IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H3650 IDA-H7520 TF-16319) ON A GRANT IN THE AMOUNT OF XDR 73.6 MILLION

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank Report No: ICR IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H3650 IDA-H7520 TF-16319) ON A GRANT IN THE AMOUNT OF XDR 73.6 MILLION (US$ MILLION EQUIVALENT) TO THE DEMOCRATIC REPUBLIC OF CONGO FOR A DRC GOVERNANCE CAPACITY ENHANCEMENT PROJECT Governance Global Practice Africa Region September 30, 2016

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 27, 2016) Currency Unit = CDF XDR 1.00 = US$1.39 US$1.00 = XDR FISCAL YEAR January 01 December 31 ABBREVIATIONS AND ACRONYMS AfDB ARMP CAS COREF CPD DFID DGCMP DRC ERR EU GCEP GDP HIPC HR HRM ICR IFI IFMIS ISR IT M&E MEF MIDS MOB MTR PAD PCU PDO PEFA PER PFM African Development Bank Procurement Regulatory Body (Authorité de Regulation des Marchés Publics) Country Assistance Strategy Committee for Public Finance Reform (Comité d Orientation de la Réforme des Finances Publliques) Decentralization Unit (Cellule pour la Decentralisation) U.K. Department for International Development Procurement Control Body (Direction Generale de Controle des Marchés Publics) Democratic Republic of Congo Economic Rate of Return European Union Governance Capacity Enhancement Project Gross Domestic Product Heavily Indebted Poor Countries Human Resources Human Resources Management Implementation Completion and Results Report International Financial Institution Integrated Financial Management Information System Implementation Status and Results Report Information Technology Monitoring and Evaluation Ministry of Finance Ministry of Interior, Security, and Decentralization Ministry of Budget Midterm Review Project Appraisal Document Project Coordination Unit Project Development Objective Public Expenditure and Financial Accountability Public Expenditure Review Public Financial Management

3 PFMA PI PIU PSM PTS Public Financial Management and Accountability Performance Indicator (PEFA Indicator) Project Implementation Unit Public Sector Management Transitory Pay System Senior Global Practice Director: Deborah Wetzel Practice Manager: Renaud Seligmann Project Team Leader: Jean Mabi Mulumba ICR Team Leader: Fabienne Mroczka

4 DEMOCRATIC REPUBLIC OF CONGO Governance Capacity Enhancement Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Project Costs and Financing Annex 2. Achievements by Objective and Outputs by Component Annex 3. Economic and Financial Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 5. Beneficiary Survey Results Annex 6. Stakeholder Workshop Report and Results Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Annex 9. List of Supporting Documents MAP... 51

5 A. Basic Information Country: Congo, Democratic Republic of Project Name: DRC Enhancing Governance Capacity Project ID: P L/C/TF Number(s): IDA-H3650,IDA- H7520,TF ICR Date: 08/02/2016 ICR Type: Core ICR Lending Instrument: SIL Borrower: Original Total Commitment: Revised Amount: Environmental Category: C MINISTRY OF FINANCE US$50.00 million Disbursed Amount: US$ million US$ million Implementing Agencies: Ministry of Interior Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 05/30/2007 Effectiveness: 08/23/ /23/2008 Appraisal: 01/07/2008 Restructuring(s): 10/01/2010 Approval: 04/22/2008 Mid-term Review: 01/05/ /05/2015 Closing: 02/28/ /28/2016 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Satisfactory Substantial Satisfactory Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Moderately Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Performance: Satisfactory Overall Borrower Performance: Moderately Satisfactory i

6 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Project at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before Closing/Inactive status: Yes Yes Moderately Satisfactory Quality at Entry (QEA): Quality of Supervision (QSA): None None Rating D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central Government (Central Agencies) Sub National Government Theme Code (as % of total Bank financing) Administrative and civil service reform Decentralization Other accountability/anti-corruption Public expenditure, financial management and procurement E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Ahmadou Moustapha Ndiaye Marie Francoise Marie-Nelly Practice Manager/Manager: Renaud Seligmann Anand Rajaram Project Team Leader: Jean Mabi Mulumba Antonius Verheijen ICR Team Leader: ICR Primary Author: Fabienne Mroczka Fabienne Mroczka F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) To enhance transparency and efficiency in central and sub-national public finance and human resource management. To establish and consolidate an equitable resource sharing mechanism between central and sub-national government. ii

7 Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value at Completion or Target Years Indicator 1 : At least 35% of domestic revenue transferred regularly to sub-national government Value (Quantitative or Between 8 10% 30% 35% 46% Qualitative) Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Indicator 2 : Value (Quantitative or Qualitative). Note that the actual value calculated includes the amounts transferred directly to the provinces, as well as the salary payments transferred to provincial civil servants and the provincial capital investments. Integrated budget execution reports are published on the Ministry of Budget and Ministry of Finance websites on a regular basis, at central and provincial levels Budget execution reports are produced, but are of low quality and are not made publicly available Budget execution reports are published on a monthly basis on the Ministry of Budget and Finance websites Budget execution reports are Budget execution published on a reports are monthly basis regularly published on the on the Ministry of Ministry of Budget and Finance Budget and websites at central Finance and provincial websites at levels central and provincial levels Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Indicator 3 : Regular payment of at least 60% of provincial level civil servant salaries Value Salary payments are (Quantitative or regularly delayed and 60% 60% 100% Qualitative) many staff are not paid Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) iii

8 (b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value at Completion or Target Years Indicator 1 : Percentage of expenditures handled outside the "chaine de la depense" is lower than 10% Value (Quantitative 20% 10% 10% 7% or Qualitative) Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Indicator 2 : Annual increase in tax revenues at central level Value (Quantitative or Qualitative) Revenue Revenue collection Tax collection is at CFAF collection increases by billion (2006) increases by 10% 10% over over previous year previous year Date achieved 01/31/ /30/ /01/ /31/2015 Comments Partially achieved. Tax collection has increased from year to year, but the (including % increase in the last few years has been lower than 10%. achievement) The difference between budgeted and executed expenditures decreases to less Indicator 3 : than 10% of total expenditures at the central level Value (Quantitative or Qualitative) Discrepancy between projected and real expenditures is 21% in % 5% 5% 41% Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Not achieved Indicator 4 : 70% of civil servants at central level paid via a reformed and computerized payroll system Payroll system Value implemented and includes (Quantitative a portion of central level or Qualitative) civil servants 70% 90% 97% Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Indicator 5 : The differences between budgeted and executed expenditures reduced in pilot provinces iv

9 Value (Quantitative or Qualitative) Budget execution data are erratic and not published v 5% 10% 63% Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Not achieved Indicator 6 : Annual increase in provincial tax revenues Value Tax revenues in the 3 (Quantitative pilot provinces for 2007 or Qualitative) 10% 10% 39% Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Indicator 7 : At least 60% of provincial personnel in pilot provinces paid via reformed and computerized payroll system Value (Quantitative or Qualitative) No public service and payroll management system exist at the provincial level 60% 60% 97% Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) Procurement code is effectively applied throughout the territory of DRC and Indicator 8 : competitive bidding is applied in at least 80% of all procurement processes with a value exceeding US$200,000 No procurement code in Value (Quantitative place. Procurement code is promulgated in April 80% 80% 80% or Qualitative) 2010 and is in force since October 2010 Date achieved 01/31/ /30/ /01/ /31/2015 Comments (including % achievement) G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 06/30/2008 Satisfactory Satisfactory /27/2008 Satisfactory Satisfactory /14/2009 Satisfactory Moderately Satisfactory /25/2009 Moderately Satisfactory Moderately Satisfactory /21/2009 Moderately Satisfactory Moderately Satisfactory 7.27

10 6 06/22/2010 Satisfactory Moderately Satisfactory /02/2011 Satisfactory Satisfactory /31/2011 Satisfactory Satisfactory /06/2012 Moderately Satisfactory Moderately Unsatisfactory /14/2012 Satisfactory Satisfactory /04/2013 Moderately Satisfactory Moderately Satisfactory /14/2014 Moderately Satisfactory Satisfactory /29/2015 Moderately Satisfactory Satisfactory /15/2016 Moderately Satisfactory Moderately Satisfactory H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring DO Amount Disbursed at Restructuring in USD millions 10/01/2010 N S MS I. Disbursement Profile IP Reason for Restructuring & Key Changes Made Add new activities to Component 1 related to procurement reform and increase the scope of the project in Component 2 to implement some activities in other provinces vi

11 1. Project Context, Development Objectives and Design 1.1 Country Context Country Context 1. At appraisal in 2007, the Democratic Republic of Congo (DRC) remained one of the poorest countries in the world with a per capita gross domestic product (GDP) of US$130 (2006), despite having access to vast reserves of natural resources, including oil, copper, coltan, gold, and diamonds. The dire economic situation of the country was a result of decades of mismanagement under authoritarian rule and several years of armed conflicts. 2. Since the early 1990s, macroeconomic indicators steadily deteriorated in the DRC, which was further exacerbated by four major conflicts between 1996 and 2011, which took an estimated 5 million lives. Following the conclusion of a peace agreement in 2001, and with the support of the international community, the Government launched the implementation of economic, financial, and structural adjustment policies aimed at stabilizing the macroeconomic situation and the creation of a climate conducive to private sector-led development. As a result, real GDP growth became positive in 2002, after 13 years of decline. 3. The year 2006 marked the successful completion of the presidential and parliamentary elections in the DRC. The success of the elections and the subsequent establishment of a coalition government, with strong commitment toward enhancing the quality of governance, raised hopes for a successful transition to a multiparty democratic rule. However, clashes between armed supporters of the runner-up in the presidential elections and the army in March 2007 and continued security problems in the eastern provinces of the country showed that the democratic process remained fragile. Nevertheless, the chances of the development of a stable governance system, based on democratic principles, remained the best the country had experienced since its independence in Sector Context 4. The successful completion of the presidential and parliamentary elections in 2006 provided a unique opportunity of addressing deep-seated governance problems. Governance in the DRC lagged behind almost all other Sub-Saharan African states. Inadequacies exist in virtually all aspects of governance, including institutions, governance outcomes, and the business investment climate. 5. The DRC has a long history of centralization and mismanagement of resources, which greatly weakened public institutions at the central and decentralized level. Though with different justifications and characteristics, the central government dominated the execution of power during both the colonial and the second republic, thus inhibiting the development of functional public institutions at the decentralized level. Even at the central level, public institutions have been shattered by decades of neglect, mismanagement, corruption and war. Most of the infrastructure has been destroyed and public institutions had all but disappeared. 1

