Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Human Development Unit South Asia Regional Office Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL FINANCING (GRANT) IN THE AMOUNT OF SDR 38.7 MILLION (US$60,0 MILLION EQUIVALENT) TO NEPAL FOR THE EDUCATION FOR ALL PROJECT November 8,2007 Report No. 41346-NP This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.
CURRENCY EQUIVALENTS (Exchange Rate Effective September 17,2007) Currency Unit = NPR NPR 1.00 = US$0.01556 US$l.OO = NPR 64.25 FISCAL YEAR July 16 -- July 15 ABBREVIATIONS AND ACRONYMS ADB ARCS ASIP AWPB BPEP CAS CFAA CMS CPAR CPIA CSSP Danida DE0 DFID DG DHS DO DTCO EC EFA FCGO FM FMR GDP GPI GON ICAN ICB IP Asian Development Bank Audit Report Compliance System Annual Strategic Implementation Plan Annual Work Plan and Budget Basic and Primary Education Project Country Assistance Strategy Country Financial Accountability Assessment Community-Managed School Country Procurement Assessment Review Country Policy and Institutional Assessment Community School Support Project Danish International Development Assistance District Education Office Department for International Development (UK) Director General Demographic and Health Survey Department of Education Development Objective District Treasury Comptroller s Office European Commission Education for All Financial Comptroller General s Office Financial Management Financial Management Report Gross Domestic Product Gender Parity Index Government of Nepal Institute of Chartered Accountants Nepal International Competitive Bidding Implementation Progress IPR ISN JAR JICA MOES MOF NCB NER NPC NPR NPV OAG PCF PDO PEFA PFM PIM PPMO PRSC RED SGOD SIP SMCs SPA S WAp UNICEF UNESCO WFP Implementation Progress Report Interim Strategy Note Joint Annual Review Japanese International Cooperation Agency Ministry of Education and Sports Ministry of Finance National Competitive Bidding Net Enrollment Ratio National Planning Commission Nepalese Rupee Net Present Value Office of Auditor General Per Capita Funding Project Development Objective Public Expenditure and Financial Accountability Public Finance Management Program Implementation Manual Public Procurement Monitoring Office Poverty Reduction Strategy Credit Regional Education Directorate School Grants Operation Directives School Improvement Plan School Management Committees Seven Party Alliance Sector Wide Approach United Nations Children s Education Fund United Nations Educational, Scientific and Cultural Organization World Food Program
Table of Contents FOR OFFICIAL USE ONLY PROJECT PAPER DATA SHEET... 1 I. INTRODUCTION 11. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING 111. PROPOSED... 2 IN THE AMOUNT OF US$60 MILLION... 2 CHANGES... 6 Iv. CONSISTENCY WITH COUNTRY ASSISTANCE STRATEGY (CAS)rrSN... 7 V. ECONOMIC ANALYSIS OF FINANCING GAp... 8 VI. EXPECTED OUTCOMES... 8 VIIS BENEFITS AND RISKS... 8 VI11. FINANCIAL TERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING... 9 ANNEX 1: SCHOOL EDUCATION REFORMS IN NEPAL... 10 ANNEX 2: DONOR HARMONIZATION... 13 ANNEX 3: PROGRESS ON KEY INDICATORS... 14 ANNEX 4: FIDUCIARY RISK ASSESSMENT... 15 ANNEX 5: EFA FINANCING... 24 ANNEX 6: GOVERNANCE AND ACCOUNTABILITY ACTION PLAN OF THE DEPARTMENT OF EDUCATION... 26 ANNEX 7: STATEMENT OF LOANS AND CREDITS... 30 ANNEX 8: COUNTRY AT A GLANCE... 31 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.
