TABLE OF CONTENTS Page No.

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1 TABLE OF CONTENTS Page No. TABLES... 1 ACCRONYMS Objectives Weredas covered by the Assessment Approaches The constraints Staffing Information Technology Operations/processes Donor related activities and Bank accounts Food Security Operations at weredas Allocations Disbursement Reporting Conclusion and Recommendations Appendix 1: Staffs interviewed Appendix 2: Sample of OFED structures & Salary scale Appendix 3: Reports generated by Wereda OFEDs for Food Security Coordination Office Appendix 4: Organization Structure for wereda OFED... 20

2 TABLES Page No TABLE 2: Weak weredas in reporting and weredas covered by Food Security Funds TABLE 4.1.A: Total positions Vs vacant positions in the Budget and Accounts Teams TABLE 4.1.B: Vacant positions in all departments of OFED TABLE 4.1.C: Staffs that do not take trainings on the new Budget & Accounting System and staff turnover in the EFY TABLE 4.2: IT status at weredas TABLE 4.4: List of bank accounts at wereda OFEDs

3 ACCRONYMS BDA BIS BOFED EFY IBEX ICT OFED RSB TFSCO UNICEF VSAT Budget Disbursement & Accounts Budget Information System Bureau of Finance & Economic Development Ethiopian Fiscal Year Integrated Budget & Expenditure system Information & Communication Technology Office of Finance & Economic Development Regional Sector Bureau Tigray Food Security Coordination Office United Nations Children s Fund Video Satellite 2

4 Report on Wereda Assessment in Tigray Region 1. Objectives The assessment was conducted with the following objectives: 1.1 Identify the major constraints that prevent wereda OFEDs from processing and sending their monthly account summaries, their budget adjustments and their budget notifications to BOFED. 1.2 Once the constraints are identified, make a recommendation on the most efficient and effective way of getting rid of those constraints. 1.3 How Food Security Coordination Office is operating at wereda level. 1.4 How Food Security Funds are allocated, disbursed and reported. 2. Weredas covered by the Assessment The Weredas were selected based on information obtained from Zafu Guebrehiwot, Accounts & Disbursement, BOFED, and from Food Security Coordination Office. The table below shows weredas that are weak in reporting and weredas that are covered by Food Security Funds. Table 2: Weak weredas in Reporting & weredas covered by Food Security Fund No. Weak weredas in Weredas covered By Remarks reporting Food Security Fund 1 Tsegede Enda Mekoni 2 Welkait Alamata 3 Erob Erob Covered by FS funds & weak in reporting 4 Seharti Samre Seharti Samre Ditto 5 Ofla Enderta 6 Shraro Town Hitalo Wajirat 7 Adigrat Town Raya Azebo 8 Mekelle Zone Atsbi Wemberta 9 Naedier Adiet Saesie Tsaeda Emba 10 Gulo Mekeda Gulo Mekeda Covered by FS funds & weak in reporting 11 Hawzien Ahferom 12 Tsirae Tsirae Covered by FS funds & weak in reporting 13 Tanqua Abergele 14 Mereb Leke 15 Tselemti 16 Tahtay Adyabo 3

5 Two Urban weredas and six rural weredas were selected for the assessment, by considering their accessibility and coverage by Food Security Funds. The selected weredas are listed below. Rural Weredas Urban weredas Tahtay Adiabo ** Tselemti** Naedier Adiet* Erob*** Seharti Samre*** Ofla* Sheraro* Adigrat* *Weredas that are slow in reporting **Weredas covered by Food Security Funds ***Weredas that are slow in reporting & are covered by FS funds Tahtay Adiabo was not assessed due to non-availability of OFED staffs at their office during the assessment. 3. Approaches Work plan was developed that was helpful in conducting the assessment. The assessment was conducted based on the work plan, interviews were made with OFED staffs and the real operations/processes at OFEDs were observed. (Please refer Appendix 1 for the list of staffs interviewed.) 4. The constraints 4.1 Staffing The OFED structure requirement with respect to the qualification and experience is over ambitious. It seems that the structure does not consider the non-availability of highly qualified staffs in the region. To hire professionals that have PHD with 8years of experience/masters with 10 years of experience/bachelor degree with 12 years of experience with the stated salary scale is very difficult (please refer Appendix 2 for the wereda structure and salary scale). As per our interviews with existing OFED officials, vacancy announcements were made continuously to attract potential candidates from the market. However, they were not successful. The reasons for not filling positions, as per OFED officials, are: 4

