delivery for poverty reduction, and (iii) improved governance and institutional capacity. 3. The macro-economic and sector policy frameworks are now adequate to undertake CBSDP. In 1988, the Government undertook bold steps to liberalize most markets, which led to a marked improvement in exchange rate performance, reduction in inflation, and more favorable terms of trade. This resulted in an average growth of GDP of about 4.5% per annum in 1990 - 1996. 4. Despite this commendable performance, social indicators were still lagging. Thus in 1996, the Government adopted and implemented a Medium Term Expenditure Framework aimed at rationalizing the overall pattern of sector expenditures. As a result, (i) the shares of public expenditures for key social sectors, especially health and education, were increased; (ii) the functional allocation of expenditures were made consistent with intra-sector priorities, and (iii) the economic composition of sector budgets was altered to give more weight to non-salary recurrent expenditures, thereby ensuring adequate provision for maintenance and increasing the likelihood of the sustainability of public investments. Fiscal impact and cost recovery 5. The proposed project seeks to improve the effectiveness of public service delivery. Such activities can only be undertaken by the public sector because they involve public goods and, as stated earlier, aim at correcting regional inequity. 6. Given the nature of the proposed operation, there is little potential for cost recovery. It will not, however, impose an undue burden on the government budget. With the likely right sizing of the public sector work force resulting from the implementation of the performance-based incentive system, the Government would have the resources to sustain recurrent costs generated by the project. Thus the project is expected to be sustainable from the fiscal standpoint. Cost - Benefit Analysis 7. Cost effectiveness indicators and a qualitative account of the expected development impact for each component of the project is discussed below. 8. Component I -- Decentralizing public expenditures management processes will result in savings. The proposed project will reinforce the positive gains achieved under PEMAC and MTEF in rationalizing the economic and functional composition of the national budget and in introducing more accountability throughout the budget process. This should result in a more growth-inducing and sustainable Public 42 Investment Program. 9. Component 2 -- Decentralizing institutional accountability and capacity for service delivery to local governments and communities. Through this component, CBSDP will help remove a major constraint to a satisfactory delivery of public services to the poor, especially in rural areas. It will be done in a cost-effective manner, through existing public institutions with minimal or recourse to costly external technical assistance. 10. Component 3 -- Improving the communication with beneficiaries will result in better targeted poverty reduction interventions. Indeed, through beneficiary consultation, the services provided would better match the needs of the communities, resulting in a lesser distortion in social welfare. 11. Component 4 -- Introducing a performance-based incentive system may cause an initial increase in government expenditures due to severance payments and the implementation of a performance based- pay scale. However, experience with such restructuring shows an inicrease in worker performance and output in the long-run. Risk analysis 12. Three major risks face the proposed project. The first relates to the possibility of policy reversals and slippage in government commitment. T11e level of this risk, identified during preparation, has since been heightened by the March 1999 reshuffling of government following Presidential elections. The risk is reduced, however, by the fact that although a new Prime Minister has been appointed, most key ministers- who have been IDA interlocutors since 1996, -- remain. In addition, through this project IDA will continue and intensify its support to the Government to maintain the broad consultation and dialogue with the civil society it initiated in October 1997. 13. The second risk relates to possible resistance of sector agencies to decentralized units and staff to change the status quo. The proposed project will provide incentives to encourage institutional changes at three levels: CRD, prefecture and central government. 14. The third risk concemns the constraint in IDA supervision to provide timely and adequate substantive advice to implementing agencies and Project Administration Unit because of limited budget and resource. This risk would be minimized with forward planning of the required supervision effort and recourse to bilateral and other donor assistance. Poverty analysis 15. The proposed project will benefit directly the poorest segment of the Guinea population, especially those living in remote rural areas who constitute the largest share of the population and who depend critically on public provision and/or funding of basic services. 16. The project will also, indirectly but potently, affect poverty reduction through its incidence on the overall rate and pattern of economic growth. As stated earlier, this capacity building operation will consolidate the positive gains of the PEMAC and MTEF in rationalizing the budget allocation and the public expenditure management system. This should result in more growth-accommodating and efficient public sector intervention and less crowding-out of the private sector. 