Date: November 8, 2007 Country: Nepal Project Name: Education for All Additional Financing Project ID: P107558 Project Paper Data Sheet Recipient: Government of Nepal Responsible agency: Ministry of Education and Sports Revised estimated disbursements (Bank FY/US$m) Team Leader: Rajendra Dhoj Joshi Sector DirectodManager: Michelle Riboud Country Director: Susan Goldmark Environmental Category: B Bank policies? For Additional Financing [ ] Loan [ ] Credit [XI Grant For LoandCreditdGrants: Total Bank financing (US$m.): 60 Proposed terms: Standard Financing P an (US$m.) Source Recipient IDA ADB UNICEF Financing Gap Total 1
I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional financing in grant terms in an amount of US$60 million to the Nepal Education for All (EFA) Project (Project ID: P074633; Cr. No. 39560). The proposed additional grant would help fill the financing gap - estimated at US$87l million for the remaining two years - resulting from a cost overrun of core project activities and scaling up of reforms for improved quality and efficiency. The government is expecting the European Commission (EC) support to close the remaining gap. 2. The original credit (US$50 million) was approved on July 8,2004, and became effective on August 27, 2004. This funding was IDA S contribution to the five-year EFA Program originally estimated to cost US$654 million but only funded up to US$629 million. The revised estimated cost is US$994 million. The Project uses a sector-wide approach (SWAP) and receives funding from the government, the Asian Development Bank (ADB), Denmark, Finland, Norway, DFID, UNICEF, and the World Bank. It represents an excellent example of donor harmonization. It covers a large sector that accounts for around 10% of the national budget. Donors contribute around one quarter of the project costs. 3, In the past few years, significant reforms aimed at enhancing efficiency of investments in primary education have been introduced. The government has announced, through the FY07/08 budget speech, that the reforms will be further broadened and deepened. With a view to meeting the heightened aspirations of the Nepalese people the government is increasing investment in education- particularly primary education-one of the top priorities of the people as evidenced by the mobilization of significant community resources for its expansion. 11. Background and Rationale for Additional Financing in the Amount of US$60 million 4. Country context: The popular movement of April 2006-led by the Seven Party Alliance (SPA) and the Maoists-brought an end to the direct rule of the King, and reestablished democracy in Nepal. Subsequently, a Peace Agreement was signed between the SPA Government and the Maoists ending the ten year old insurgency. In December 2006 an interim Parliament-including representation by the Maoists-was constituted, and in April 2007 an interim government including the Maoists was formed. The next step would be holding elections for a Constituent Assembly, which will have the mandate for drafting the constitution and function as a Parliament2. The swift and impressive move towards settlement of the conflict and the restoration of democracy have raised popular expectations, however challenges still exist towards cementing this process. Sustaining the peace process will be a challenge unless the root This is the gap without the proposed additional financing. The additional financing will reduce this gap to US$27 million. Following a failure to reach consensus on the electoral system, the government, on October 5, announced a postponement of the Constituent Assembly elections, planned for November 22. Coming just over two weeks after the CPN-Maoist withdrew from the Council of Ministers, these events illustrate the continuing fluid nature of the political situation in Nepal. The ongoing special session of the interim parliament is expected to resolve the deadlock either through a political compromise or a vote. Announcement of a new election date -- possibly before April 2008 -- is also anticipated soon thereafter. Notwithstanding the current setback, all sides appear keen to emphasize that they continue to honor the Comprehensive Peace Agreement which the UN is mandated to monitor. 2
causes of insurgency are addressed. These, among others, include: disenchantment of the people with public service delivery; elite capture of the government and bureaucracy; inequitable allocation of resources; geographic and ethnic disparities; and lack of employment. Some of these could be addressed through greater investment in primary education, and effective management of the limited resources. 5. Sector context: In 2001, Nepal initiated reforms (Annex 1) aimed at increasing the accountability of schools and efficiency of investments following the Seventh Amendment of the Education Act passed by the Parliament and demonstrating a rare consensus. Despite the political instability, these reforms have moved ahead and by now Nepal has already built an impressive track record that includes: (a) formation of school management committees (SMCs) accountable to parents - thus ending the political appointment of SMCs; (b) transfer of public schools3 to community management: to date 3,607 schools-r over 13% of public schools-have been transferred; (c) per capita funding for non-salary costs reducing the political influence in resource allocation; (d) disbursement of salary grants to schools instead of supplying government teachers allowing schools to recruit teachers; (e) funding of unaided schools improving equity, and encouraging communities to open schools; (0 introduction of a grants manual for transparent allocation of resources; (g) opening textbook printing and distribution to the private sector; (h) introduction of social audit for strengthening accountability of schools to communities; and (i) shift from implementation of development activities through dedicated project units to delivery through the regular government administration. 