6 Non-availability of qualified professionals in the market (with respect to qualification and experience), as required by the current OFED structure. Incompatibility of the qualification and experience requirements with their respective remunerations. The already existing professionals in the market do not want to work at weredas that do not have reasonably enough infrastructures (for instance, Naedier Adiet wereda does not have electricity, potable water and telephone services). Lack of adequate incentives that compensate hardships at weredas. Fresh graduates are willing to work at weredas for only one or two years. They resign after they get experience. We can observe from table 4.1.A that more than a quarter of the required positions in the Accounts Team and more than half of the required positions in the Plan and Budget Team are not filled. Table 4.1.A: Total positions Vs vacant positions in the Budget & Accounts Teams Number of vacant Vacant positions Vacant positions Number of positions as %age of as %age of positions existing staff positions No. Wereda name Accounts Budget Accounts Budget Accounts Budget Accounts Budget 1 Erob Ofla Seharti Samre 4 Naedier Adiet 5 Sheraro Town Tselemti Adigrat Town These vacant positions are creating workload to the existing staff since they cover the work of vacant positions. In addition to this, there are vacant positions in the other area of the office. We can observe from Table 4.1.B, in most cases, that more than a quarter of the total positions are not filled. Almost in all the assessed weredas, positions for Office, Plan & Budget Team leader, Expenditure Accounts Team leader and Revenue Team Leader are not filled. 5

7 Table 4.1.B: Vacant positions in all departments of OFED No. Weredas Erob Ofla Seharti Samre 1 Plan expert Plan & Plan Budget Budget 2 Budget Senior Budget expert Accountant expert 3 Expenditure Expenditure Accounts Accounts 4 Office Office & Expenditure Accounts Senior Accountant Naedier Adiet Plan & Budget Budget expert Expenditure accounts Office Sheraro Town Plan & Budget Data Entry Clerk Expenditure Accounts Office Tselemti Plan & Budget Senior Accountant Assistant cashier Office 5 Revenue Revenue Revenue Revenue Revenue Revenue 6 Data Entry Data Entry Auditor Auditor Plan Clerk Clerk Expert 7 Plan expert Plan Expert Typist 8 Junior Accountant Adigrat Town Plan & Budget Senior Accountant Auditor (Inland Revenue) Income Tax auditor Revenue No. of Vacant Positions Total Positions Vacant positions as Percentage of existing staff Vacant positions as percentage of positions % 21% 33% 44% 41% 23% 19% 21% 17% 25% 30% 29% 19% 16% The non-availability of staffs in the departments other than Budget and Accounts is creating burden to the existing staff that are located at the Accounts Team as well as Plan and Budget Team. Further more, almost all acting Office s agree that the training that was given on the new budget and accounting system for about eight to ten days is not enough. However, this might not be a big problem. The problem might be the fact that follow-on support has 6

8 not taken place by BOFED after the training was conducted. BOFED claims that followon support has not taken place because of shortage of staff in the Bureau. BOFED structure does not include positions for staffs that will support weredas. Besides, some of the trained staffs are resigned and new staffs are employed after the training was conducted. Table 4.1.C shows the number of staffs that do not take trainings on the new budget and accounting system, and staff turnover during 1996 Ethiopian Fiscal Year. It seems that training to the newly hired staff is required and refresher training is also required to the existing staff that took the initial training. Table 4.1.C: Staffs that do not take trainings on the new budget and accounting system & Staff Turnover during EFY1996 No. Wereda Staffs that do not take training 1 Erob Auditor (1), Expenditure accountant (1), Plan & Budget expert (1) 2 Ofla Budget expert (1), Budget Junior Expert (1), Expenditure Accountant (1) 3 Seharti Samre Auditor (1), Expenditure accountants (2), Accounts Junior expert (1) Staff Turnover Accounts experts (2) & Plan Expert (1) Plan Expert (1) Acting Expenditure Accounts Team Leader (1) 4 Naedier Adiet Expenditure Accountant (1) Auditors (2), Expenditure Accountant (1) & Main Cashier (1) Remark All the untrained staffs are new entrants Ditto Ditto 5 Sheraro Town Nil Nil All (existing) staffs have taken the training 6 Tselemti Nil Nil Ditto 7 Adigrat Town Nil Accounts Senior Expert (1) Budget experts did not take training for accounts, & Accounts Experts did not take training for budget 7