43 Environmental Impact 17. No environmental assessment will be conducted. The proposed project is a capacity building operation featuring training, studies and technical assistance; it has no foreseen adverse environmental impact. On the contrary, CBSDP would have an indirect positive impact on the environment by contributing to rural poverty reduction as environmental degradation is often the result of poor rural populations striving to over-consume natural resources for subsistence. Institutional development grounds are considerable. It is presented as a justifiable and worthwhile undertaking. 44 Annex 5: Financial Summary Guinea: Capacity' Building for Service Delivery Project Table 5A. -Year Ending December 31 (US$ M) Phase I Phase II Phase III (2000- 2003) (2004- 2007) (2008- 2011) Project Costs Investment Costs 17.89 46.86 63.90 Recurrent Costs 3.11 8.14 11.10 Total 21.00 55.00 75.00 Financing Sources (% of total project costs) IDA 19.00 40.50 49.50 Other Donors N/A 10.00 20.00 Government 2.00 4.5 5.50 Total 21.00 55.00 75.00 Main assumption: The amounts to be finarnced in Phases II and III are indicative and will be finalized based on the experience of the preceding phase and when commitments from co-financiers are confirmed. 45 Annex 6: Procurement and Disbursement Arrangements Guinea: Capacity Building for Service Delivery Project 1. In 1998, IDA supported through an IDF Grant a procurement reform. The new procurement regulation does not conflict with IDA Procurement Guidelines, and no special exceptions, permits, or licenses need to be specified in the Credit documents for National Competitive Bidding (NCB). Guinea's procurement practices allow IDA procedures to take precedence over any contrary provisions in local regulations. IDA financed Works and Goods will be procured in accordance with World Bank's Guidelines under IBRD Loans and IDA Credits, (January 1995, revised January and August 1996, September 1997 and January 1999). National Competitive Bidding (NCB), advertised locally provided that: (a) any bidder is given sufficient time to submit bids (three to four weeks); (b) bid evaluation and bidder qualifications are clearly specified in bidding documents; (c) eligible firms are not precluded from participation; (d) award will be made to the lowest responsive bidder; and (e) prior to issuing the first call for bids, draft standard documents are submitted to IDA and found acceptable. Selection of Consultants will be based on Bank Guidelines for Selection and Employment of Consultants by World Bank Borrowers, (January 1997, revised September 1997 and January 1999). 2. The proposed project is designed to fit the country's existing implementation capabilities, as implementation would be entrusted to the public agencies concerned at both central and field levels, all of which having already had experience with development projects. The responsibility for the implementation would be as follows: the Ministry of Economy and Finance for Component I; the Ministry of the Territorial Administration and Decentralization for Component II and III; and the Ministry of Employment and Civil Service for Component IV. A Project Administration Unit (PAU) headed by an Administrator would be responsible for harmonizing the monitoring and evaluation systems of the various project activities. It would include three small teams: (1) a project management team, composed of an accountant, a procurement specialist, and a project manager, responsible for coordinating work plans and keeping project accounts and audits and handle all procurement matters for all components; (2) a technical support team to provide technical advice, coordinate leadership and general management training, manage special studies and support the communicationlinformation program; and (3) a monitoring and evaluation team, responsible for baseline studies, monitoring overall implementation progress and evaluating program impact, as well as providing technical support to individual M&E activities of implementing agencies. PMU would also be responsible to the government and the external funding agencies for the regular preparation and submission of progress reports. 3. Capacity Assessment, and Proposed Management Arrangements. National Bidding Procedures for public sector procurement in Guinea have recently improved. Practices were slow before a revised procurement code was issued in June 1997. The introduction of simplified procedures and training of staff supported under an IDF Grant has improved the current situation. An evaluation of the capacity of the recruited procurement management staff will be carried out before credit effectiveness to assess any need for training or recruitment of ad-hoc external services. 4. In Guinea, all public procurement should be carried out in accordance with the general rules established by Law No 97/016/AN of June 3, 1997. Articles 32 and 33 of this Law establish the Procurement Commission ("Commission Interministerielle d'Ouverture des Plis et de Jugement des Offres') which is in charge of the procurement of all contracts up to 1 billion GNF (approximately US$800,000) and "Commission Nationale des Grands Marches Publics" for all contracts with a contract value exceeding this amount. 46 5. A General Procurement Notice will be published in the Development Business and will be updated annually for all outstanding procurements. A timetable listing all procurement steps was prepared with the borrower during appraisal and will be regularly updated. A detailed procurement plan of goods and services will be annexed to the Manual of Procedures. 6. The Government has submitted: (i) a draft Manual of Procedures, and (ii) the procurement plan for the first year of project implementation. Procurement of all goods, works and services shall be undertaken in accordance with such procurement plan up-dated every year and approved by the Association. 