12 6. Recruitment for the civil service did not follow any transparent procedures but was often based on kinship or political affiliation. Hence, rather than serving the population, the civil service frequently served the power that sustained it. 7. The key governance challenges in the DRC are summarized in the Contrat sur la Gouvernance or Governance Compact, which is part of the Government program. The Governance Compact sets out seven main priorities, divided into three sector governance priorities (reform of state-owned enterprises, mining sector reform, and security sector reform), and four crosscutting or horizontal priorities (enhancing transparency, decentralization, public financial management [PFM] reform, and public sector management [PSM] reform). A Common Assistance Framework has been agreed between the Government and the donor community to address these and other strategic priorities in the Government program. The Common Assistance Framework constitutes the framework for the World Bank Country Assistance Strategy (CAS) approved in December 2007 and remains relevant for the new FY13 16 CAS approved in May Among the four crosscutting areas outlined above, the decentralization process has been the Government s main priority in its first year. In addition, the Governance Compact outlines a large reform agenda in the areas of PFM and PSM. 8. With regard to the decentralization process, the 2006 Constitution stipulates a significantly increased level of provincial autonomy, both in political and fiscal terms. Specifically, the constitution foresees that 40 percent of domestic revenues should be retained by the provinces and that significant government functions (primary and secondary education, primary health care, and agriculture) should be transferred to this level. In reality, however, at the time of appraisal, transfers in the first semester of 2007 amounted to less than 6 percent of domestic revenue, which led to strong discontent among elected local leaders and posed a risk to political stability. At the same time, there is a recognition that the capacity of provincial governments to effectively absorb a significant increase in resources and responsibilities and translate this into improved service delivery remained in doubt. Rationale for World Bank Involvement 9. The World Bank s engagement was motivated by the fact that improving the quality of governance was seen as crucial to ensuring the conditions for sustainable economic growth and poverty alleviation, as well as assisting in maintaining political stability; the World Bank s comparative advantage of leveraging of prior support in the DRC in this sector, as the World Bank was at the center of the dialogue in governance since the start of the peace process in 2003 and was viewed as one of the lead partners by the Government; and analytical work underpinning the project s relevance through studies carried out by the World Bank and other donors (such as the Policy Notes on decentralization, the Public Sector Wage Reform, and the Public Expenditure Review [PER] published in 2008). 2

13 1.2 Original Project Development Objectives (PDO) and Key Indicators 10. The original PDO is (a) to enhance transparency and efficiency in central and subnational public finance and human resource management and (b) to establish and consolidate an equitable resource sharing mechanism between central and subnational government. The PDO outcome indicators are the following: 1. Evidence of domestic revenue transferred regularly to subnational government 2. Evidence that Integrated Budget Execution Reports are published on the Ministry of Budget and Ministry of Finance websites on a regular basis, at both central and provincial levels 3. Evidence or regular payment of provincial level civil servant salaries in target provinces 4. Evidence of increase in citizens satisfaction with public services in the pilot provinces 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 11. Despite a project restructuring in 2010 and an additional financing in 2013, no revisions were made to the original PDO. The Results Framework was adapted during the restructuring process by introducing two new intermediate results indicators to measure the outcome of the new procurement activities and the replication of key elements of PFM and PSM systems to provinces other than the three pilot provinces. The Results Framework was also revised with the additional financing by introducing changes to end targets to reflect the outcome of the scaled-up activities. 1.4 Main Beneficiaries 12. The primary direct beneficiaries of the project were various agencies within the Ministry of Interior, Security, and Decentralization (MIDS); the decentralization unit (Cellule pour la Decentralisation, CPD), the lead ministry for the decentralization project responsible for the implementation of the overall project; the Ministry of Budget (MOB) and the Ministry of Finance (MEF), the lead ministries for the PFM reform; the Ministry of Public Service, the lead ministry for the PSM reform; the Ministry of Planning; the governorates of the pilot provinces; and the Public Administration Reform Technical Committee (Comite Technique pour la Reforme de l Administration Publique). More broadly, the project had a positive impact on the entire public as the decentralization process sought to bring the Government closer to the citizens and increase the opportunity for citizens to directly influence decisions that pertain to key issues of social service delivery. In addition, the implementation of wage system reforms aims to address the existing lack of equity and income predictability in the public sector and will have a positive impact on civil servants at the central and provincial levels. 1.5 Original Components (as approved) 13. To reflect that the project focuses on medium- and longer-term institution building, the project was designed around two main components, with a third component to strengthen 3

14 governance reform implementation capacity, project implementation, and monitoring and evaluation (M&E): (a) strengthening PFM and PSM at central government level, including establishing a functioning system of intergovernmental fiscal relations and (b) building public sector and financial management systems at provincial level (see annex 1 for details of approved subcomponents and activities). Component 1: Strengthening PFM and PSM at Central Government Level (US$21.28 million) 14. Considering the priorities expressed in the Government program as well as issues identified in the Policy Notes on Decentralization and Public Sector Wages and in the PER, this component focused on (a) supporting the MIDS in designing and implementing the decentralization process; (b) supporting the Ministries of Budget and Public Service in implementing Public Sector Wage Reforms, including the design of an integrated personnel and payroll management system; and (c) supporting the Ministries of Budget and Finance in strengthening the budget process. Component 2: Building PFM and PSM Systems at Provincial Level (US$20.72 million) 15. As building effective and transparent PFM and PSM capacity at the provincial level was recognized as one of the most urgent elements of the governance agenda in the DRC, this component focused on (a) developing budget management systems and capacity at the provincial level, (b) developing personnel and payroll management systems, (c) building regional development project management capacity to enable provincial officials to formulate economic development opportunities and supporting investments, (d) building capacity to design and monitor performance indicators, (e) implementing a small capacity development facility which will finance specific capacity development and demand-side activities, and (f) peer learning at provincial level. Originally, three representative pilot provinces (Bandundu, Katanga, and Sud- Kivu) were selected by the Government to be covered by the project. Component 3: Governance Reform Implementation Capacity (US$7.98 million) 16. This component financed the implementation and monitoring of the project as well as the broader M&E effort related to the implementation of the Governance Compact. 1.6 Revised Components 17. A restructuring process was completed in October 2010 at the request of the Government to (a) increase the scope of the project to allow for replication of critical elements of PFM and PSM systems to provinces other than the pilot provinces and (b) expand the scope of project activities in the area of PFM and add engagement on procurement reform. 18. An additional financing approved in April 2013 to (a) support the broadening of approach on PFM, specifically support the financing of the Government s PFM Strategic Action Plan including scaling up provincial support and strengthening PFM and PSM reforms at central government level, specifically acceleration of procurement reforms and the expansion of activities related to public service reforms such as staff identification processes in the MEF, MOB, and the Ministry of Public Service and (b) expand the scope of project activities to one additional province (Kasai Occidental). 4

15 1.7 Other Significant Changes 19. The institutional arrangements for the execution of additional financing took into account the need for reinforcing the fiduciary management capacities of the ministry in charge of decentralization so that the risks of delaying decisions and execution of project activities were reduced. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at Entry 20. The project was designed to assist the Government in building or strengthening critical elements of PFM and PSM systems at the central and decentralized level, thus enabling it to build a strong base for further PFM and PSM reforms. The project used the decentralization process as an entry point to governance reform, as well as a prism through which to approach central (policy and design) and provincial (implementation and capacity) level efforts to strengthen the governance system reforms. With regard to its approach, the project focused on medium- and longer-term institution-building measures to build a strong base. 21. The project was designed around three principal interventions. They were establishing an equitable resource-sharing mechanism between the central and subnational governments, strengthening PFM and PSM systems at the central level, and strengthening PFM and PSM systems at the subnational level, particularly in the pilot provinces. Thus, the project worked with several agencies and provided seed funding for a broad set of activities related to the PFM, PSM, and decentralization reforms. While this could present coordination challenges, it also afforded better coordination among the various reforms. 22. Components and activities under the project are extensively detailed in the Project Appraisal Document (PAD), showing effective sequencing of activities, while keeping some flexibility for adjustments. Because of identified capacity constraints, emphasis has been placed on sequencing activities, as well as on building in learning and evaluation opportunities. In its first phase, the project focused on supporting the design of essential legislation (decentralization, PSM, and PFM reforms) and the enhancement of existing PFM and human resource management (HRM) systems, including training and capacity building, at central level. At the provincial level, initial support focused on capacity development and the design of interim arrangements for financial and public service management. Information technology (IT) systems components were launched once new legal frameworks and business processes were designed. 23. The design of components and activities were driven by prior analytical work (Policy Notes on decentralization, the Public Sector Wage Reform, and the PER published in 2008), discussions with government officials and other financing partners, similar experiences in other African countries, and to complement the work of other financing partners. The US$50 million (and the subsequent additional financing) is an important contribution to the overall governance program of the development partners in DRC, as presented in table 1 below. 5

16 Table 1: Main areas of donor assistance in the governance and decentralization sectors Donors Belgium French Cooperation South Africa UNDP/DFID European Commission USAID AfDB Areas of Governance Reform Decentralization and Local Governance (local level in selected provinces) Support to Capacity Building Focus on Kasai-occidental PFM, Payroll System Support to Capacity Building Support to Administration and Finance Sections Public Administration and Civil Service Reform (Census of Civil Service) Building the provincial taxation system (technical and institutional support for revenue collection) Setting up the chain of revenues Implementation of an automated chain of expenditures (procedures, circuit and software) Support to the rationalization of the provincial payroll Revision of the legal framework for PFM Capacity building for PFM and HRM at provincial level Support to the planning and budgeting process (MTEF) Focus on Kasai- Occidental, Nord Kivu and Equateur Technical and institutional support to the provincial structures for revenue collection Setting up the chain of revenues Setting up of an automated chain of expenditures (procedures, circuit and software) Rationalization of the provincial payroll Revision of the legal framework for PFM Capacity building for PFM and HRM at provincial level Support to the planning and budgeting process (MTEF) Focus on Nord Kivu and Kinshasa Capacity building of ECOFIN members at provincial level Focus on Maniema, Bandundu and Katanga Building the provincial taxation system (technical and institutional support for revenue collection) Setting up the chain of revenues Implementation of an automated chain of expenditures (procedures, circuit and software) Rationalization of the provincial payroll Revision of legal framework for PFM Capacity building for PFM and HRM at provincial level Support to the planning and budgeting process (METF) Support to procurement law implementation at provincial level Focus on Bas-Congo, Province Orientale, Maniema 24. Under the preparatory activities for the project, training programs in leadership and rapid results methodologies were conducted. These initiatives initially helped identify a group of change agents at both provincial and central government levels. The project then relied on this network of change agents to ensure that technical advice and training provided under the project were effectively translated into behavioral change. Experience in other African countries, including Burundi and Kenya, had shown the viability of this approach in driving and consolidating the implementation of key aspects of governance reform. Training and networking of this group of change agents continued to be facilitated under the project, both under the peer learning network subcomponent and under the various training initiatives. 6