9 Mostly, staff turnover is observed in the Accounts and Plan & Budget Teams. The reason for this, as mentioned above, is the hardship existing at weredas, and the salary scale does not fit with experience and qualification requirement. As a result, individuals move to more lucrative jobs after they have got the experience. 4.2 Information Technology Although it is believed that automation of the weredas existing systems speeds up the wereda operations (with respect to reporting), it is not a big problem, when compared with the staffing problem. However, it might reduce the need for more accountants in the office. More over, automations of wereda systems speeds up consolidation of region wide budgets and accounts at BOFED. The ICT infrastructure (the Gov Net) is erected in all the assessed weredas, including power generator and, as per information obtained from BOFED, this process has taken place in all the remaining weredas. Nevertheless, the technology is not yet operational due to lack of skilled manpower. The Regional Government is arranging trainings for the new infrastructure and the weredas are currently selecting candidates for the training. BOFED has distributed one computer to each wereda OFED in EFY1996. However, most of them are not currently under usage (Table 4.2 shows this fact). The main reason is lack of electricity in the weredas and there is also lack of skilled manpower in very small weredas. Nevertheless, there is a possibility of sharing power from wereda administration office starting this year (power generator is erected together with the VSAT at each wereda administration office). Table 4.2: IT status at weredas No. Wereda No. of computer s Currently under usage? What for? No. of Computer literate staffs 1 Erob One No N/A Two-Acting Office & Acting Expenditure Accounts 2 Ofla One Yes Payroll preparation, expenditure reports, budget Six- one have knowledge of BIS/BDA reports 3 Seharti Samre One No N/A Three-from accounts & budget Team Power/Gener ator available? No Yes (24 hours a day) Yes, but only at the night time No 4 Naedier Adiet One No N/A One-Expenditure Accountant 5 Sheraro Town One No N/A Nil Yes, but only at the night time 6 Tselemti One No N/A Two-Accounts No Ditto Wereda net (VSAT) erected? Yes, including power generator, but not yet operational Ditto Ditto Ditto Ditto 8

10 7 Adigrat Town Three Yes Secretarial works, Federal Inland Revenue TINs, Payroll, Budget, accounts expert & Typist Four-Office, Data Entry Clerk, Tax Auditor, Plan & Budget Expert Yes (24 hours a day) Ditto BOFED has a plan to rollout BIS/BDA to all weredas in EFY1997. This is actually a good idea, provided that there is adequate financial and human resource to implement it, and that it is practical to share power generator from the Wereda Administration Office. Piloting of IBEX depends on being the ICT infrastructure become operational. As mentioned above, the Regional Government has a plan to begin operation of the ICT infrastructure in EFY1997. As per the information obtained from the DSA-IT Team, IBEX is ready for piloting in Tigray. 4.3 Operations/processes All the assessed weredas, except Ofla and Adigrat town, do not have banks near to them. This creates a problem of not following the normal control procedures, such as imprest system of petty cash and effecting payments in cheque. However, this problem is irreversible until the weredas have banks near to them though the current system of withdrawing cash in a very huge lump sum (up to Birr 500,000 at a time) is very risky. As per the information obtained from BOFED, an arrangement to use local bank (Dedebit Credit and Saving Institute-DECSI), for those that do not have banks near to them, is underway. In some weredas, errors are occurred frequently in processing transactions, and detecting them takes too much time. The reason for this, as most OFED officials agree, is lack of adequate trained staff, as mentioned in section 4.1 above. Some OFED staffs are busy in making settlements at Regional Sector Bureaus in Mekelle for budgets that are appropriated at the Regional level but disbursed at the wereda level. In some cases, rejecting documents for settlement at RSBs, due to control or other procedural requirements, creates additional burden to OFED operations. 4.4 Donor related activities and Bank accounts Every wereda, except the urban weredas, handles a minimum of four accounts, most of which are opened for donor funds. A minimum of one staff from OFED takes part in signing of cheques for all the accounts (signatories for the treasury account are all from OFED). Table 4.4 lists out types of bank accounts held at each wereda OFED. 9