7. The Government has given assurance cluring negotiations that it will use: (i) the finalized version of the Manual of Operational Procedures approved by IDA, (ii) the Bank's standard bidding documents and bid evaluation reports for International Competitive Bidding, (iii) the Bank's standard request for proposal, evaluation reports and model contracts for the consultant services; and (iv) apply the procurement procedures and arrangements presented in the Manual of Operational Procedures. 8. The Manual of Operational Procedures will be approved before credit effectiveness and would only be modified with prior IDA approval. The procurement plan will be updated on regular basis, in particular during semi-annual reviews. The Government also gave assurance that it will take the necessary measures to ensure that procurement phases do not exceed the following targets periods mentioned below: Procurement Phases Maximum Time Frame Preparation of bidding document 6 weeks (3 weeks for small contracts) Preparation of bids by bidders 6-12 weeks (3 weeks for small contracts) Bid evaluation 4 weeks (2 weeks for small contracts) Signature of contracts 2 weeks Payments 3weeks 9. During project implementation, all bidding documents, bid evaluation reports, and draft contracts transmitted to IDA for review will contai:n. an updated copy of the procurement plan. Procurement confirmation will be collected and recorded as follows: (a) prompt recording of contract award information by the PAU and (b) comprehensive quarterly reports by PAU indicating: (i) revised cost estimates for individual contracts and the total program, including best estimates of allowances for contingencies, (ii) revised timing of estimated procurement actions, including advertising, bidding, contract award and experience with completion time and completion costs for individual contracts; and (iii) compliance with aggregate limits on specified methods of procurement. 1. Procurement methods (Table 6A) 1.1 Civil Works (US$0.3 million) Procurement arrangements for civil works contracts (rehabilitation of four prefectures) estimated to cost lest than US$50,000 per contract, up to an aggregate amount of US$0.3 million, will be procured under National Competitive Bidding. Small contracl:s w7ill be procured under lump sum fixed price contracts awarded on the basis of quotations obtained from three qualified domestic contractors invited to bid. The invitation shall included an estimation of the works established by an engineer/architect, a detailed description of the works, including basic specifications, the required completion period, a basic form of 47 agreement acceptable to IDA, and relevant drawings, where applicable. 1.2 Goods and Equipment (US$4.1 million) Procurement of Goods and Equipment will follow Bank Guidelines on Procurement under IBRD Loans and IDA Credits, January 1995, revised January and August 1996, September 1997 and January 1999. The project will mainly support the procurement of (i) vehicles and motorcycles; (ii) computers and servers, (iii) communications equipment and (iv) office furniture and equipment. 1.2.1 International Competitive Bidding (ICB) (US$3.2 million) Except otherwise provided below, goods and equipment shall be procured through International Competitive Bidding (ICB) in accordance with the provisions of the Guidelines.Invitations to pre-qualify or bid for contracts procured under ICB will be advertised in Specific Procurement Notices in at least one newspaper of national circulation, and preferably in international press and in the Development Business. To the extent practicable, contracts for goods and equipment shall be grouped in bid packages estimated to cost US$50,000 equivalent or more each. 1.2.2 National Competitive Bidding (NCB) (US$8 million) Contracts for the purchase of goods and equipment valued at less than US$100,000 per contract may be procured through National Competitive Bidding (NCB) in accordance with the provisions ofParagraphs 3.3 and 3.4 of the Guidelines. 1.2.3 National Shopping (US$.0.6 million) The equipment and other office equipment and furniture, estimated to cost less than US$5,000 per contract up to an aggregate not to exceed US$ .06 million may be procured under contracts awarded on the basis of prudent national shopping based on price quotations obtained from at least three reliable suppliers and in accordance with the provisions of Paragraphs 3.5 and 3.6 of the Guidelines. 1.3 Consultant Services, Studies, Training and Workshops (US$8.8 million) Consultant services would be contracted following procedures in accordance withBank Guidelines for Selection and Employment of Consultants by World Bank Borrowers, January 1997, revised September 1997 and January 1999. The Standard Request for Proposals and Conditions of Contract as developed by IDA would be used for all contracts. Simplified contracts may be used for short-term assignments, i.e. those not exceeding six months, carried out by firms or individual consultants. The project will include consultant services to support the Government's effort to strengthen the ability of the public system to respond effectively and efficiently to the demands and needs of the rural population mainly for (i) review the budgetary system to allow the direct transfer of resources to the prefecture an CRD levels, (ii) introduce transparency in the management of financial resources, (iii) involve beneficiaries in problem solving with regard to community affairs, and (iv) introduce a performance incentive system to reward high performing units. Short lists for consultants below estimated under US$50,000 may comprised, on exceptional basis and with IDA's prior agreement, entirely national consultants, if a sufficient number (at least three) are available at competitive cost in accordance with the provisions of Paragraphs 2.7 of the Guidelines. NGO activities. The selection of NGOs would be based on their qualifications (experience and competence relevant to the assignment). The package of activities proposed by NGOs would be retained 48 on the basis of eligibility criteria established for that purpose in the Manuel of procedures agreed upon with IDA. NGOs would sign a convention (costing more than US$50,000 but less than US$200,000 per convention) with the implementing agency. Standard unit prices based on on-going similar contracts would be used for the purpose of determining the amount of packages of activities. 