6. Nepal has also made significant progress in terms of donor harmonization (Annex 2). Building on the success of the basket funding (pooled donor funding) approach adopted in the Basic and Primary Education Project (BPEP) I1 (1999-2004)-funded by Denmark, EC, Finland, Norway and the World Bank-a SWAP was adopted for EFA through which seven donors are pooling resources together with the government. The government is preparing School Sector Reform (SSR) Program covering grades 1 to 12, which will start in 2009 after the end of EFA. Donors have indicated their commitment to jointly appraise this program. Donors are also considering the government request to fund piloting of selected SSR activities under the framework of EFA. 7. Encouraged by the reforms and efficiency gains, the government is increasing investment in primary education. This fiscal year: (a) the share of the education sector in the national budget increased to 16.6% from 16% (the previous year); and (b) the share of primary education in the education budget is being maintained at a high level of over 60%. The wide reach of education investments makes it a good vehicle for delivering peace dividends. 8. Program objectives and scope: The original project development objective (PDO) was to improve access to and benefits from basic and primary education for children, especially from disadvantaged groups, and from literacy programs to poor adults. The project objectives and design have remained un-changed. However, based on the implementation experience some sub- 3 In Nepal schools are classified into community and institutional schools. Institutional schools, which are fhded privately, are called private schools. Community schools are classified into aided and unaided schools. Schools to which government has supplied teachers are aided schools. Unaided schools receive salary grants from the government instead of teachers. Aided schools are also referred to as public schools in this project paper. 3
activities were added and others dropped or modified while remaining within the overall scope of the project. 9. Performance to date: The project is making good progress towards achieving the EFA outcomes. The progress on key indicators is presented in Annex 3. Access to primary education is steadily rising. From 2004 to 2006, according to Ministry of Education and Sports (MOES) statistics, the net enrolment rate (NER) increased from 84.2% to 87.4%.The expanded reforms are likely to accelerate the pace to reach the access target of 96%. 10. Social disparity in access to education has been reducing satisfactorily. From 2004 to 2006, according to MOES, the gender parity index (GPI) has increased from 0.87 to 0.94. The efficiency of the system is improving as evidenced by the increase in the survival rate4 from 76.2% in 2004 to 80.3% in 2006 against the project target of 85%. If the present trend continues the project target is likely to be met. Similarly, progress is also being made in reducing illiteracy, with the literacy rate of the population aged 15 to 24 reaching 79.4% in 2006 from 70% in 2001 against the project target of 82%. 1 1. Although standardized learning achievements have not been administered during the EFA period, an evaluation of community schools underway, which includes standardized learning assessment tests, should help Nepal to initiate such tests. 12. On the implementation side, the government has been always meeting its commitment for co-financing EFA, and it has demonstrated reasonable implementation capacity. The absorption capacity of EFA has been high - using at least 95% of allocated resources annually. Adequate emphasis is being given to improving accountability and governance, and particularly strengthening financial management. The process of periodic progress reporting through the Implementation Progress Reports (IPRFthat measure progress on outputs, detailed analysis of financial information and procurement management-has now gradually been internalized. 13. The development objective (DO), implementation progress (IP) and components have been rated satisfactory, and all covenants have been complied with. 14. Justification for additional financing: EFA is the main vehicle for attaining universal primary education in Nepal. The Program originally estimated at US$654 million started with a total commitment of US$629 million - US$479 million from Government of Nepal (GON), and US$l50 million from donors, of which US$50 million was the IDA Credit. The financial gap estimated at US$25 million at the beginning has increased very significantly due to: (a) government's commitment to provide free primary education and meet the popular aspirations of universal primary education, which entailed funding additional teachers and non-salary costs including additional classrooms; (b) unforeseen rise of 27% in teacher salaries; (c) increase in number and amount of scholarship for girls and dalits; and (d) a fall of US$ against Nepali Rupee by about 11%. The share of children continuing study to grade 5 computed using the proxy method. 5 Based on Census, 2001 and Demographic and Health Survey, 2006. 4