11 Table 4.4: List of bank accounts at wereda OFEDs Bank Account Erob Ofla Sharti Naedier Sheraro Tselemti Adigrat Samre Adiet Town Treasury Recurrent Treasury Capital Treasury Recurrent and X X X X X X X Capital Treasury for Regional X Branches (sub-agencies) Food Security X X X X X coordination Office HIV/AIDS X X X X X X UNICEF X Emergency Drought X Recovery Project (EDRP) Ethiopian Social X Rehabilitation & Development Fund (ESRDF) Cooperatives Office X (donor Account) Education Office (Donor X Account) Health Office (Donor X X X Account) Agriculture Office (Donor Account) X X X X Rehabilitation X X (Demobilization & Repatriation Funds) Total Number of Bank Accounts A separate transaction register and ledger is maintained for each bank account in most weredas though separate reporting is required only for Food Security Funds (please refer Appendix 3) & Treasury Funds, and documents are sent to their respective RSBs for the rest of the bank accounts, including Food Security funds (Food Security is explained separately under section 5). 5. Food Security Operations at weredas The TFSCO s function is to coordinate rather than implement food security-related activities. At present (i.e. EFY1997), TFSCO focuses on coordinating activities at all the 34 rural weredas in the region. In general, the TFSCO concentrates on agricultural 10

12 activities, such as irrigation, soil and water conservation, introduction of high value crops, etc. A minor portion of its budget, however, is spent on health interventions and such things as adult education. TFSCO is coordinating its activities through a coordinator stationed at the wereda. In 1997 the wereda structure is raised to four staffs, namely, coordinator, accountant, secretary and driver. Role of the coordinator Facilitates the planning and budget process & notifies budget, which is approved by Regional Steering Committee, to respective sector offices for preparation of revised action plan. Food Security related activities are carried out by Wereda Sector Offices. The coordinator monitors and evaluates the activities. Prepares activities progress report quarterly, and sends it to FSCO and the Wereda Administration Office Role of the Accountant The accountant will be stationed at OFED, and is responsible to process Food Security related transactions. 5.1 Allocations The following steps take place while allocating Food Security funds: The coordinator requests Sector Offices to prepare and submit their annual plan and budget request in relation with Food Security activities. Sector Offices submit their plan and budget request, in September each year, to the coordinator & he/she sends the overall wereda plan to TFSCO, upon approval by the Wereda Food Security Steering Committee. TFSCO submits plans for all weredas to the Regional Food Security Steering Committee for review and approval. Members of the Steering Committee are organized from Regional Sector Bureaus. The Committee reviews and approves the budget with or without making adjustments. Copy of the approved budget is sent to OFED and the Coordinator, and he/she notifies Sector Offices their approved budget. Budget ledger card, for each expenditure item, is maintained by OFED for follow up. 11