1.3.1 Quality and Cost Based Selection (U,SX$3.3 million) Consultant services for technical assistance, studies and training financed under this project shall be normally selected through competition among qualified short-listed firms in which the selection is based on Quality and Costs Based Selection (QCBS) by evaluating the quality of the proposal before combining quality and cost evaluation. 1.3.2 Consultant Qualifications (US$8 million) For specialized assignments, for which the need of preparing and evaluating competitive proposals is not justifiable, the Borrower may prepare TORs, request expressions of interest and information on consultants experience and competence relevant to assigmnent, establish a short list, and select the firm with the most appropriate qualifications and references in accordance to the provisions in Paragraph 3.7 of the Guidelines. Consultancy such as (i) review the budgetary system to allow the direct transfer of resources, and (ii) introduce a performance incentive system to reward high performing units, may require the services of several consulting firms to be selected based on consultant qualifications. NGOs may be included in the short list, as participation and local knowledge is essential for canrying out the assignment; and will be procured in accordance with the provisions of Paragraphs 3.13 and 3.14 of the Guidelines. 1.3.3 Single-Source Selection (US$.3 million) In exceptional cases, tasks valued at less than US$25,000 that represent a natural continuation of previous work carried out, where a rapid selection is essential, for very small assignments or when only one firm is qualified or has experience of exceptional worth for the assignment, a single source selection may be used with IDA prior agreement and in accordance with the provisions of Paragraphs 3.8, 3.9, 3.10 and 3.11 of the Guidelines. 1.3.4 Individual Consultants (US$.4 million) Services valued at less than US$10,000 per contract which do not require firms may be procured by Individual Consultants e.g. for small assignments, studies, organization of or lecturing at a seminars, workshops or study tours will be selected through comparison of qualification and experience among those expressing interest in the assignment or approached directly in accordance of the provisions of Section V of the Guidelines. The Administrato:r, the procurement specialist, the accountant and the project manager will be recruited with IDA non-objection based on comparison of at least three resumes proposed by the Government. 1.3.5 Project Audit (US$0.2 million) For audits of standard nature, such as the project audit, the Least-Cost Selection (LCS) will be used: the firm with the lowest price will be selected, provided technical proposals received the minimal score. 1.3.6 Training (US$3.0 million) The project will finance training in development and field testing of new delivery approaches and other relevant fields in the country and abroad. The program containing names of candidates, cost estimates, courses, period of training and institutions selected would be reviewed by IDA semi-annually.The Government will also submit a final report not klter than three months after the training was completed. 49 1.4 Operating expenses (US$3.6 million) Operating costs include incremental operating costs incurred in the program implementation, management and supervision, including rent, office supplies and small office equipment, operation and maintenance, administrative and secretarial support but excludes salaries of officials of the borrower's civil service and the purchase of vehicles. 2. Prior review thresholds (Table 6B) 2.1 Civil Works Contracts for the rehabilitation of four prefectures costing more than US$50,000 will be subject to IDA prior review. All other small contracts, if any, will require post review. 2.2 Goods All contracts for procurement of goods costing more than US$100,000 per contract will be subject to IDA prior review. All other contracts will require post review. The review process is expected to cover about 80% of the total value of the amount contracted for goods. 2.3 Services Prior review will be required for consultant services valued at more than US$100,000 equivalent per contract with firms and at more than US$50,000 per contract with individuals. The project audit in any case will be subject to prior-review. The technical evaluation report will be submitted for IDA non- objection before the financial envelopes are opened. All other contracts will be subjected to post review. Ho-wever, this exception for prior review will not apply to amendments of contracts with firms raising the contract value to US$100,000, amendments of contracts with individuals to US$50,000, to services procured by single-source selection and to assignments of critical nature as determined by IDA. For training abroad or in the country, the program containing names of candidates, cost estimates, courses, period of training and institutions selected would be reviewed by IDA semi-annually. The review process is expected to cover 90% of the total value of the amount contracted for consultant services. Selective post-review of contracts awarded below the threshold levels will apply to about one in three contracts a year. 50 Table 6A: Project Costs by Procurement Arrangements (US$ million equivalent including taxes, duties and contingencies) Procurement Methods Expenditure Category ICB NCB Other' N.B.F. Total Cost 1. Civil Works 