17 25. While the PAD provides a comprehensive discussion of risk and mitigation measures, it appears to have understated the political and capacity risks related to the acquisition and implementation of the integrated information system. Delays experienced in the acquisition and implementation of the integrated information system resulted in this activity not being fully implemented. 26. A number of risks rated high were appropriately mitigated. For example, the risk that there would be a lack of leadership and coordination within the Government was rated high, yet coordination among the key ministries was strong due to the efforts made by the project at the beginning to build consensus around the reform program. Similarly, the risk that funds at the decentralized level may not be used in an efficient and economical way and exclusively for intended purposes was rated high; yet this risk was appropriately mitigated due to the timely intervention of the World Bank team. This resulted in no issues with procurement or use of funds at the decentralized level. 27. Risk rating related to capacity risks and implementation delays were identified at the outset but given that the project was one of the first World Bank projects to be fully implemented through an existing government structure rather than by a specially created Project Implementation Unit (PIU), the risk of capacity constraints, which was originally rated moderate, was more significant and materialized, creating initial delays in the implementation of the project. It is important to clarify that while the project was not implemented by a specially created PIU, it was coordinated by a Project Coordination Unit (PCU), located within the CPD (MIDS). 2.2 Implementation 28. The overall project implementation arrangements were Satisfactory. Overall, the project s implementation strategy remained relevant and adequately responded to the Government s priorities and the limited capacity of the central and subnational government. The project effectively used the decentralization process as an entry point to governance reform, as well as a prism through which to approach central (policy and design) and provincial (implementation and capacity) level efforts to strengthen the governance system. The implementation strategy included assisting the Government in the preparation of the regulatory framework, establishment of entities to carry out the new framework, including refurbishing of buildings to house them and equipment (for example, the Procurement Control Body [Direction Generale de Controle des Marchés Publics, DGCMP], Procurement Regulatory Body [Authorité de Regulation des Marchés Publics, ARMP] and ministerial procurement units for procurement, Committee for Public Finance Reform [Comité d Orientation de la Réforme des Finances Publliques, COREF] for public finance reforms, tax collection agencies in the subnational government, and procurement units in the subnational government). The newly created units benefited from training (for example, 1,048 people received training in procurement), and technical assistance for 12 to 24 months. The establishment of those units was successful, as those units now continue to carry out their mandate satisfactorily. 29. Overall, the PCU played an effective role in coordinating the assistance provided by the project, helped in each of the four pilot provinces by the small coordination units, which helped coordinate the assistance provided by the project effectively at the subnational level. Throughout the project, the team also responded to the volatile context and new priorities by realigning project 7

18 activities, when needed, to ensure the achievement of the PDO. The project had anticipated the split of the 11 provinces into 26, which was to happen in February 2010, by putting aside some funds to finance certain activities to allow the new provinces to become operational. However, the split did not happen until 2015 because of a shift in the political direction, toward the end of the project, with local governments being installed by the end of This did not allow the project to execute its planned strategy for newly created provinces. However, the Public Financial Management and Accountability (PFMA) Project financed by the World Bank, U.K. Department for International Development (DFID) and the Belgian Cooperation is taking over the activities financed by the Governance Capacity Enhancement Project (GCEP). 30. The project, originally planned for 4.5 years, was extended once for a total of 7.5 years. The project was approved by the Board on April 22, 2008 and it became effective on August 23, 2008 with the original closing date of February 28, The project was extended with the additional financing, which was approved by the Board on May 9, 2013 and became effective on September 6, 2013, with an extended closing date of February 28, Figure 1. Yearly Disbursements of the GCEP (source: DRC Government, MIDS) 31. The project was slow to move forward in its first year of implementation (as demonstrated in figure 1), mainly due to (a) political volatility including a change of Government and a government reshuffle at the central level, which included several changes of supervising ministers; (b) the fact that the project was one of the first World Bank projects to be fully implemented through an existing government structure rather than by a specially created PIU; and (c) the fact that this was the first World Bank project to directly support an elected subnational government, which created a learning curve for the subnational authorities. The pace of disbursement picked up in 2010, slowed down in 2012 and 2013 while the additional financing was being approved, and picked up again after the approval of the additional financing. Hence, after an initial period of being rated Moderately Unsatisfactory on implementation progress in April 2012 due to the existing political environment, the project delivered satisfactory results on both development objectives and implementation progress, as shown in the latest Implementation Status and Results Report (ISR). 32. Despite its successful implementation, the project suffered from political instability, which underscored the challenging implementation environment. From preparation to the closing of the project, the project has had to work with three different prime ministers (the president of the Steering Committee), six ministers at the MIDS responsible for the 8

19 decentralization process, six ministers at the Ministry of Public Service, four ministers at the MEF, and five ministers at the MOB. At the provincial level, the project has had to work with three governors in the provinces of Bandundu, Kasai Occidental, and Sud-Kivu and two governors in the province of Katanga. 33. The project suffered from several delays, which had an impact on its implementation: (a) irregular meeting of the Council of Ministers resulting in a long delay for the approval of the Grant Agreement and therefore, occasioning delays in the effectiveness of the project; (b) long delay in the approval of new regulations in parliament necessary for the implementation of the reform program; and (c) delays in the approval of the additional financing. 34. A Government reshuffle and the reorganization of the PFM and PSM reform teams in 2010 contributed to a renewed political engagement on government-related reforms and a renewed interest in furthering the initial progress made by the project at the national and provincial levels. Initially the project had a significant impact on the improvement of PFM and PSM at the national and provincial level. The implementation of the project helped create a platform for development partner support to administrative and fiscal decentralization. 35. Another issue that was identified during the first annual review was the need to decentralize more responsibility to the provincial units, which was subsequently done by creating the provincial procurement specialists, paving the way for moving responsibility for procurement to the subnational level. 36. While most of the activities were completed at project closure, the acquisition and implementation of the integrated financial management information system (IFMIS) and the human resources (HR) system was not completed by the end of the project 1, mainly because of delays in the procurement process and the lack of coordination within the administration which may indicate a lack of commitment. The HR system, which integrates payroll and personnel information, was installed, but could not be tested before the end of the project, and the IFMIS system was not acquired. Those activities will be taken over by other governance projects in the DRC (PFMA project for PFM activities and the Public Service Reform and Rejuvenation Project for PSM activities). The PFMA project is currently preparing an additional financing to allow for the inclusion of these activities under the project; the concept review meeting should happen in late August. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 37. While the PDO was clear and measurable, it was complex (with nine identifiable objectives). The activities and outputs of each component and subcomponent had a clear link with the objectives. 1 While the integrated HR system was not completely implemented by the end of the project, a reformed and computerized payroll system was implemented and fully operational. In fact 97 per cent of civil servants are currently paid through the reformed computerized payroll system financed by the project. 9

20 38. The relevance of the indicators chosen by the team was suitable to capture the achievements of the project and allow attainment of the PDO. Since the beginning of the project, a change in behavior, in favor of more transparency in the DRC, correlates to the publication of budget monitoring reports (from 2014) and with the changes in the management of public procurement, with at least 60 percent (in 2012) of procurement processes going through competitive procedures. In addition, increased tax revenue and the decrease in percentages of expenditures handled outside normal procedures were good proxies for measuring the increase in efficiency of PFM both at the central and decentralized level. Similarly, the increase in the regular payment of civil servant salaries is a good proxy for measuring the efficiency gain in HRM. 39. The team could have been more thorough in updating the Results Framework to facilitate monitoring of results. Not every aspect of the PDO was measured in the Results Framework. For example, no direct outcome indicators were available for measuring transparency in HRM at the central and subnational level. An indicator was originally set for measuring citizens satisfaction with public services in the pilot provinces, but it was later dropped because of the unavailability of baseline data without a formal process. Finally, there were several discrepancies in the different Results Frameworks, for example, the Results Framework in the additional financing still mentions a target of 60 percent of provincial-level civil servants salaries paid regularly in the pilot province, while the ISR mentions a 95 percent target (although this probably happened because the target was reached in 2012, which would seem to imply that the target should have been adjusted for the additional financing). Another example is the percentage of expenditures executed outside normal procedures at the central level, whose target in the Results Framework in the additional financing paper is 5 percent, but is shown as 10 percent in the ISR. 40. However, given the weak capacity context, the PCU implemented an effective system for M&E of project activities and results. Serious investments were made to build an M&E system, even if not perfect, across different levels of the Government, resulting in evaluation reports of acceptable quality, related to the M&E systems being published quarterly. All indicators were updated on a regular basis, except indicators related to the implementation of the integrated system. The evaluation reports were validated by the beneficiaries to enhance their ownership and ensure accuracy of data. 41. In the last ISR, the achievement toward the PDO was rated Moderately Satisfactory because of the delays observed in the implementation of the integrated PFM and PSM information systems. 2.4 Safeguard and Fiduciary Compliance 42. The project did not trigger safeguard policies and there were no exceptions to World Bank policies. It was categorized as C for both. 43. The financial management and procurement activities were conducted in line with the provisions in the legal agreement and were considered satisfactory. The project was well managed with no overdue audit report and financial information and reports of acceptable quality were produced on time. Reports were delivered on time, with the last audit report for December 31, 2014 having a clean opinion. Significant progress was made by the project team to address inadequacies related to the procurement management system at the beginning of the project. More 10

21 procurement responsibility was transferred to the provincial level to respond to issues identified in the early stages of project implementation. As of the end of the project, the contract management system was well functioning, with contract deadlines being broadly met. The only remaining problem was related to the delays experienced in the procurement and delivery of the integrated PFM and PSM systems. 2.5 Post-completion Operation/Next Phase 44. Many activities, including the remaining activities in the implementation of the integrated PFM and PSM systems, continue to be financed under the existing governance projects. In addition, as the project was effective in building a platform for support of reforms at the decentralized level, partners continue to finance support activities in financial management of public resources at the provincial level. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation 45. Relevance of the PDO. The relevance of project objectives is rated High at design and remained so throughout implementation. As mentioned in previous sections, when the project was designed and even now, with the newly installed provinces, the Government s priorities remain centered on the decentralization processes, with an increased level of provincial autonomy, in both political and fiscal terms, as well as the need to address deep-seated governance problems in public finance and HR administration. Therefore, the PDO, as stated in the PAD, was and remains relevant to the context and challenges in the DRC. The PDO was seen as responsive to the country s circumstances and development priorities at that time. A majority of the indicators was realistic and reachable, focusing on the outcomes for which the project could reasonably be held accountable given its duration, resources, and approach. 46. Relevance of Design. Project design is rated Substantial for financing key priorities and systems of Government and providing assistance in much needed areas. The design of components and activities were not only designed to support key government priorities, but were also driven by prior analytical work performed by the World Bank or other financing partners. At project design, the project was the only World Bank project in governance and was, thus, used to engage in a large number of areas, at multiple levels (central and subnational), and with multiple implementing agencies. Component 1 focused on public finance and HRM at the central level and financed key activities such as the drafting of key legal instruments for the rollout of the new procurement policy and the new decentralization policy, the upgrade and rollout of the automated payroll system, and the upgrade and rollout of the chaine de la depense, which contributed to substantial improvements in the transparency and efficiency in PFM and PSM at the central level. Component 2 focused on similar activities at the subnational level, which contributed to substantial improvements in the transparency and efficiency in PFM and PSM at the subnational level. The strengths of the design include the fact that by supporting various reforms (decentralization, public finance, procurement, and HRM) the project was able to obtain an overall view of governance issues and ensure better coordination among all those reform plans. In addition, the fact that the project not only assisted in the creation of the environment with the drafting of key legal instruments, but also assisted in the implementation of those instruments with the setting up of 11