13 Sector Offices make adjustments to their annual plan when the requested budget is different from the approved budget, and copy of the adjusted plan is submitted to the Coordinator. 5.2 Disbursement Funds are released from TFSCO to weredas based on the approved budget, by specifying project activities. Most of the time, they are released without request by weredas and sometimes the Coordinator requests transfers when there is no enough money in the Food Security separate bank account, which is administered by OFED. Signatories of the bank account are of OFED (mandatory), the Coordinator or Rural Development of the wereda. Sector Offices provide documents for accomplished activities to the Coordinator. Payment requests are made to OFED (by the Coordinator). Based on the supporting documents, OFED effects payments on behalf of Sector Offices. 5.3 Reporting The wereda OFED submits documents for settlement at TFSCO in Mekelle. One staff from OFED travels to mekelle every quarter to make the settlements. As per the information gathered from OFEDs, delay of up to two weeks is occurred in making the settlements. The Coordinator prepares progress reports every quarter and submits it to TFSCO and the Wereda Administration Office. The OFED prepares reports that are specified by TFSCO. The reporting formats are shown in appendix 3. The TFSCO reports results of its activities to both the Federal FSCO and the regional BoFED, and directly to key donors (e.g., EU, Ireland Aid). The BoFED then reports results to Cabinet, along with the main budget it administers. The TFSCO uses Peachtree accounting software, and maintains two charts of accounts: one for government reporting purposes (expenditure category-based), and another for donor reporting requirements (project-based). These charts of accounts were developed and the use of the Peachtree software began in 1999, when the TFSCO was started up as the Food Security Desk. TFSCO does not have a Financial Manual and uses the normal government procedures, except for the reporting system mentioned above. The TFSCO prepares reports in terms of two fiscal years: Standard calendar year (January December) for donors reporting requirements 12

14 Ethiopian fiscal year (July June) for Ethiopian government reporting requirements Per Hagos Gebrehiwot, this is a major issue in maintaining the accounts. 6. Conclusion and Recommendations As mentioned in the above sections, the major bottlenecks in reporting at wereda OFEDs are related with staffing problems though other small problems are also mentioned. To summarize, the bottlenecks are: The existence of unfilled positions Lack of follow-on support from BOFED after training in the new system was given to OFED staffs Existence of untrained staffs at OFED Existence of different bank accounts that are administered by OFED Processing of transactions manually To get rid of the above constraints, the following solutions are recommended: Review OFED structure and minimize the qualification and experience requirements within the existing structure. Make the staff recruitment process through BOFED on behalf of OFED. This is because qualified staffs are more available in big towns than in weredas. Conduct refresher training, for those that took training in EFY1996, and new training, for those that did not take training at all. Organize a Wereda Support Unit at BOFED that will carry out follow-on support until the reform is fully adopted by weredas. Convince donors to reduce the requirement of separate bank accounts for each fund, in that funds are better tracked using the new system, i.e. the Single Treasury System. Roll out a stand-alone BIS/BDA system to those that do have power/generator and computer literate staffs. Carry out IBEX piloting immediately after the Gov Net starts operation. 13

15 Appendix 1: Staffs interviewed Appendices Date Location Staff name (including position) September Erob Wereda OFED 22, 2004 September 24, 2004 September 30, 2004 October 08, 2004 October 18, 2004 October 19, 2004 October 20, 2004 October 29, 2004 Ofla wereda OFED Seharti Samre Wereda OFED Naedier Adiet Wereda OFED Sheraro Town OFED Tselemti Wereda OFED Zeru Girmay, Acting office and Plan & budget officer Negassi Mezgebo, Acting Expenditure Accounts Siyoum kefey, Acting Office, Acting Revenue head & Junior Auditor Guebre Nega, Acting Expenditure and Budget & Expenditure Junior Expert Zenabu Geremew, Budget Junior Expert Hailu Negash, Office Fitsum Berhe, Personnel Officer Alem Guebretsadkan, Acting Office & Expenditure Accountant Berhe Wolday, Acting Office Berhe Teklehaimanot, Acting Expenditure Accounts head Guebregiorgis Kiros, Acting Office Kidane Guebremariam, Food Security Coordinator Tel. No (Tele) (Admin) (Admin) (Admin) (Admin) Adigrat Town OFED Kiros, Office TFSCO, Mekelle Hagos Guebrehiwot, Finance, FSCO Tadelle Guebretsadik, Senior Accountant, FSCO 14