0.3 0.3 (0.15) (0.15) 2. Equipment & Vehicles 2.6 1.4 0.1 4.1 (2.6) (0.8) (0.06) (3.46) 3. Services & Training 8.8 8.8 (8.4) (8.4) 4. Incentives Funds 4.2 4.2 (3.8) (3.8) 5. Operating Cost 3.6 3.6 _______ ~~~~(3.19) (3.19) Total 2.6 1.7 16.7 21 (2.6) (0.9) (15.5) (19) Note: QCBS = Quality- and Cost-Based Selection QBS Quality-based Selection SFB = Selection under a Fixed Budget LCS Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Single-Source Selection, Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed (includes elements procured under parallel co-financing procedures, consultants under trust finds, any reserved procurement, and any other miscellaneous items). Figures in parenthesis are the amounts to be financed by the Bank credit. All costs include contingencies Includes goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs. 51 Table 6B: Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contract subject to Category (Threshold) Methods Prior Review 1 (US$ millions) (US$ millions) 1. Works ICB NCB Other $50,000 and above X Prior review Below $50,000 X Prior review (the first three contracts every L_______________ _____ _ _ year) 2. Goods $100,000 and above X l Prior review Below $100,000 X Prior review (the first three contracts every year) Below $ 5,000 x l_X 3. Consultants Selection Methods Audit N/A Least Cost Selection Prior review Consulting Firms or $100,000 and above QCBS + Short list Prior review Training Institutions $100,000-$50,000 QCBS + Short list Prior review Below $50,000 Consultants' Post review (except Qualifications for TORs) Individuals $50,000 and above Comparison of at least Prior review 3 CVs Below $50,000 Comparison of at least Post review (except 3 CVs for TORs) Total value of contracts subject to prior review: $ 11.3 million or 80% of the project cost excluding the Incentives Funds. Overall Procurement Risk Assessment High = An evaluation of the capacity of the PAU will be carried out before Credit effectiveness. Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) Prior review is also required for: (a) all TORs for consultants, studies and training; (b) annual training and procurement plan; (c) sole source selection of individual consultants and firms; and (d) amendments to contracts with consulting firms or individuals that bring the total value of the contract to US$ 100,000 equivalent or above for firms and US$ 50,000 for individuals. 52 Table 6C: Allocation of Credit Proceeds (US$19.0 million) Expenditure Category Amount in Financing _____ _____ _____ ____ _____ _____ _____ ____ US$ m illion Percentage 1. Ci i Wrk 0.14 50 aEquimn 1.84 100 b. Vehicles 1.06 100 cOffice furiniture. 0.40 90 3Services Ta. Trig Seinrs Sudie Tou 2.79 100 b. Studies 2.53 100 cTehni,ca IA s~ac ~2.25 100 4Incen tives F unds 3.18 97.5 5.Oprting Costs 2.60 80 6. RefNdin of Proj.e.t Prr.9ratl0 AdvAinc:e, 1.20 7. Unallocated ~~~~~~~~~~1.01 Total 19.00{ 53 Table 6D: Estimated Disbursement of IDA Credit (US$19.0 million) YEAR 1999 2000 2001 2002 2003 Amount 1.2 8.44 4.64 2.15 2.56 Cumulative 1.2 9.64 14.28 16.43 18.99 Cumulative rate 50.7 75.1 86.5 100.0 %relative 6.7 44.4 24.4 11.3 13.2 54 Annex 7: Project Processing Budget and Schedule Guinea: Capacity Building for Service Delivery Project A. Project Budget (US$'000) Planned (US$400,000) Actual (US$284,300) B. Project Schedule Planned Actual Time taken to prepare the project (months) 18 14 First Bank mission (identification) 10/98 11/98 Appraisal mission departure 6/99 08/99 Negotiations 8/99 10/99 Planned date of Effectiveness 3/00 Preparation assistance provided by PPF ($1.2m) and Japanese PHRD (US$501,860) Bank staff who worked on the project included: Name Specialty Rudy Chizungu Public Sector Management Specialist, Team Leader, AFI12 Albert Osei Senior Economist, Resident Representative: Brian T. Ngo Principal Country Economist, AFTM5 Luc Lapointe Consultant - Procurement, AFTS2 Bella Lelouma Diallo Financial Management Specialist, AFMGN Abdullaye Yero Balde Economist, Resident Mission: Joseph Toledano Sr. Agricultural Services Specialist, Resident Mission Hassane Cisse Counsel, LEGAF David Webber Principal Financial Management Specialist, LOAAF Ousmane Jah Operations Officer, AFC 16 Armand Atomate Public "Sector Management Specialist, AFTI2: Mathurin Gbetibouo Agricultural Economist, AFTR3: Jack Titsworth Consultant - Governance: AFT12 The following Bank staff were consulted duri:g project preparation: Robert S. Prouty Principal Education Specialist, AFTH2 Linda English Education Economist,AFTH2 Bachir Souhlah Senior National Resources Maniagement Specialist, AFTR3 Astrid Lawson Hegeland Research Analyst, AFTH2 Slaheddine Ben- Halima Senior Operations Officer, AFTH2 Susanne Holste Transport Specialist, AFTT2 Suzanne Piriou - Sall Rural Development Specialist, AFTR3 Yves Genevier Health Specialist, AFTH4 Quality Advisory and Review Team Bernard Abeille Principal Procurement Specialist, AFTS2 Siaka Bakayoko Financial Specialist, AFTH2 Amitaba Mukherjee Public Sector Management Specialist; ECSPE Markus Kostner Consultant, SDVPC 55 Annex 8: Financial Management Guinea: Capacity for Service Delivery Project A. Disbursement The proposed IDA Credit will finance an investment program for the capacity building sector in Guinea. It will be disbursed over a period of four years, according to the categories presented in Annex 6 -Table D. The Credit will follow the standard disbursement profile for Guinea. Disbursements of the credit will be fully documented at time of submission of withdrawal applications, except for expenditures valued at less than US$20,000 equivalent, which will be made against Statements of Expenditure (SOE), and will be kept available for examination by auditors, technical audits, and by IDA supervision missions. Applications for direct payments can be submitted for amounts exceeding US$50,000 