22 new institutions that were later fully integrated with the administration, ensured a sustainable way to implement reform and strength governance. Finally, the fact that the project received a large additional financing which enabled it to expand the scope of intervention and that other donors have started to also finance certain reforms, prove the relevance of design. 3.2 Achievement of Project Development Objectives 47. The PDO is clearly defined in the PAD and additional financing paper and activities under each component and subcomponent are closely linked to the achievement of each objective. The PDO can be broken down in to nine identifiable objectives: (a) To enhance transparency in public finance at the central level (b) To enhance transparency in human resource management at the central level; (c) To enhance transparency in public finance at the sub-national level (d) To enhance transparency in human resource management at the sub-national level; (e) To enhance efficiency in public finance at the central level (f) To enhance efficiency in human resource management at the central level; (g) To enhance efficiency in public finance at the sub-national level (h) To enhance efficiency in human resource management at the sub-national level; (i) To establish and consolidate an equitable resource sharing mechanism between central and subnational governments 48. Annex 2 on the assessment of achievements by objectives captures the Results Framework as in the PAD, while showing achieved outputs by components. The sources of information include information collected directly from the M&E unit and units directly responsible for the execution of the project during an Implementation Completion and Results Report (ICR) mission, as well as the borrower completion report, the 2008 (published) and 2012 (unpublished) Public Expenditure and Financial Accountability (PEFA) reports, and the 2015 PEFA self-evaluation undertaken by the Government Objective 1, to enhance transparency in central public finance, is rated Substantial, as the outcome indicator was fully achieved. By the end of the project in 2015, budget execution reports were published regularly on the MOB website, making the information available to the public and thus enhancing transparency of public finance at the central level. In addition, budget execution 2 The 2015 self-evaluation was undertaken by the Government under the PFM and accountability project, but was not directly sponsored by donors and therefore, did not undergo in-depth review usually associated with a PEFA exercise. 12

23 reports now present information that is more comprehensive, allowing for better analysis. At the close of the project in February 2016, the Government and the World Bank sponsored a series of meetings on governance and transparency in the DRC, which were very well received, and put transparency at the forefront of the Government agenda. According to the 2012 PEFA exercise (conducted by the World Bank and DFID, but not published) the rating for Performance Indicator 10 (PI-10), public access to key fiscal information, increased from a D in 2008 to a C in 2012, with notable efforts identified to provide key fiscal information to the public. A self-evaluation performed in 2015 by the Government of the DRC rated PI-10 a B, with the publication of more reports and information that is more comprehensive. Finally, in addition to transparency in budget information, there is greater transparency in procurement with procurement information published periodically on the Procurement Authority website, making it available to the public. 50. Objective 2, to enhance transparency in central human resource management, is rated Modest (the project is devoid of any transparency-related results indicator in HRM at the central level). Transparency in HRM at the central level has improved over the eight-year implementation period. Recruitment for civil service personnel now follows a more transparent process which includes an exam open to the public, whose results are published in the media. The last recruitment exam took place in September 2015 with 4,824 participants in Kinshasa and provinces. The project also supported the elaboration and adoption of standardized organization charts to help streamline the structures of the ministries and institutions, thus, forcing more transparency in the appointment of officials. Furthermore, the project also supported the computerization of the HR system, as well as the rollout of the transitory pay system (PTS) (payroll) reform. Along with the computerization of the payroll system, the use of electronic transfers for payroll resulted in more transparency and control over the list of civil servants receiving salaries. However, progress in this regard is partial and can only be deemed sustainable if the Government implements the law on the General Statute of Public Service (recently adopted by parliament) and if the integrated management software for payroll and HR is effectively implemented, activities which will now be financed under the Public Service Reform and Rejuvenation Project s additional financing. 51. Objective 3, to enhance transparency in subnational public finance, is rated Substantial, as the outcome indicator was fully achieved. By the end of the project in 2015, budget execution reports for each province were published regularly on the MOB website, making the information which was not available before the project, now available to the public and hence enhancing transparency of public finance at the subnational level. In addition, support to the assemblies in the four pilot provinces yielded better transparency (in Sud-Kivu for example, a television channel was created to make public the meetings of the assembly, including budget discussions). The participatory budget that was implemented in the province of Sud-Kivu, which will be implemented in other provinces, helped enhance citizen s participation in the budget process and increase transparency over the use of public resources. Due to the participatory budget, stakeholders including the provincial government, decentralized localities, civil society, and the private sector started participating in the preparation of the provincial budget since 2012 through a series of public meetings. 52. Objective 4, to enhance transparency in subnational human resource management, is rated Modest (the project is devoid of any transparency-related results indicator in HRM at the subnational level). The project contributed to providing the four pilot provinces with databases following the 2012 biometric census, which enabled the pilot provinces to have a list of civil 13

24 servants working in the provinces, thus increasing controls over ghost employees and improving transparency in HRM at the subnational level. However, to enhance the sustainability of this action, those databases need to be updated. In the absence of a law on the General Statute of Decentralized Public Service, recruitment criteria and promotion of local agents remain a contended issue. 53. In addition, as many civil servants at the subnational level are paid from the central level, the support provided to the computerization of the HR system, as well as the rollout of the PTS (payroll) reform at the central level and the use of electronic transfers for payroll, resulted in more control over the list of civil servants receiving salaries at the subnational level. 54. Objective 5, to enhance efficiency in central public finance, is rated Substantial, as the outcome indicators were mostly achieved. This objective was mostly measured by looking at the efficiency of spending, tax collection, and use of procurement procedures. With respect to spending efficiency, by the end of the project in 2015, with the 2010 manual on the chaine de la depense available online from the MEF, there was a better clarity of spending procedures that had to be applied. As can be seen in figure 2, the implementation of the chaine de la depense at the central level and the improvements made to the information system enabled an improvement in the expenditures that were handled outside normal procedures. The percentage of expenditures handled outside normal procedures steadily decreased from 26 percent in 2009 to reach 7 percent in Figure 2. Percentage of Expenditures Executed Outside Normal Procedures at the Central Level (source: DRC Government, MEF) 55. In addition, the 2012 PEFA exercise recognized the improvements made through the utilization of the chaine de la depense at the central level by changing the rating of PI-20, effectiveness of internal controls for non-salary expenditures, from a D in 2008 to a C in With respect to tax collection, tax collection at the central level showed a year-to-year increase from CDF 1,427,534 million in 2009 to CDF 3,894,202 million in 2015, with a large yearto-year increase from 2009 to 2012 and a leveling of the increase from 2012 to In addition, tax budgeting is becoming more accurate from 123 percent of realized taxes in 2009 to 106 percent in

25 Figure 3. Annual Increase in Tax Collection at the Central Level (source: DRC Government, MEF) 57. With respect to procurement efficiency, with the implementation of the new procurement regulation, the regulatory environment for procurement considerably improved since 2010 with the creation and operationalization of the DGCMP and ARMP. Procurement processes are now reviewed by the Procurement Directorate within the MOB and at the end of the project, procurement became more efficient with 80 percent of contracts over US$200,000 following a competitive process. In addition, the percentage of direct contracts diminished from 43 percent in 2013 to 20 percent in The 2012 PEFA exercise recognized improvements made in the procurement area by changing the rating of PI-19, competition value for money and controls in procurement, from a D in 2008 to a B in Objective 6, to enhance efficiency in central human resource management, is rated Substantial, as the outcome indicator was fully achieved. The percentage of civil servants paid through the reformed and computerized payroll system was very low (29 percent on average) during the first three years of project implementation. The acquisition of a large capacity server and the access to the unique base of census of Public Service in 2011 has allowed the Payroll Department (MOB) to accelerate the integration of new services in to the computerized system (an average of 20 services per quarter according to the PEFA 2012). Significant progress has also been made in efficiency of the control of staff and payroll, causing the 2012 PEFA score for PI-8 to improve from a D in 2008 to a C+ in The centralization of the payroll files combined with the development of computer applications and security devices helped clean up the payroll database and delete duplicates. In 2015, percent of the agents and civil servants were paid by the reformed computerized system. 59. With regard to the bonuses and allowances, percent types of bonuses and allowances have been set in the system according to the independent final evaluation report. The report makes no mention of the actual use of the system for the payment of these bonuses and allowances. Furthermore, an IFMIS for pay and personnel rolls was planned to be installed to improve HRM but this software was installed but could not be tested before the end of the project. The Public Service Reform and Rejuvenation Project funded by the World Bank is financing the operationalization of the software. In the absence of integration of the pay and personnel rolls, the payroll management by the MOB and the HRM by the Ministry of Civil Service remain disconnected; there is no evidence that patronage in the recruitment and promotion of civil servants has decreased. 15

26 60. Objective 7, to enhance efficiency in subnational public finance, is rated Substantial, even though some of the selected outcome indicators were only partially achieved. This objective was mostly measured by looking at the efficiency of spending and tax collection. For the central level, the efficiency of spending was measured by the difference between real and budgeted expenditures. However, the project mainly financed reforms related to the implementation and utilization of the chaine de la depense and substantial progress has been made in enhancing the efficiency of public finance at the subnational level because of project intervention, which is not being captured by the indicator mentioned above. Looking at the execution of transfer for operating expenditures at the subnational level (which are expenditures that are directly managed by the provinces), an overall improvement can be seen in the execution of expenditures from 82 percent of execution in 2011 to 90 percent in 2015 (there is no data available before 2011 for the provinces). The trend is even more pronounced in the four pilot provinces which went from 76 percent in 2011 to 90 percent in In addition, with the implementation of the chaine de la depense at the subnational level, where none existed before, efficiency of expenditures has increased at the subnational level. In addition, at the subnational level, efficiency of spending was strengthened by bringing the Government closer to the citizens through their involvement in participatory budgeting. This activity led to small projects that were financed by the subnational budget, such as the construction of latrines in a neighborhood in Sud-Kivu, which were much needed by the citizens. Due to the positive results demonstrated in Sud-Kivu, participatory budgeting will be implemented in other DRC provinces. Figure 4. Execution of Transfers for Operating Expenditures at the Subnational Level (source: DRC Government, MEF) 61. With respect to tax collection, tax collection at the subnational level increased, especially in the four pilot provinces, from 249 percent in 2010 (compared to 2009) as the project was establishing tax collection administrations in the provinces and continued to improve until 2015 (39 percent increase over the previous year). In the province of Sud-Kivu for example, tax collection increased from CFAF 4,027 million in 2010 to CFAF 5,821 million in Objective 8, to enhance efficiency in subnational human resource management, is rated Substantial, as the outcome indicators were fully achieved. The 2015 ISR reports that 100 percent of the civil servants in the pilot provinces are paid by the reformed and computerized system. However, it should be noted that the staff of the decentralized sectors are not yet transferred and continue to be paid by the central government with provincial resources. The 16

