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1 Document of The World Bank PROJECT COMPLETION NOTE OF A LEARNING AND INNOVATION LOAN IN THE AMOUNT OF SDR 2.7 MILLION (US$4 MILLION EQUIVALENT) TO THE REPUBLIC OF MALAWI FOR A DEVELOPMENT LEARNING CENTER PROJECT December 15,2005 AFTPR Africa Regional Office Report No: 35059
2 CURRENCY EQUIVALENTS (Exchange Rate Effective February 19,2004) Currency Unit = Malawi Kwacha MK 1 = US$ US$1 = MK FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS CAS CCA CFAA DCA DLC ECSAFA FIMTAP FMR GDLN GOM GPN HIPC ICR ICB ICT IDA IDP 1 IFAC IDP2 INTOSAI ISG LIL MASAF M&E MIM MOU MOFEP NAO NCB NGO OPC PA PCU PIE' POM Country Assistance Strategy Credit Ceiling Authority Country Financial Accountability Assessment Development Credit Agreement Development Learning Center Eastern, Central and Southern African Federation of Accountants Financial Management, Transparency and Accountability Project Financial Monitoring Report Global Development Learning Network Government of Malawi General Procurement Notice Heavily Indebted Poor Countries Implementation Completion Report International Competitive Bidding Information Communication Technology International Development Association First Institutional Development Project International Federation of Accountants Second Institutional Development Project International Organization of Supreme Audit Insitutions Information Solutions Group Learning and Innovation Loan Malawi Social Action Fund Monitoring and Evaluation Malawi Institute of Management Memorandum of Understanding Ministry of Finance and Economic Planning National Audit Office National Competitive Bidding Non-Governmental Organization Office of the President and Cabinet Project Agreement Project Coordination Unit Project Implementation Plan Project Operations Manual
3 PRSP QCBS SA SPN SOE SOCAM UNDB WBI Poverty Reduction Strategy Paper Quality and Cost Based Selection Special Account Special Procurement Notices Statement of Expenditures Society of Accountants in Malawi United Nations Development Business World Bank Institute Vice President: Country Director: Sector Manager: Task Team Leader: Gobind T. Nankani Hartwig Schafer Helga Muller Marc Jean Yves Lixi
4 Project Completion Note Republic of Malawi - Development Learning Center Project (IDA MAI) 1. An IDA Credit of $4.0 million for the Development Learning Center Project was approved by the IDA Executive Directors on March 11,2004. The project, originally scheduled to reach financial closure in June 30,2009, failed to start implementation and disbursement, and was subsequently cancelled. The Government of Malawi officially requested the cancellation of the IDA credit early November The purpose of this note is to explain why the project was not implemented. The main purpose of this Learning and Innovation Loan (LIL) was to test the effectiveness and sustainability of the Global Development Learning Network (GDLN), and more specifically, a Development Learning in Malawi as part of a global knowledge-sharing network to strengthen the capacity of public, private and civil society decision makers to design, plan, and manage social and economic development programs. The project was to focus on improving human development in Malawi, particularly regarding expenditure and financial management skills and the capacity of accountability institutions as outlined in the pillars 2 and 4 of the Malawi Poverty Reduction Strategy (PRSP). Project Description 3. The DLC was created as an independent legal entity to share development knowledge and information. It was formally established by an Act of Parliament with a view to launching construction in Lilongwe on the Malawi Institute of Management campus during the first year of the project. Thereafter, the project was to support the operations of the DLC (with costs on a decreasing basis) over the following four years. 4. The learning was to take place through a structured pilot aimed at documenting the effectiveness, efficiency, impact, relevance, and sustainability of the DLC. Success was to be determined by the achievement of critical performance indicators such as the demonstration of financial viability, training relevance, learning, and application of skills. A Monitoring and Evaluation (M&E) system, performance indicator tools, and associated monitoring instruments were to systematically measure the extent to which success has or has not been achieved. 5. This LIL had four components : (i) Main DLC construction and development in Lilongwe: This component was to set up the institutional, physical and human resource requirements for the DLC. It was to be implemented by the Project Coordination Unit located within Malawi Institute of Management (MIM); (ii) Support of the Main DLC operations: This component was in effect to support the DLC operations and assist in establishing its viability and training program. It was to be implemented by the DLC; (iii) Equipment and Installation of the sub-dlc in Blantyre: This component was to comprise the development of the sub-dlc facilities in Blantyre and the support of its operations during the first three years of implementation. It was to be implemented by the DLC; and (iv) Monitoring & Evaluation: This component was to be carried out by MIM with considerable input and collaboration from the DLC. 6. The Credit was to finance the DLC operations during the first four years of operations on a decreasing basis. The first year, the Credit would cover 80% of the Center's operating costs. The