equivalent. B. Counterpart Funds and IDA support for Operating Costs Government's counterpart funds needed for twelve (12) months to cover the share of investment not financed by IDA will be deposited by the government in a Program Account (PA) at a viable and reputed local Bank at the beginning of each year of the project. The funds will be managed by the Project Administration Unit (PAU) for Government's share of eligible expenditures. Operating costs consist of incremental operating costs incurred as a result of project implementation, management and supervision including office supplies, responsibility allowances for coordinators of implementing agencies, salaries of project support staff, fuel, utilities, rent, communication costs and travel allowances of project staff, but excluding salaries of Borrower's civil servants. C. Special Account To facilitate disbursements, the government will open a Special Account (SA) at a reputed local Commercial Bank acceptable to IDA in Conakry for IDA's share of eligible expenditures. The maximum balance in the Special Account will be US$ 500,000, which will cover about 4 months of expenditures, to be disbursed from the Special Account. IDA will replenish the SA upon receipt of appropriate documentation satisfactory to IDA for incurred eligible expenditures. Each replenishment request will be accompanied, as necessary, by an up-to-date bank statement and a reconciliation statement. D. Secondary Accounts or " Caisses d'Avance " To facilitate disbursements at each level of the project, the government will open (a) an Advance Account at a local and viable commercial bank for activities executed by the implementing agencies. AC is funded by the Special Account and will be managed according to the procedures specified in the Project Operational Manual in accordance with respective annual work programs and budgets. ACs will be managed by the Prefet and the elected Presidents of related CRDs according to the procedures specified in the Project Operational Manual. CAs will pay the total amount of expenditures incurred at the prefectures and CRD levels, the consolidation of expenses will be effected by the PAU. CAs accounts, each not exceeding a maximum of US$15,000 equivalent, will be replenished by the PAU against Statements of Expenditure (SOE). 56 E. Accounting CBSDP will operate on a decentralized basis with all its components which will be managed by separate project implementation units set up in separate ministries, prefectures and CRDs. The Project Administration Unit (PAU) and the other implementing agencies will maintain each separate set of accounting records for the portion of the program they are directly in charge of. In addition to maintaining the accounts at the central level, PAU will be responsible for the consolidation of the program accounts and the production of the annual financial statements. To ensure consistent financial reporting, detailed procedures will be developed for project accounting. Based on IDA's experience with decentralized projects in Guinea with agricultural projects, the PACV project experience in close monitoring to maintain controls and build financial capacity will be adequate. Intemal accounting controls for the project will be set out in detail in the Financial Section of the Project Operational Manual and will provide reasonable assurances that accounts are properly recorded and resources safeguarded. The accounting systems for the implementation agencies will be computerized using well-known software on other IDA financed projects in French-speaking West Africa and that has been found to be satisfactory for Borrower and IDA purposes. The chart of accounts for the project will be based on the "Plan Comptable National " of the Republic of Guinea. F. Auditing Program accounts will be audited in accordance with international audit standards by experienced and internationally recognized audit finns acceptable to IDA. The audit reports and related project accounts will be submitted to IDA within four (4) months after the end of fiscal year. In addition to their standard short form report with the opinion, the auditors will be required to: (i) carry out a comprehensive review of all SOEs as well as the internal control procedures governing their preparation for the relevant period under audit, and express a separate opinion thereon; (ii) review the management and utilization of the Special Program Account and express a separate opinion thereon as well. Finally, the auditors will complete their in-depth review, started at irnterim, of the internal control system of the program with a view to identify the major weaknesses ancl shortcomings and propose practical recommendations for improvement. The results of this review wvill be documented in a Management Letter to be submitted along with the audit reports. The Bank Resident Mission's Financial M:anagement Specialist will also perform interim audits (9 months into the fiscal year) to review the internal control system including management performance, and issue reports to that effect within one month from the end of their work. The findings and recommendations of the interim reports will be attended to right away before the return of the auditors for the final audit (mostly 3-4 months after closing of the fiscal year of the program). The contracting of auditors (financial and technical), on multi-year contract, acceptable to IDA, and certification by the RM Financial Management Specialist that the PAIJ's accounting system is operational, is a condition of credit effectiveness. 