27 biometric census conducted in 2012, with the support of the project, has allowed the creation of a database, which needs to be kept updated. In addition, it appears from the meetings with the beneficiaries, that 100 percent of civil servants are paid; however, this percentage remains impossible to verify as the number of civil servants and agents at the subnational level is still unknown. Figure 5. Transfer of Resources from the Central to the Subnational Government (source: DRC Government, MEF) 63. Objective 9, to establish and consolidate an equitable resource sharing mechanism between central and subnational governments, is rated Substantial, as the outcome indicator was fully achieved. A key objective of the project, as stated in the PAD, was the establishment of a more equitable resource-sharing mechanism between the central and subnational governments. The project assisted in the establishment of the formula for resource sharing between the central and provincial governments which is still in use and has lessened tension between the central and provincial governments. In the 2012 PEFA exercise, the rating for PI-8, transparency of intergovernmental fiscal relations, recognized the improvements in the relations between the central and provincial governments by improving the rating of the indicator from a D in 2008 to a D+ in This increase in the rating was mostly due to better and more equitable allocation of resources between the central and provincial governments and better communication between the central and provincial governments. Transfer of resources to the provincial governments has undoubtedly increased since 2009 as can be seen in figure 5 3 above. 3.3 Efficiency Rating: Substantial 64. The return on investments under the project is Substantial, even under conservative assumptions. Table 1 summarizes the key results for the project. Under quite conservative assumptions, where GDP would grow at 10 percent and 11 percent in 2017 and 2018 (as is 3 Note that the actual value calculated includes the amounts transferred directly to the provinces, as well as the salary payments transferred to provincial civil servants and the provincial capital investments 17

28 currently forecasted), then at 7.4 percent until 2038, the economic rate of return (ERR) would be 91 percent. Table 2. ERR for the Project Project Components Cost (US$) ERR % 1. Strengthening PFM and PSM at Central Government Level 38,080, Building PFM and PSM Systems at Provincial Level 41,044, Governance Reform Implementation Capacity 29,892,771 Total 109,017, With respect to decentralization, the project contributed to the establishment of an equitable resource-sharing mechanism between the central and subnational governments. Since 2009, transfer of resources to provincial governments increased, to 49 percent of collected revenue in This transfer of resources enabled provinces to maximize necessary resources to fund their development and contributed to the improvement of public services delivered, thus having a positive impact on the population living condition. 66. With respect to Public Sector Wage Reform, the project contributed to the regular payment of civil servant salaries at the central and subnational levels (97 percent of agents and civil servants are receiving regular payments through the reformed and computerized system). The resultant spending made by civil servants would have a significant impact on reviving the economy and reducing poverty levels. 67. With respect to public finance reform, the project contributed to an increase in tax collection at the central and subnational levels, which resulted in the Government having more available resources and improving the availability and quality of public services. In addition, the project also contributed to better performing public institutions capable of employing finances and HR in a more effective, transparent, and accountable way. More efficient execution of budgetary transactions, reduced delays in payments, and improvement in procurement practices, will lead to reduction in the cost of goods and services to the Government. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 68. The overall outcome rating of Satisfactory is based on the individual ratings for relevance, efficacy, and efficiency as shown in table 2. Table 3. Calculation of the Overall Project Outcome Rating Relevance of: Efficacy: Objective Overall Efficiency Objectives Design Outcome High Substantial S M S M S S S S S Substantial S 69. The project had a significant impact in three important areas: decentralization, public wage reform, and public finance reform. Since the start of implementation in August 2008, the project had a significant impact on the improvement of PFM and PSM at the central and provincial level in a difficult and volatile environment. Furthermore, the implementation of the 18

29 project has helped create a platform for administrative and fiscal decentralization of public services and financial management of public resources, which are now being taken over and deepened by projects financed by the World Bank and/or other donors. The project contributed to the more equitable transfer of resources to the provincial level. While some shortcomings in efficacy surfaced during implementation, the evidence available indicates that they were minor, given the many achievements of the project and the very fragile context of the operation. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 70. The strategic importance of improved governance in providing reliable data to inform policies aimed at poverty reduction and social inclusion is well recognized. Through the establishment of a more equitable resource-sharing mechanism between the central and subnational governments, the project ensures that resources are shared among richer and poorer provinces. In addition, by strengthening participation of citizens in the budgeting process through participatory budgeting, the project allows the population not only to access information about public finances but also provides better access to basic services, such as sanitation services (with the construction of latrines, for example, in a neighborhood in Sud-Kivu). (b) Institutional Change/Strengthening 71. The governance project is essentially an institutional strengthening project. Today, the DRC benefits from better trained and highly capable staff, both at the central and subnational levels, thanks to the intervention of the governance project. Many newly created bodies, such as the DGCMP, ARMP, provincial governments, provincial assemblies, and CPD, became and continue to be operational owing to the assistance (training, equipment, and technical assistance) of the project. The project made effective use of technical assistance to strengthen key units and ministries. The governance project was instrumental in operationalizing the reform process in the DRC. (c) Other Unintended Outcomes and Impacts (positive or negative) 72. With the training and technical assistance provided by the project (for example 1,048 people were trained in procurement), many units in the Government of the DRC, particularly in the prime minister s cabinet, the MEF, MOB, MIDS, as well as in provinces are staffed with highly trained and skilled individuals. The project, therefore contributed to creating a more robust civil service. 73. The implementation of the new procurement regulation, supported by the project, contributed to helping the DRC to reach the completion point under the heavily indebted poor countries (HIPC) initiative assistance in 2010, resulting in the cancellation of its external debt of approximately US$10 billion. This allowed the DRC to allocate more resources to core sectors, such as health and education over the last few years. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable 19

30 4. Assessment of Risk to Development Outcome Rating: Significant 74. The overall risk to the development outcome is rated Significant. The project had significant results and was a major contributor to increased governance in the DRC. In particular, the project was a key contributor to the implementation of the Government s decentralization policy by providing the new provincial governments and administrations the necessary tools and training to function, increasing the transparency and efficiency of management of public finance and collection of taxes. The policy of decentralization in the DRC is likely to remain a Government priority, as it is reflected in the 2006 Constitution. However, one significant risk to the achieved development outcome is the split of the 11 initial provinces into 26 in late 2015, toward the end of the project life. The risk is that the capacity gains experienced in the 11 initial provinces will be greatly diminished or lost because of the split. This risk, however, is mitigated by the continued involvement of other donors in the provinces (DFID and African Development bank [AfDB]) and other World Bank-financed projects such as PFMA project and the Public Service Reform and Rejuvenation Project. These projects continue to finance activities to enable efficient operation of provinces (DFID and the World Bank cover 20 provinces and AfDB the remaining 6 provinces). Another significant risk is the ability to retain existing capacity at the subnational level in the absence of an implemented civil service reform, as with each new government there is an opportunity to start with all new staff. However, this risk is mitigated by the existence of established procedures and systems which remain and the continued support of the World Bank and other donors. 75. Another major achievement of the project is the improvements made in increasing transparency and efficiency in government procurement. With respect to this activity, the risk to the achieved development outcome is Moderate as agencies supported under the project have now been operational for a few years, while demonstrating visible results and are fully embedded in government procedures. 76. The project achieved the establishment of a more equitable formula for resource sharing between the central and provincial governments, which is still in use and has lessened tension between the central and provincial governments. For this reason, with respect to this activity, the risk to the achieved development outcome is Moderate. 77. The project made a significant impact in increasing the transparency and efficiency in PFM and contributed to the establishment of a group of highly trained and skilled staff in many government units in the DRC. While tools and procedures will remain in place, it is now the responsibility of the Government to retain those staff. 78. Finally, the improvement made in HRM can be at substantial risk if the Government does not live up to its commitment of linking payroll to the HR system. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance 20

31 (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 79. The project drew on extensive analytical work performed in the DRC PEFA/PER 2008, which sets out a comprehensive reform agenda on PFM reforms; the programmatic series of Policy Notes on Decentralization, jointly designed with the European Union (EU); the Public Sector Wage Reform (2008); the HIPC/Africa Action Plan (2004); Country Financial Accountability Assessment (2005); the Institutional and Governance Review (2005); the Country Procurement Issues Paper (2005) and sector related analytical work with governance aspects, notably the Governance Note produced as part of the preparation of the Education Sector Reform Project and the Mining Sector Study. 80. The project design drew on several lessons and good practices in similar projects in the DRC and World Bank-wide projects. The project, which was prepared in a postconflict environment, specifically supported the implementation of the Government s priorities in enhancing the quality of governance. It built flexibility into the project design to accommodate for changes in reform priorities over the medium term. It focused on supporting small steps in the right direction in governance reforms, which has been recognized to work better than grand designs. The project provided technical support, focusing on implementation practicalities, in particular at the provincial level, which became the linchpin between the central government and the community levels, based on the decentralized design of the DRC Constitution. Finally, the project took into consideration the need to coordinate with other donors, especially when faced with the extensive work program involved in increasing the capacity at the subnational level. 81. The project was the first project in the governance sector in the DRC and as such included various aspects of governance, working at the central and subnational levels, as well as various beneficiary entities. However, the project s governance structure was put in place to ensure effective coordinating of those various reforms. (b) Quality of Supervision Rating: Satisfactory 82. Between 2008 and 2015, the World Bank conducted 14 formal supervisory missions, documented in ISRs with formal supervision missions and corresponding Aide Memoires. These missions covered approximately six-month periods and included reviews of the technical aspects of the project, as well as the aspects relevant to procurement, financial management, and social and environmental safeguards, when applicable. The close supervision and day-to-day support by the field-based team allowed for effective implementation and disbursement. Bottlenecks and challenges were flagged and were addressed on time. 83. The first midterm review (MTR) took place in November 2010 after the restructuring of the project in October It highlighted the need for the additional financing, which was not approved until April The results of the 2010 MTR were, however, taken into account for the additional financing in 2013 with the inclusion of the fourth province to ensure coverage of all provinces by development partners and the scaling up of PFM activities. The second MTR took place in March It highlighted the deficiencies in procurement of the GCEP and enabled the 21

32 team to take corrective actions to speed up the procurement process of certain activities, including procurement activities related to the purchase of the integrated HR system. 84. During the course of the project, the World Bank team provided regular technical supervision and hands-on assistance focused on proactively identifying and resolving threats to the achievement of the PDO. These supervision missions were conducted with the support of various specialized technical experts and jointly with the Government. This created a real dynamic environment for the project, promoting the sharing and implementation of good practices and initiatives. The team went out of its way to work directly with clients and provide hands-on support in very difficult conditions and remote locations with challenges of access. 85. The Government counterparts consistently praised and greatly appreciated the commitment, support, and technical assistance provided by the World Bank team at all levels of the Government. In almost every single meeting, both at the central and at the subnational levels, the World Bank team was recognized for having provided high quality implementation support and troubleshooting a number of complex issues that had the potential to derail some activities. 86. The team could have been more thorough in updating the Results Framework to facilitate monitoring of results. Even though the team did a thorough job in regularly monitoring the Results Framework, not every aspect of the PDO was measured in the Results Framework and there are several discrepancies among the different Results Frameworks, which could have been addressed by the team during the restructuring of the additional financing. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 87. The overall Bank performance is rated Satisfactory based on the ratings for quality at entry and quality of supervision. The ICR author questioned whether the impact would have been greater had the project focused only on a few reforms. However, the consistent feedback received from counterparts was that the design of the project, although complex and covering multiple levels and actors, was well prepared and responded to the needs of each agency. In addition, the availability of permanent resources in-country, the regularity of the supervision missions, and the efforts made to increase dialogue at all levels of the Government are elements that contributed to reinforcing the partnership between the DRC s Government and the World Bank. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 88. A consistent finding from the evaluation was the high level of commitment from the Government to the objectives of the project, its components, and subcomponents. This can be measured by the fact that the performance of the beneficiary units increased and that most objectives were achieved. However, the Government s performance is rated Moderately Satisfactory because of the inability to complete the testing of the integrated HR system and the acquisition of the IFMIS, mainly due to a lack of commitment from the Government s side. This lack of commitment stemmed from a political issue (certain reforms are not understood the same 22