5 second year, it would cover 60%, the third year 40%, and the fourth year 20%. The management staff of the DLC was expected to develop a business-plan which would describe the management policy of the Center. The business-plan was to help the DLC reach financial sustainability by the fifth year of implementation Events which Led to the Project's Cancellation The GDLN Center initiative was initially a component of the Financial Management, Transparency and Accountability Project (FIMTAP). Following the Decision Meeting, this component was taken out of the FIMTAP's design and transformed into a stand-alone operation. A new $4.0 million LIJi was then set up to finance this new project. In order to move the preparation forward on a fast track basis, the Task Team decided not to fund project preparation activities (e.g. Manual of Procedures, Financial Management system, recruitment of the auditor, etc.) that are usually funded by a Project Preparation Facility (PPF) or other preparation grants. The mobilization of the national counterpart funds from the Government side took longer than expected and as a result the credit became effective in October 2004, seven months after the Board approval. As the project had not financed preparatory activities, MIM, as the Project Coordination unit, had to pre-finance some activities in order to launch the project implementation. The Project Coordinator had to seek MIM's Board approval to mobilize the necessary funds, which again delayed the project implementation. 8. Eight months after the credit became effective, in May 2005, the Project Coordination informed the Bank that they had not received from the Bank the Guidelines document (Disbursement Letter) necessary for the project to disburse and were not able to request the initial deposit. In the meantime, the preparation of the bidding documents for the selection and recruitement of the architect and engineer, was being discussed and reviewed by the Ministry of Housing, the Ministry of Public Works, and the Office of the President and Cabinet (OPC), the ministerial home of MIM at the time. The Disbursement Letter was finally sent to the project early August The Project Coordination received final approval from the Minisines reviewing the bidding documents for architectural studies in September During the second supervision mission in early September 2005, noting the lack of progress in the implementation, the Task Team rated the project execution "not satisfactory", requesting the Project Coordination to update key project documents such as the Project Implementation Plan (PIP) including the Procurement Plan, and to ake pro-active action to avoid any further delay. 9. Following Quality at Entry (QEA) review by QAG, the project was considered at risk. At the end of September and in October, internal discussions on the project status took place. The project was considered a risk for the whole portfolio that could "affect negatively future prospects of increasing IDA resources for Malawi." In parallel, the new GoM has been developing a new strategy and reconsidering its areas of focus (now in areas of growth and infkastructure). The Government of Malawi officially requested the cancellation of the IDA credit early November 2005, since the project no longer falls within the government's current strategic priorities. Lessons Learned 10. Due diligence for any new distance learning initiative, including GDLN, will take note of the various issues raised by the Quality Assurance Group (QAG) panel in August 2005, and will address them in the context of the project preparation and appraisal process. The main lessons learned from the non-performance of this LIL are the importance of:
6 a. a well formulated Project Development Objectives (PDO) which, in case of a LIL, support the "pilot" aspect of this type of operation. In particular, the alignment of the PDO with the Government's strategy in order to ensure a strong ownership is critical; b. a complete preparation stage of the project including the set up of a strong Project Coordination as well as the completion of all the necessary studies; c. a finalized M&E Plan with adequate capacity within the Project Coordination; d. involvement of the other donors at the earliest stage of the project preparation would have mitigated the risks incurred by an innovative operation; and e. a better coordination and communication between the Bank and the Borrower at all stages of the project preparation and implementation would have resulted in a better outcome.
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