57 G. Reporting The PAU will submit the following reports prepared jointly with the implementing agencies: (a) semi- annual progress reports; (b) an annual report and a proposed financing plan, four weeks before the joint annual review, and not later than December 1St each year; (c) a detailed progress report on technical and financial programn activities not later than four weeks before the date of mid-term review; and (d) relevant sections of the implementation completion report (ICR) three months before the closing date. The CRD's (the base accounting unit) will provide quarterly activity reports to the Prefectures together with quarterly financial reports of their respective activities. The Prefectures will submit consolidated quarterly financial reports with supporting documentation to the PAU which will consolidate the financial reports of the operational components. The annual financial statements of the project will be prepared in accordance with the generally accepted accounting principles in Guinea and with FARAH, which has been accepted by IDA for projects in Guinea. They will include at least a statement of sources of funds, a statement of reconciliation of the special accounts, a balance sheet and required notes to the financial statements. Also they will be submitted to IDA no later than six months after the end of the fiscal year. H. Project Management Reports The Bank has introduced an initiative to change loan administration in Bank Group projects, the Loan Administration Change Initiative (LACI). This initiative assists projects to put in place sound financial management, procurement and output monitoring systems. Where appropriate, if these systems are in place, disbursements may be made on the basis of agreed quarterly Project Management Reports (PMR) rather than on the basis of individual invoices or statements of expenditures. It was agreed, however, not to proceed immediately with PMR-based disbursement method during the first 18 months of implementation while the financial management system is being strengthened to ensure an orderly transition to LACI. To that end, the Bank will carry out at the end of the first year of implementation, a comprehensive and detailed assessment of the program financial management to detennine its full readiness for LACI. A second assessment will be carried out at the end of the second quarter of the second year of implementation to evaluate the effectiveness of the transition to LACI. During the first two years of implementation, meanwhile, disbursements under the program will be made in accordance with the SOEs-based approach. The program will still be required to submit, in addition to its financial statements, five quarterly reports, namely a Summary of Sources and Uses of Funds, a Contract Expenditure Report - Goods & Works, a Contract Expenditure Report - Consultants, a Procurement Management Report - Goods & Works, and a Procurement Management Report - Consultants. All procurement documents, contracts, and invoices will be maintained separately by PAU and be made accessible to supervision missions and auditors. 58 Annex 9: Documents in the Project File Guinea: Capacity Building for Service Delivery Project 1. Rapport de mission. "Volet Amelioration des services publics a la base: tester une approche de recherche-action dans les prefectures de Coyah et de Mamou" (July 1998). 2. L'organisation et la gestion des administrations prefectorales - Le cas de Coyah (January 1999) 3. Etude du syst&me de gestion budg6taire avec concentration sur le secteur du developpement rural (Janvier 1999). 4. Etude du systeme de communication entre I'Administration et les populations dans les prefectures de Coyah et de Mamou (February 1999). 5. Etude du svsteme de gestion des ressources humaines dans les prefectures de Coyah et Mamou avec concentration sur le secteur du developpement rural (February 1999). 6. Les problemes de developpement rural, d'education et de sante dans certaines sous-prefectures de Coyah et de Mamou (March 1999). 7. Atelier de formation: Guide du FacilitateLir; Guide du Formateur; Cahier du Participant (March 1999). 8. Politiques et strategies sectorielles : La situation des prefectures (March 1999) 9. Financial Management Situation before tlle Introduction of L.A.C.I. (March 1999). 10. Program Implementation Plan (August 1999). 11. Detailed Cost Tables (August 1999). 12. Procurement arrangements - Mission report and technical note. (July 1999). 13. Action Plan to Implement the Loan Administration Change Initiative (August 1999). 14. Project Operational Manual (September 1999); 15. Preliminary Design of a Performance Incenitive System (October 1999); 16. Projet de Lettre de politique en matiere de deconcentration administrative (Octobre 1999) 59 Annex 10: Status of Bank Group Operations in Guinea Operations Portfolio As of 12-Jul-99 Guinea: Capacity Building for Service Delivery Project Difference Between expected Original Amount in I1S$ Millions and actual Fiscal disbursements a/ Project ID Year Borrower Putpose IBRD IDA Cancellations Undisbursed Orig Frn Rev'd Number of Closed Projects: 44 Active Projects GN-PE-1074 1999 GOVERNMENT URBAN III 0.00 18.00 0.00 17.26 0.00 0.00 GN-PE-41568 1999 GOVT.OFGUINEA POP&REPROD BEALTH 0.00 11.30 0.00 10.79 -.33 0.00 GN-PE-50732 1999 GOVT OF GUINEA VILIAGE COMUNTY SPRT 0.00 22.00 0.00 21.01 0.00 0.00 GN-PE-57188 1999 GOVT. OFGUINEA PRE-SRVTEACHEREDUC 0.00 4.10 0.00 3.14 .92 0.00 GN-PE-50731 1998 MICROFINANCE 0.00 5.00 0.00 5.09 .44 0.00 GN-PE-1075 1997 GOVERNMENT llI1RD WATER SUPPLY 0.00 25.00 0.00 22.58 4.07 0.00 GN-PE-1077 1996 GOVERNMENT MNNSECTINVPROMOT 0.00 12.20 0.00 3.54 2.06 0.00 GN-PE-1081 1996 GOVERNMENT AGRIC SERVICES 0.00 35.00 0.00 11.25 -3.30 0.00 GN-PE-1090 1996 GOVERNMENT HIGIEFREDUCATION MAN 0.00 6.60 0.00 3.85 3.56 2.86 GN-PE-1087 1995 GOVERNMENT EQUITY AND SCHOOL IM 0.00 42.50 0.00 20.45 14.00 0.00 GN-PE-1070 1994 GOVERNMENT HEALTH/NUT.SCTR. 0.00 24.60 0.00 10.14 3.57 3.57 GN-PE-1068 1993 GOVTOFGI7INEA AGR.EXPORTPROMOTION 0.00 20.80 0.00 10.37 9.11 .51 lotal 0.00 227.10 0.00 139.47 34.10 6.94 Active Projects Closed Projects Total Total