33 way by institutional players supposed to facilitate their preparation and implementation, thus impeding the participation of officials and members of political cabinets in evaluation committees) which resulted in substantial delays in procurement processes. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 89. One of the recognized positive elements was the performance of the coordinating unit, both at the central and subnational levels. At the central level, the coordinating unit collaborated effectively with beneficiary entities for the implementation of activities and performed its fiduciary role satisfactorily. In addition, the fact that the coordinating units were used by the governor as an advisor in the four pilot provinces underlies the effectiveness of its performance. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 90. Overall, the coordinating unit and the beneficiary agencies performed effectively in a very challenging environment that was marked by political instability. However, considering the noncompletion of the IFMIS system, the overall borrower performance is rated Moderately Satisfactory. 6. Lessons Learned 91. In a fragile context, to ensure ownership and relevance, a governance project needs to participate in the process of consensus building, as well as build strong relationships with all levels of Government. As the Government took power after the 2006 elections, its mandate was to build a more stable and transparent State, the project facilitated a consensus building process among Government officials on how to build such a stable and transparent State, by devoting some resources for workshops. This ensured that the project remained relevant and fully aligned to Government objectives. In addition, the World Bank team concentrated much effort on building strong relationships with all levels of government by maintaining a fluid communication with them, ensuring they understood the objectives of the project, how these objectives contributed to the goal of the new Government, and thus, allowing for the delivery of the activities under the project. 92. In a context of ever changing Government officials and priorities, a project needs to remain flexible and adaptable in order to remain relevant, as well as strong implementation arrangements. It is important to periodically perform in-depth reviews, such as MTRs (the World Bank Team performed two such reviews), as well as more regular supervision to make appropriate adjustments to project activities, and use appropriate avenues such as restructuring (the project was restructured once to allow for additional activities to be included in the project). Given the high turnover of Government officials, both at the central and provincial level, it is important to put in place strong implementation arrangements to keep the institutional memory (for example, in the provinces, the implementation units set up for the project, although may seem costly, were in fact essential as they became advisors for new elected officials ensuring continuity in project implementation). 93. Supporting delegation, devolution, or decentralization in a weak capacity context can provide greater accountability and better results in governance. In a context of weak human 23

34 and institutional capacity, the approach taken to strengthen central systems, while laying the foundation of the system at the decentralized level ensured sustained client capacity building and provided for better results at the decentralized level. For example, by giving the provinces more autonomy in the collection of taxes and at the same time strengthening the provincial tax collection agencies, local tax collection has seen an increase of 250 percent from 2009 to 2010 as the project put in place tax collection administrations in the four pilot provinces, and continued to increase year over year until the end of the project. In addition, with the assistance provided by the project on the utilization of the resources (with the implementation of the chaine de la depense and participatory budgeting), provinces became more accountable and were able to provide better services to the population. Thus, in the presence of significant disparity between the central and decentralized levels, even in cases of weak capacity, such an approach enables the pooling of available resources and ensures a minimum functioning of public services and greater accountability in the poorest localities. 94. Designing a project that is anchored on previous analytical work greatly facilitates implementation. Many of the activities planned at the outset of the project came from the extensive analytical work that was done before project preparation (PEFA/PER 2008, which sets out a comprehensive reform agenda on PFM reforms; the programmatic series of Policy Notes on Decentralization, jointly designed with the EU, United Nations Development Programme, and the Belgium Technical Cooperation; the Public Sector Wage Reform (2008); the HIPC/Africa Action Plan (2004); the Country Financial Accountability Assessment (2005); the Institutional and Governance Review (2005); the Country Procurement Issues Paper (2005); and sector-related analytical work with governance aspects, notably the Governance Note produced as part of the preparation of the Education Sector Reform Project and the Mining Sector Study). This provided a path to organize the reform dialogue with the Government responding to its specific needs in a coordinated manner. 95. Designing a project that fits and supports the country s reform agenda pays off in the medium term. Design might take longer than usual and additional efforts are needed to find consensus with the Government and other international financial institutions supporting the country, to align the project s content with the country s reform agenda. This is all the more relevant when the implementation periods on average are long and outlive different political administrations. This project did just that by assisting the Government to put in place the required regulatory framework following the reform agenda, then the establishment of entities to carry out the new framework (for example the DGCMP, ARMP, and ministerial procurement units for procurement, COREF for public finance reforms, tax collection agencies in subnational governments, and procurement units in subnational governments). These efforts contributed to greater ownership and stronger partnership between the country and the World Bank, as well as other international financial institutions. It also translated into a project whose PDO and components were not modified over time. Finally, it enhanced the ability of the team and the project to remain flexible/adaptable by responding to new Government priorities and financing new and urgent activities that may not have been planned at the outset. 96. Interinstitutional collaboration and civil society participation are key for the successful implementation of governance reform programs. Strengthening governance, at the central and decentralized levels, can only be achieved as a government effort, with the collaboration of all sectors and joint support from international financial institutions. In efforts to 24

35 strengthen governance at the decentralized level, strengthening the MIDS was crucial. However, in the case of the project, it did not end there, as the project promoted coordination with and strengthening of the MEF, MOB, Planning, and Public Service, and other agencies involved in the governance reform process such as COREF and the Public Administration Reform Technical Committee (Comite Technique pour la Reforme de l Administration Publique). The collaboration was an integral part of the successes and the progress reached during the life of the project. In addition, strong cooperation between development organizations such as the World Bank, DFID, AfDB, United Nations Development Programme, and the EU was also a factor of success, especially in the context where leadership and donor coordination by the Government was inadequate. The GCEP project illustrated how cooperation under a win-win framework emphasized the adding up of the comparative advantages of these entities, especially in a context of decentralization, where one donor may not be able to do everything. Finally, greater participation of the civil society in the governance reform program would lead to an even better result, particularly at the decentralized level. 97. Considering the behavioral element of reforms and implementing a national communication campaign to build awareness when new or transformational strategies are implemented is crucial to facilitate implementation. To ensure that new procedures, systems, or institutions are utilized, there is a need to ensure that the project takes into account the behavioral aspect of change, as well as build awareness of the new or transformational elements of the reform. An example could be to offer economic incentives for the utilization of new procedures, systems, or institutions created by new reforms or tie activities of the project to prior actions, or output of budget support, or an agreed upon economic framework. 98. Considering power elements when providing support to IT elements in subnational governments can ensure sustainable results. For example, the supply of electricity in many provinces is unpredictable, affecting the efficient use of computerized systems. One option is to consider the purchase of alternative energy sources (such as solar panels) when making investments in computerized systems in subnational governments. In fact, given the early experience in the provinces, the GCEP project applied this lesson in its intervention in the Kassai province by exploiting solar energy for the implementation of the chaine de la depense. Similarly, when making investments in computerized systems, it is important to consider maintenance of those systems for sustainability purposes. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies Not applicable (b) Cofinanciers Not applicable(c) Other partners and stakeholders Not applicable 25

36 Total Annex 1. Project Costs and Financing (a) Project Cost by Component (in US$, millions equivalent) Components Component 1: Strengthening PFM and PSM at Central Government Level Component 2: Building PFM and PSM Systems at Provincial Level Component 3: Governance Reform Implementation Capacity Appraisal Estimate (US$, millions) Additional Financing (US$, millions) Total Actual/ Latest Estimate (US$, millions) Percentage of Appraisal Actual/Latest Estimate (US$, millions) Physical contingencies Price contingencies Total Project Costs Front-end fee Project Preparation 0.00 Fund Front-end fee IBRD Total Financing Required (b) Financing Source of Funds Type of Cofinancing Appraisal Estimate (US$, millions) Actual/Latest Estimate (US$, millions) Borrower NA IDA Grant NA % (c) Approved Project Components, Subcomponents and Activities Percentage of Appraisal Component 1: Strengthening PFM and PSM at Central Government Level (US$21.28 million) 1.1 Supporting the MIDS in designing and implementing the decentralization process Key decentralization laws and decrees Legal instruments to roll out decentralization including to the split of the provinces foreseen in 2010 Training and dissemination of legislation and policies 26

37 1.2 Supporting the MOB and Ministry of Public Service in implementing Public Sector Wage Reforms, including the design of an integrated personnel and payroll management system Amendments to public service legislation Design and implementation of public sector payroll and pension reform Upgrade and rollout of the automated payroll system, creation of a civil service register and assuring their effective linkage Comprehensive training needs assessment Support to the restructuring and adaptation of six selected line ministries most affected by the decentralization process 1.3 Strengthening of public financial management Reform and reinforcement of the legal and institutional framework for budget management Design and implementation of a Medium-term Expenditure Framework, including capacity-building support to line ministries and support for change management Reform of tax policy and administration System support for PFM through the implementation of an integrated system Component 2: Building PFM and PSM Systems at Provincial Level (US$20.72 million) 2.1 PFM systems at the provincial level Provincial budget procedures Provincial-level tax and fiscal agencies System support to PFM 2.2 Personnel management and payroll systems at the provincial level Development of model organizational structures at the provincial level, including accountability arrangements Design and installation of a simplified database system for provincial public service, with a link to the central systems and roll out of the automated pay system to the provinces Implementation of a comprehensive training program in HRM and PFM 27

38 2.3 Capacity building for regional economic planning Capacity building for the development of regional plans and evaluation of project proposals 2.4 Monitoring indicators Design and monitor performance indicators to track provincial government performance 2.5 Capacity development facility Financing under the capacity development facility for proposals submitted by provincial institutions relating to the core objectives of the project 2.6 Rollout strategy and monitoring Rollout strategy which will serve as a framework for donor coordination on capacity development activities at the provincial level Information and practice-sharing activities between provinces Component 3: Governance Reform Implementation Capacity (US$7.98 million) Building project implementation capacity Monitoring and evaluation Building demand for governance reforms 28