16 Appendix 2: Sample of OFED structures & Salary scale No. Position name & number Level Qualification & experience requirement Salary Scale (Birr) 1 Support Staff Team 1.1 Office (1) PS 8 Bachelor Degree with 12 years, or Masters Degree with 10 years, or PHD with 8years 1.2 Auditor (1) JP 10 Diploma with 8 years, or BA with 6 years 1.3 Data Entry Clerk JP 8 Diploma with 4 years 760 (1) 1.4 Tax files officer BC 7 12 th grade complete with 4 years 2 Expenditure Team 2.1 Team Leader (1) PS 6 BA/BSC with 8 years, or MA/MSC with 6 years, or PHD with 4 years 2.2 Accounts Senior Expert (1) PS 4 BA/BSC with 5 years, or MA/MSC with 3 years, or PHD with 1 year 2,000 1,040 1,565 1, Accounts Junior JP 10 Diploma with 8 years, or 1,040 Expert (1) BA with 6 years 2.4 Accounts Junior JP 9 Diploma with 6 years, or 895 Expert (1) BA with 4 years 2.5 Expenditure JP 8 Diploma with 4 years 760 Accountants (2) 2.6 Main Cashier (1) BC 9 Diploma with 4 years Assistant Cashier BC 8 12 th grade + 1, with (1) years 2.8 Court Cashiers (3) BC 5 12 th grade with 2 years Plan & Budget Team 3.1 Team leader (1) PS 6 BA/BSC with 8 years, or MA/MSC with 6 years, or PHD with 4 years 1, Plan Expert (1) PS 4 BA/BSC with 5 years, or MA/MSC with 3 years, or PHD with 1 year 1, Budget Expert (1) PS 3 BA with 6 years 1, Plan & Budget JP 9 Diploma with 6 years, or 895 Junior Expert (1) BA with 4 years Remarks 15

17 4 Inland Revenue Team 4.1 Team Leader (1) PS 5 BA with 6 years, or 1,370 MA with 4 years 4.2 Junior Auditor (1) JP 9 Diploma with 6 years, or 895 BA with 4 years 4.3 Inspector (1) BC 8 12 th grade + 1, with years 4.4 Rural Land Use Tax Controller BC 9 Diploma with 4 years Procurement & General Service Team 5.1 Team Leader (1) PS 5 BA with 6 years, or 1,370 MA with 4 years 5.2 Purchaser (1) JP 8 Diploma with 4 years Store Keeper (1) BC 7 12 th grade complete with years 5.4 Guards (2) ML 2 4 th grade with zero experience Personnel Team 6.1 Team Leader (1) AD 5 Diploma with 8 years, or 875 Degree with 6 years 6.2 Archiver (1) BC 8 Diploma with 4 years Typist (1) BC 7 12 th grade complete with years 6.4 Messenger (1) ML 2 4 th grade with zero 222 experience 6.5 Janitor (1) ML1 200 N.B. Experience requirements are relevant with the corresponding positions. PS- Professional Science JP- Junior Profession BC- Bookkeeping and other Clerical works AD- Administration ML- Maintenance and Labor 16

18 Appendix 3: Reports generated by Wereda OFEDs for Food Security Coordination Office Report #1 Tigray Region Food Security Coordination Office-Wereda Cash and Bank Reconciliation Statement 1. Receipts Month, year, Birr Month, year, Birr Month, year, Birr Month, year, Birr Month, year, Birr Month, year, Birr Total Receipts Birr 2. Expenditures Previous Expenditures Birr Current month Expenditures Birr Total Expenditures Birr 3. Remaining Balance (1-2) Birr 4. Represented by: 4.1 Cash on Hand Birr 4.2 Cash at Bank Birr 4.3 Advance Birr Total Birr 17

19 Report #2 Tigray Region Food Security Coordination Office-Wereda Operating Cost break down No. Description Code Amount Remark Prepared by Checked by Approved by 18

20 Report #3 Tigray Region Food Security Coordination Office-Wereda World Bank Assisted Expenditure Summary Sheet Source of funds Implementing agency Item Category Fund No. Received 1 Goods Expenditure 2 Consultants Service and Training 3 Community Subprojects 4 Operating Costs Total Budget Allocate d Previous Expenditu res Current Period Expendi tures Total Expendi tures (5+6) Remaini ng Budget balance( 3-7) Prepared by: Name Checked by: Name Approved by: Name Sign Sign Sign Date Date Date Remaini ng Fund balance( 4-7) 19

21 Appendix 4: Organization Structure for wereda OFED Office Procurement and Property Plan and Budget Dep t Accounts Dep t Revenue Dep t 20