Disbursed (IBRD and IDA): 76.34 1,010.93 1,087.27 of which has been repaid: 0.00 101.43 101.43 Total now held by IBRD and IDA: 227.10 858.42 1,085.52 Amount sold : 0.00 0.00 0.00 Of which repaid : 0.00 0.00 0.00 TotalUndisbursed : 139.47 .39 139.86 a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. Note: Disbursement data is updated at the end of the first week of the month and is currently as of 30-Jun-99 60 Annex [L1: Guinea at a Glance Guinea: Capacity Building for Service Delivery Project Guinea at a glance 10/i/99 Sub. POVERTY and SOCIAL Saharan Low- 1997 Guinea Africa income Development diamond, Population, mid-year (miffions) 6 9 614 2.048 Life expectancy GNP per capita (Atlas rnetlrod US$) 570 500 350 GNP (Atlas method, .SS$ brons) 4 0 309 722 Average annual growth, 1991-97 Populatin (%4) 2 6 2.7 2.1 Laborforce (%56) 2.3 2.6 2.3 GNP ,, Gross per prinary Most recent estimate (latest year available, 199147) capita "'. enrolmren1 Poverty (% of population below naUonal poverty line) Urban population (% of totalpopulation) 31 32 28 Life expectancy at birth years) 46 52 59 Infant mortality (per 1, 003live bi,ths) 120 90 78 Child malnutrition (5 of children under5) 24 .. 61 Access to safe water Access to sate water 1%6 o population) 62 44 71 Illiteracy (% of population age I5-) 64 43 47 Gross primary enrolhment (%of school-age population) 48 75 91 Guinea Male 63 82 100 - Low-income group Female 34 87 81 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1976 19fi 1996 1997 Ewnnernyc ratioes GDP (US$ billions) . 1.9 4.0 3.9 Gross domestic investmenVGDP .. 14.9 21.1 21.7 Exports of goods and servicesGDP .. 31.1 17.1 17.7 Trade Gross domestic savings/GDP .. 18.0 18.7 Gross national savings/GDP .. 8 4 13.4 13.7 T Current account balance/GDP .. -.6 -7.7 -7.7 0.7 2 1 2.1 ~Domestic Interest payments/GDP .. 0.7 2.1 2.19 Investment Totaldebt/GDP .. 81.7 90.6 79.9 Savi gs Totaldebtselvice/exports .. 11.9 17.2 15.0 . Present vale of debt/GOP .. . 54.3 Present valae of debtlexports .. 264.1 I ndebtedness 1976436 19i87-97 1996 1997 1998-02 (average annual growth) GDP .. 4.0 4 6 4.5 5.6 -uinea GNP per capita .. 1.8 1 6 1.1 2.6 - Low-ncomegroup Exports of goods and services .. 2.8 -1.8 -23 4.6 STRUCTURE of the ECONOMY 1976 1986 1996 1997 Growth rates of ioutput and investment I%) (% of GOP) Agricufture 239 21.8 22.4 Industry .. 34.8 33.1 35.1 r Services 41 5 45.1 42.5 n Private consumpton .. 70 6 74.9 74.3 2 o i General govemment consumrption .. 114 7.1 7.0 Imports of goods and services .. 28 1 20.2 20.8 (average annual growth) 1976.86 19,7-97 1996 1997 Growth rates of eaports ad imports I%) Agriculture . 7 9 4.5 5.1 201 I ndustry .. 1 9 9.0 4.3 Manufacturing .. 1 8 25 4.5 10 Senices 31 22 3.8 . Private consumpton .. 3.8 5.9 6.8 I General govemment consumption .. 2.5 -5.2 -1.9 Gross domestic investment .. 5 5 3.5 2.6 ' Imports of goodsand services .. 11 -1.9 3.1 Epo - Irnports Gross national product .. 4 6 4.5 4.1 Note: 1997 data are preliminary estimates. The diamonds show four key indicators in the country (in bole I compared with its income-group average. If data are missiag, the diamond will be incomplete. 61 Guinea PRICES and GOVERNMENT FINANCE 1976 1986 1996 1997 Inflation (%) Domesticprices (% change) 30 Consumer prices .. 3 0 3.2 20 ImplicitGDP deflator .. 3.0 30 Govemment finance IC (% of GDP, includes current grants) 2 Current revenue .. 13.4 10.1 11.5 92 93 94 95 96 97 Current budget balance .. 0.1 1.3 2.7 -"GDP defator CPI Overall surplus/deficit .. -9.8 -8.9 -8.7 TRADE (US$ millions) 1976 1986 1996 1997 Export and Import levels (US$ millions) Total exports (fob) .. 590 696 797 1000 Other metals .. 381 324 342 Aluminum 73 104 113 750 Manufactures Total imports (cif) . 422 7146 779 S0D Is Food .. 7 76 77 25 Fueland energy .. 51 87 90 Capital goods .. 50 78 83 o 9 92 93 94 95 96 97 Exportpriceindex (1995=100) .. 106 93 93 Import price index (1995=100) .. 70 97 96 | Exports aimports Terms of trade (1995=100) .. 152 96 .97 BALANCE of PAYMENTS 1976 1986 1996 1997 Current account balance to GDP ratio (%) (US$Smillions) Exportsof goodsand services .. 598 746 821 0 Imports of goods and services .. 540 866 926 Resource balance . 58 -120 -105 Net income -3 33 3159 Net current transfers .. -32 -36 -37 Current account babnce .. -126 -305 -301 10 Financing items (net) .. 200 254 324 Changes in net reserves 0 -74 51 -24 15 Memo: Reserves including gold (US$ millions) 0 0 170 225 Conversion rate (DEC, local/US$) 21.4 346.0 1,004.0 1,096.6 EXTERNAL DEBT and RESOURCE FLOWS 1976 1986 1996 1997 (US$ millions) Compositlon of total debt, 1997 (US$ millionr Total debtoutstanding and debursed 824 1,764 3,196 3,120 IBRD 66 61 0 0 G 3 IDA 1 160 863 922 0 212 Total debtservice 38 72 131 125 F 92 lBRD 8 12 0 0 IDA 0 2 11 10 Composibon of net resource flows Official grants 2 42 122 129 Official creditors 29 148 122 227 E E 1244 _:1D 1 Private creditors 12 1 0 9 Foreign direct investment 0 8 40 43 Portfolio equity 0 0 0 0 World Bank program Commitments 0 50 54 95 - IBRD E - silateral Disbursements 1 36 47 109 B-IDA D-Other MLiniateraI F-Private Principal repayments 2 8 4 4 c-IMF G- Short-teen Netfiows -1 28 43 105 Interest payments 6 6 7 6 Net transfers -7 22 36 99 Development Economics 10/1S98 F- 1E t A 12° 10, 8° +? ' ~~~Koundor J^_ 9_ ~ G A-' a M ' A L fI-- ( ' k~~~~~SA 2 JtetB -uuio/){v-W / - D / X_+ ~~~~~~^; JZ | q; ~~~~~~L(bE<) ks Dinguirrzye O>5 @ Trk s> ig"irtG~} < ~~~~~~G \U I N E E KalJxk Niandakoro tm an S. ! <$ * w-~~~~~/-._ r KoAMNSRTIERGO APTL urceouss di Montaj rH SENGA r AI* PEETRCPTL j > tt /FRITEE ^-> - > -- I Jr D'IVOIRE .. J c~1 KLMEES s Yomou f c ...... LBERI \ i 5how on hfs rap danot nolpin°Ototnhsondt°fYT°ther nformtionX L |B E RI A r? nkan rm~~~~~~~Bf T ¢/ . n ugento h glsou foytrioy rayedreet:r- o0 dvC- .i; ro cpan of su chbudre.l0t78 Yb~~~~~~~~~~~ ~.Fr !.ona N ..| '10 _.