39 Annex 2. Achievements by Objective and Outputs by Component Table Achievement by Objective Objective 1 : Enhance transparency in public finance at central level Rating: Substantial (achieved or nearly achieved) PDO Outcome Indicator 1. Integrated Budget Execution Reports are published on the Ministry of Budget and the Ministry of Finance websites on a regular basis at central level Baseline Budget execution reports are produced but are of low quality and are not made publicly available Target Budget execution reports provide reliable information and can be readily obtained from the MOB and MEF website at central level Actual (2015) Budget execution reports are regularly published on the MOB and MEF websites at central level Statu s Achie ved Data Source MOB and MEF websites at central and provincial levels Objective 2: Enhance transparency in human resource management at central level Rating: Modest (partially achieved) Comments Report published on the MOB website on a monthly basis in 2015 February 2016 series of meetings on governance and transparence in the DRC budget execution reports present more comprehensive information allowing for better analysis In addition to transparency in budget information, there is greater transparency in procurement with procurement information published periodically on the Procurement Authority website According to the 2012 PEFA exercise (conducted by the World Bank and DFID, but not published) the rating for PI-10, public access to key fiscal information increased from D in 2008 to C in 2012 with notable efforts to provide key fiscal information to the public A self-evaluation performed in 2015 further rating PI-10 B with the publication of more reports and more comprehensive information 29

40 PDO Outcome Indicator No indicator Baseline Target Actual (2015) Statu s Objective 3: Enhance transparency in public finance at subnational level Rating: Substantial (achieved or nearly achieved) PDO Outcome Indicator Baseline Target Actual (2015) Statu s Data Source Data Source Comments No indicator Recruitment for civil service personnel now follows a more transparent process which includes an exam open to the public, whose results are published in the media. The last recruitment exam took place in September 2015 with 4824 participants in Kinshasa and provinces Adoption of standardized organization charts to help streamline the structures of the ministries and institutions Computerization of the HR system Use of electronic transfers for payroll resulted in more transparency and control over the list of civil servants receiving salaries Comments 30

41 1. Integrated Budget Execution reports are published on the Ministry of Budget and the Ministry of Finance websites on a regular basis at subnational level Budget execution reports are produced but are of low quality and are not made publicly available Budget execution reports provide reliable information and can be readily obtained from the MOB and MEF website at the subnational level Budget execution reports are regularly published on the MOB and MEF websites at the subnational level Achie ved MOB and MEF websites at central and provincial levels Objective 4: Enhance transparency in human resource management at subnational level Rating: Modest (partially achieved) PDO Outcome Indicator No indicator Baseline Target Actual (2015) Objective 5: Enhance efficiency in public finance at central level Rating: Substantial ( or nearly achieved) PDO Outcome Indicator Baseline Target Actual (2015) Statu s Statu s Data Source Data Source Report published on the MOB website on a semester basis in 2015 Support to the assemblies in the four pilot provinces yielded better transparency (in Sud-Kivu for example, a television channel was created to make public the meetings of the assemblies, including budget discussions) Implementation and utilization of a chaine de la depense in provinces to allow for more efficient and transparent use of resources Participatory budget implemented in the four pilot provinces helped enhance citizen's participation in the budget process and increased transparency over the use of resources Comments No indicator The project contributed to providing the four pilot provinces with databases following the 2012 biometric census Comments 31

42 1. Percentage of expenditures handled outside of the chaine de la depense is lower than 10% 2. Procurement code is effectively applied throughout the territory of the DRC and competitive bidding is applied in at least 80% of all procurement processes with a value exceeding US$200,000 30% Less than 10% 7% Achie ved 30% in % 80% Achie ved Budget execution report ARMP report There is a better clarity of procedures to apply with the 2010 Manual on the chaine de depense available online from the MEF at the central level The 2012 PEFA exercise recognizes the improvements made through the utilization of the chaine de la depense at the central level by rating PI-20, effectiveness of internal controls for non-salary expenditures, from D in 2008 to C in 2012 The implementation of the chaine de la depense at the central level and the improvements made to the information system enabled an improvement in the expenditures handled outside normal procedures; however, an average of 10% of commitments still continue to be handled outside normal procedures A reduction in expenditures handled outside normal procedures from 26% in 2009 to 7% in 2015 Procurement processes are now reviewed by the Procurement Directorate within the MEF 80% of contracts over US$200,000 in 2015 followed a competitive process Percentage of direct contracts have diminished from 43% in 2013 to 20% in 2015 The 2012 PEFA exercise recognized the 32

43 3. Annual increase in tax revenue at central level greater than 10% 4. The difference between budgeted and executed expenditures decreases from 21% in 2006 to less than 10% of total expenditures at the central level Tax collection is CFAF billion in % increase year to year 21% in 2006 Less than 5% 6% Partia lly achie ved 41% Not achie ved Budget execution report Budget execution report improvements made in the procurement area by improving the rating of PI-19, competition value for money and controls in procurement, from D in 2008 to a B in 2012 The regulatory environment for procurement was considerably improved since 2010 with the creation and operationalization of the DGCMP and ARMP. Tax collection has increased year to year from CDFF 1,427,534 million in 2009 to CDFF 3,894,202 million in 2015, with a large increase year to year from 2009 to 2012 and a leveling of the increase from 2012 to 2015 In addition, tax budgeting is becoming more accurate from 123% of realized taxes in 2009 to 106% in 2015 Even though the difference between budgeted and executed expenditures at the central level is still high (41% in 2015), the trend, for example, shows an improvement from 65% in 2010; Even though the rating for PI-1, expenditure out-turn compared to original approved budget, remains the same at D from 2008 to 2012 and the selfevaluation in 2015, there is an evolution from 2008 to 2015 (PEFA 2008 included 33

44 Objective 6: Enhance efficiency in human resource management at central level Rating: Substantial (achieved or nearly achieved) PDO Outcome Indicator 1. At least 70% of civil servants at central level paid through a reformed and computerized payroll system Baseline Target Actual Statu s 28% in % 97.70% Achie ved Objective 7: Enhance efficiency in public finance at subnational level Rating: Substantial (achieved or nearly achieved) PDO Outcome Indicator 1. The difference between budgeted and real expenditures does not exceed 10% of total expenditures at the provincial level Baseline Target Actual Statu s 31% Less than 63% Not 10% achie ved Data Source Payroll report Data Source Provincial budget execution report 2004: 70%, 2005: 120.9% and 2006: 116.1%; PEFA 2012 included 2009: 16.3%, 2010: 34% and 2011: 29%; and selfevaluation 2015 included 2013: 28.2% and 2014: 21.5%) PFM reforms still under implementation aim to refine the budgeting process and improve accuracy of budgeting. Comments The single file payroll introduced by the PTS reform in 2008 to allow for transparency and a better control of the wage bill is still under constitution The independent final evaluation report mentions that between 80% and 85% of bonuses and allowances have been set in the system but makes no mention of the actual use of the system for the payment of these bonuses and allowances Comments As for the central level, the difference between budgeted and executed expenditures at the provincial level is still high (63% in 2015) PFM reforms still under implementation aim to refine the budgeting process and improve accuracy of budgeting 34

45 2. Annual increase in tax revenues at provincial level 28% in 2009 Annual increase 39% Achie ved Provincial budget execution report Objective 8: Enhance efficiency in human resource management at subnational level Rating: Substantial (achieved or nearly achieved) PDO Outcome Indicator 1. Regular payment of at least 60% of provincial level civil servant salaries 2. At least 60% of public servants in pilot provinces are paid via a reformed and computerized payroll system Baseline Target Actual Statu s Salary 60% 100% Achie payments ved are regularly delayed and many staff are not paid No PSM and payroll management system exists at the provincial level 60% 97.74% Achie ved Data Source Provincial budget execution report Budget execution report Tax revenue and collection has increased in the provinces (in the four pilots) from 250% in 2010 (compared to 2009) as the project was establishing tax collection administrations in the provinces and continued to improve until 2015 In the province of Sud- Kivu for example, tax collection increased from CDF 4,027 million in 2010 to CDF 5,821 million in 2015 Comments Currently 100% of public servants in the pilot provinces are paid by the reformed and computerized system. However the staff of the decentralized sectors are not transferred yet and continue to be paid by the central government 100% of civil servants are paid according to the budget report; however, this percentage remains impossible to verify because the number of civil servants and agents working at the subnational level is still unknown Objective 9: Establish and consolidate an equitable resource-sharing mechanism between central and subnational government Rating: Substantial (achieved or nearly achieved) PDO Outcome Indicator Baseline Target Actual Statu s Data Source Comments 35

46 At least 35% of domestic revenue transferred regularly to subnational government Between 8% and 10% in January % 46% Achie ved Budget Execution Reports Table Output by Component Project /Not Explanation if Not Output at Completion Components/Activities Component 1: Strengthening PFM and PSM at Central Government Level (US$ millions) The project helped establish the formula for resource sharing between the central and provincial governments which is still in use and has lessened tension between the central and provincial governments Transfer of resources to the provincial governments has undoubtedly increased since 2009 In the 2012 PEFA exercise, the rating for PI-8, transparency of intergovernmental fiscal relations recognized the improvements in the relations between the central and provincial governments by rating the indicator a D in 2008 and a D+ in 2012; this increase in the rating was mostly due to the allocation of resources between the central and provincial governments and better communication between the central and provincial governments PDO Subcomponent 1.1: Supporting the MIDS in designing and implementing the decentralization process 1. Key decentralization Partially laws and decrees achieved Studies on the development of decentralization laws and decrees; studies on budgetary decentralization and territorial decentralization; several laws and decrees adopted Critical activities which remain incomplete are the following: Adoption of the Law on the Statute of Central, Provincial and Local Public Service, adoption of a Law on the National Equalization Fund, 3,4, 7, 8, 9 36

47 Project Components/Activities Output at Completion /Not Explanation if Not adoption of a bill for clarification of concurrent jurisdiction between the central government and the provinces. PDO 2. Legal instruments to roll out decentralization Outreach campaign on legal instruments 3, 4, 7, 8 3. Training and dissemination of legislation and policies Experience sharing and training of roughly 20 staff of the Ministry of Decentralization 3, 4, 7, 8 Subcomponent 1.2: Supporting the Ministries of Budget and Public Service in implementing public sector wage reform, including the design of an integrated payroll management system 4. Amendments to public service legislation Production of legal texts and application decrees on public service reform 2 5. Design and implementation of public sector payroll and pension reform 6. Upgrade and rollout of the automated payroll system with civil service register 7. Training needs assessment Studies on pay reform; Institutional audits for the establishment of standard directions in the ministries and other public institutions The PTS was implemented; acquisition- HRM payroll software; pending integrated HR and payroll system 100 IT professionals trained in system development Partially achieved The critical activity which remains incomplete is the implementation of the integrated HR and payroll management system Support to the restructuring of six line ministries affected by the decentralization process Acquisition of furniture and hardware for the MEF, Ministry of Decentralization, MOB, and CTAD; Rehabilitation of Buildings UADS; development of a website for the MEF; studies on the interconnection of government s websites; recruitment of 540 agents for the Ministry of Agriculture 6 37

48 Project Components/Activities 9. Implementation of biometric staff identification system Output at Completion Development of a database of the decentralized sector s civil servants /Not Explanation if Not PDO 6 Subcomponent 1.3: Strengthening of Public Financial Management 10. Reinforcement of legal and institutional framework for budget management Production and dissemination of the organic law on public finance Implementation of a Medium-term Expenditure Framework Development of the National Strategic Development Plan Reform of tax policy and administration Support for tax reform (value added tax and several laws) Implementation of IFMIS Assistance for the implementation of the computerization of public finance; IT support to Materials to improve the computerized system of execution of public expenditure Subcomponent 1.4: Procurement reforms 14. Procurement reforms About 1000 workers trained in procurement; furniture and IT equipment acquisition for ARMP; Audit of Public Procurement (FY2011); adoption of the Law on Procurement Partially achieved Integrated financial management software was not acquired; Terms of Reference were prepared through the project Component 2: Building PFM and PSM Systems at Provincial Level (US$34.16 millions) 5 5 Subcomponent 2.1: Public Financial Management Systems at Provincial Level 15. Provincial budget procedures Establishment of minimum standards of PFM; Several technical 16. Provincial-level tax and fiscal agencies assistances in PFM At least 750 agents recruited and trained in revenue mobilization techniques;

49 Project Components/Activities 17. System support to public finance management Output at Completion rehabilitation of buildings for the provincial revenues authorities; office rehabilitation of the provincial assemblies; studies on provincial revenue collection system; Elaboration of a directory of taxpayers Installation of Chaine de la dépense in four pilot provinces; at least 600 agents trained for the use of Chaine de la dépense /Not Subcomponent 2.2: Personnel management and payroll systems at provincial level 18. Development of organizational structures at provincial level, including accountability arrangements Review of legal and organizational framework in provinces and preparation of legal texts Partially achieved 19. Implementation of database system for provincial public service and automated pay system 20. Implementation of training programs in HRM and PFM 21. Implementation of biometric staff identification system Census of provincial staff and creation of a database for provincial Basic training in IT, training in revenue mobilization techniques, public finance and procurement; experience sharing between the provincial assemblies Biometric staff identification conducted in 2012 Subcomponent 2.3: Capacity building for regional economic planning 22. Capacity building for regional development planning Training provided on participatory budgeting, leadership, and so on; technical assistance provided for the preparation of local development plans Subcomponent 2.4: Monitoring indicators 23. Performance indicators to track provincial government performance Establishment of performance indicators to track provincial government performance and training Subcomponent 2.5: Capacity development facility Explanation if Not PDO 7 Legal texts have been prepared but are still awaiting adoption by the parliament The decentralized staff continue to be monitored at the central level 4 4 7, , 8 39

50 Project Components/Activities 24. Capacity development facility for provincial initiatives Output at Completion Implementation of investment projects of public-private partnership between provinces and private investors; supporting budgetary conferences; supporting provincial assemblies open houses events for civil society; training in participatory budget for decentralized territorial entities (entités territoriales décentralisées); capacity building in leadership Subcomponent 2.6: Roll out strategy and monitoring 25. Roll out strategy and Communication campaign monitoring for experience sharing among the provinces 26. Information and practice sharing activities between provinces Experience sharing among the provincial assemblies /Not Component 3: Governance Reform Implementation Capacity (US$ millions) Explanation if Not PDO 7, 8 7, 8 7, Implementation capacity in the Cellule pour la Decentralization Furniture, equipment, and supplies and capacity building for PCU and the CPD 1, Capacity building in M&E for the Governance Department under the administration of the president Support to governance for the presidency (Governance Department) 1, Strengthening implementation capacity on the Governance Compact in the Prime Minister's Office Support to governance for the prime minister 1, 3, Design and implementation support for a government communication policy No outcome listed 40

51 Project Components/Activities 31. Balanced scorecard surveys (3 over the duration of the project) Output at Completion No outcome listed /Not Explanation if Not PDO 41

52 Annex 3. Economic and Financial Analysis 1. The impact on GDP is computed as the value of disbursement per year assuming that government consumption increases by that disbursement value, therefore increasing GDP by the same amount (%) and there are no other positive externalities. Under the assumption that the project has a positive impact on GDP of percent on average over its life cycle and beyond (30 years total, which is the standard for World Bank loans to IBRD or IDA countries, that is, ), using a 11 percent discount rate, which is the midpoint between 10 percent and 12 percent usually used in World Bank projects appraisal, gives the following results: Period Financial flows (US$) (641,752) (5,769,435) (10,194,447) (20,170,179) (10,566,804) (8,312,696) (25,188,537) (5,396,943) (7,688,070) 15,696,078 NPV (14,144,788) (US$) ERR 9% Note: NPV = Net Present Value 2. Now assuming that after the project is completed (2016), GDP growth is at 10 percent and 11 percent in 2017 and 2018 respectively (as is currently forecast), then at 7.4 percent until 2038, the project would yield the following result: Period Financia l flows (US$) (641,752) (5,769,435) (10,194,447) (20,170,179) (10,566,804) (8,312,696) (25,188,537) (5,396,943) (7,688,070) 5,003,788,649 NPV 11,628,100,395 (US$) ERR 91% 42

53 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Names Title Unit Responsibility/ Specialty Lending Maurice Adoni Senior Procurement Specialist GGO07 Procurement Monthe Bienvenu Biyoudi Senior Operations Officer AFCW2 Operations Jean Charles Amon Kra Sr Financial Management Specialist GGO13 Financial Management Emilie Ayaza Mushobekwa Economist AFTP3 - Economic Analysis HIS Herimpamonjy Mavoarisoa Ranaivoarivelo Operations Analyst GGO13 Operations Dieudonne Randriamanampisoa Senior Economist AFTP1 - Economic Analysis HIS Janette Uhlmann Senior Program Officer MNCMI Operations Antonius Verheijen Country Manager ECCYU Operations Supervision/ICR Bourama Diaite Senior Procurement Specialist GGO07 Procurement Jean Charles Amon Kra Sr Financial Management Specialist GGO13 Financial Management Philippe Mahele Liwoke Senior Procurement Specialist GGODR Procurement Gaspy Gedeon Muanda E T Consultant AFTME - Operations HIS Jean Mabi Mulumba Senior Public Sector Specialist GGO25 TTL Evariste Niyonkuru Consultant GGO13 Governance Thomas Jeffrey Ramin Senior Operations Officer DFGPE Operations Dieudonne Randriamanampisoa Senior Economist AFTP1 - Economic Analysis HIS Arleen Cannata Seed Senior ICT Policy Specialist GTI11 ICT (b) Staff Time and Cost Staff Time and Cost (World Bank Budget Only) Stage of Project Cycle US$, thousands (including No. of Staff Weeks travel and consultant costs) Lending FY FY Total: Supervision/ICR FY FY FY FY FY FY FY

54 FY FY FY FY Total: 1,

55 Annex 5. Beneficiary Survey Results Not applicable 45

56 Annex 6. Stakeholder Workshop Report and Results Not applicable 46

57 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 1. The evaluation of the DRC - Enhancing Governance Capacity Project was undertaken over the month of February 2016 by an independent evaluator. The project was originally approved by the Board on April 22, 2008 with a closing date of February 28, 2013 and was extended until February 28, 2016 by the additional financing approved on May 9, The project was structured in three components whose activities were targeting the performance indicators of the log frame of the financial agreement approved on June 8, Over a total funding estimated at US$ million, the project has disbursed US$ million, approximately percent. 3. Component 1 was dedicated to strengthening PFM and PSM at the central government level. At the end of the project, most of the activities planned were completed. Such activities as the adoption of key decentralization laws, the implementation of the integrated HR and payroll management system did not happen because of political reasons (Legal texts prepared are still awaiting adoption by parliament) and administrative/procedural delays in contracting. 4. Component 2 was aimed at building public sector and financial management systems at the provincial level, based on 12 planned activities. At the end of the project, 10 activities were fully completed and 2 activities, the development of organizational structures at the provincial level and implementation of database system for provincial public service and automated pay system, were partially achieved. 5. With regard to Component 3 on enhancing governance reform implementation capacity, over five planned activities, three were fully achieved. Design and implementation support for a government communication policy did not happen, nor did the three balanced scorecard surveys planned over the duration of the project. 6. On the relevance. The design stage the DRC-Enhancing Governance Capacity Project was developed on the basis of identified needs and priorities of the Poverty Reduction Strategy Paper and the Country Strategy Paper to improve governance. The project formulation considered the objectives, policies, and strategies of the Government s guiding documents defining the need to strengthen governance with the backdrop of improved transparency in public finance and the public sector. The activities were also properly designed to support the achievement of the PDOs. 7. On the effectiveness. The DRC-Enhancing Governance Capacity Project has delivered substantial non-quantifiable benefits of improving governance capacity at the central and subnational level. The cost-effectiveness of the project relates to its relevance to enable the country to have better trained and highly capable civil servants, both at the central and subnational level. 8. On the impact. Significant positive impact of the project has been noticed through its role in capacity building played by the World Bank experts. These made a real and lasting capacity impact for the DRC s inadequate public service. The supervision missions conducted, with the support of experts have created among civil servants, an incentive to implement best practices and develop new initiatives to promote transparency and good governance. 47

58 9. The evaluation noted that the project has played an important role in supporting capacity building and improving governance in the DRC. These results, reflect efforts made by the PIU, and implementing agencies and their effective involvement despite the difficult implementation environment. In effect, the Government was supposed to exercise its oversight through the steering committee meetings; however, meetings were held only sporadically. Overall, only 33 committee meetings were held, out of the initially planned 140 meetings, throughout the period of implementation of the project at central level and in the four provinces. In addition, the few committee meetings failed to address the project's strategic orientation issues. 10. Furthermore, frequent changes of the head of key implementing ministries and unstable provincial governments have contributed to slow down the implementation of some activities; with new officials continuously reconsidering decisions made by their predecessors. 11. The PIU (36 staff members) takes credit for the sound implementation arrangements that contributed to the good results. The creation of local coordinating entities in the four provinces to coordinate the activities of the project and ensure monitoring, reflects the achievements at the subnational level. Effective coordination, timely funding of activities; adoption of annual work plans and budgets; and submission of progress indicators echo the PIU s effective performance in project coordination. 12. IDA performance was characterized by multiple supports including joint (IDA- Government) supervision missions for harmonious implementation. These supervision missions conducted, with the support of experts have helped to develop transparency and good governance in PFM and HRM. 48

59 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 49

60 Annex 9. List of Supporting Documents Loi N 08/012 portant principes fondamentaux relatifs à la libre administration des provinces (July 31, 2008) RDC Loi N 10/010 relative aux marches publics (April 27, 2010) RDC Analyse de la situation administrative et financière et de la livraison des services publics des entités territoriales décentralisées (ETDs) (February 28, 2011) World Bank-USAID-EU Plan stratégique de réforme des finances publiques (March 2010) RDC Evaluation finale indépendante du projet PRCG (February 2016) RDC Mesure de la performance de la gestion des finances publiques en RDC, selon la méthodologie PEFA (March 2008) EU Mesure de la performance de la gestion des finances publiques en RDC, selon la méthodologie PEFA (2012) World Bank-DFID Exercice d auto évaluation de la gestion des finances publiques de la RDC, selon la méthodologie PEFA (2015) COREF/RDC Rapport annuel PRCG (2014) RDC Evolution des dossiers des marches examinés a la DGCMO suivant le mode (2016) RDC 50

61 MAP 51