15. In addition, radical reforms, which are expected to improve both quality and efficiency of the primary education system in Nepal, are being expanded to cover additional schools and mainstream within EFA (see box 1). Box 1: Major Reforms in Education Sector in Nepal 1. 2. 3. 4. 5. Salaw grants are provided to schools to recruit community teachers. Empowering communities to hire and fire their own teachers - as opposed to government supplying them with centrally recruited teachers- increases teacher accountability, which impacts quality of education. First introduced in 2003104 in unaided schools through IDA PRSC support, it was mainstreamed into the EFA SWAP program in FY04/05. This funding modality was spread to aided schools from FY05/06. Already very popular among the communities, this reform has proven to be highly effective and EFA plans to scale up the impact by providing additional salary grants equivalent to 8,000 and 10,000 (Le. cumulative 21,824 and 31,824) teachers salaries in FY07/08 and FY08/09 respectively. Community Managed Schools (CMS): Started in 2002, the transfer of aided primary schools to SMCs has been a radical reform. To date, 3,607 schools have completed the process. Community ownership empowers the SMC (consisting of parents, other community members, teachers and a local government representative) with various staffing and fiscal decisions. GON has set a target to transfer an additional 2,500 aided schools to community management in FY07/08, and recently announced a plan to bring all 7,000 or so unaided schools to the fold of community-managed schools (CMSs). Each CMS is provided with a one-time start-up untied grant of approximately US$1,540 as an incentive for its choice to transfer. The transfer of management of aided schools to the community was first supported through CSSP and later mainstreamed into EFA SWAp. EFA additional financing is expected to disburse incentive grants to about 16,000 schools. Per capita fundinz (PCF) of salaries is a student enrolment-based funding (as opposed to teacher-based funding) that is expected to enhance quality and efficiency through increased school choice (for children), competition among schools, and efficient teacher deployment. GON is introducing PCF based salary grants in both unaided and aided community-managed primary schools from FY07/08. While allocating PCF grants, schools with high student-teacher ratio will receive higher priority. PCF provides a major shift in funding formula and mitigates political influence in resource allocation. Zmmoved equifv: One of the major reforms of EFA in terms of improving equity in resource allocation is the expansion of -ita non-salary cost grants financing (NPR 300 per student per year on an average equivalent to about US$4.6 per student per year) across the country. The number of recipients of these grants is expected to increase by over seven million students. An increase in the number of dalit students and the expansion of girls scholarships to cover 50% of girls is expected to increase the number of scholarship recipients by over five million. To address the increase in enrollments the additional financing would support construction of 8,000 additional classrooms. Opening textbook mblication to mivate sector: Textbook grants to schools have been part of EFA since the beginning. They were introduced to remedy extreme delays in delivery of free textbooks by Janak Education Materials Center (JEMC), a state owned enterprise. GON has now opened up printing and distribution of textbooks to the private sector. Started as a pilot in FY06/07 in the eastern development region for grade 5 textbooks, it is now expanded to grades 1 to 5. 16. These include: (a) providing salary grants to schools instead of supplying government teachers - supported at the beginning through the IDA Poverty Reduction Strategy Credit (PRSC); (b) transferring public schools to community management (supported on a pilot scale through CSSP, an IDA Learning and Innovation Loan ); (c) gradually introducing per capita (child) funding (PCF) of salaries for improved efficiency of education expenditure, which entails a shift from teacher-based funding to child-based funding; (d) improving equity through per capita non-salary cost grants and scholarships; and (e) disbursement of text book grants to schools - instead of free textbooks supplied through by a state owned enterprise - to ensure timely delivery of quality books. 5
17. The program is now estimated at US$994 million. To meet the gap of US$365 million, GON and donors have committed additional US$247 million and US$3 1 million, respectively. GON is requesting US$60 million grant from IDA to further narrow the financing gap. 111. Proposed Changes 18. With the additional financing, there will be no changes in the PDO or the project design. Institutional arrangements for financial management and disbursement will remain unchanged. The fiduciary assessment for additional financing is presented in Annex 4. The government has agreed on an Action Plan with the donor partners for improving overall financial management in the sub-sector. The proposed Financial Management (FM) arrangements will be adequate for the additional funding level. The additional financing is expected to be used before the current closing date6. 19. The Parliament has enacted the Public Procurement Law based on UNCITRAL model, and the Government has subsequently approved the related Procurement Regulations. In this project, though no ICB procurement is foreseen, any ICB procurement related to project activities which is to be financed under the Grant shall be procured in accordance with the procedures in the Bank s Guidelines for Procurement under IBRD Loans and IDA Credits (May 2004, revised October 2006) using the Bank s Standard Bid documents. All procurement through national competitive bidding using the proceeds of this additional financing will be carried out following procedures prescribed in the above Law and Regulations with the caveat that no preference of any kind will be given to any bidder. The bid documents for National Competitive Bidding (NCB) shall be those reviewed by and agreed with the Bank. 20. The Procurement Section of the EFA Program Implementation Manual (PIM) will be revised to incorporate the above change. The revised PIM will also specify measures for enhancing governance and accountability, as outlined in the Governance and Accountability Action Plan prepared by GON. 21. The financing plan for EFA is presented in Annex 5. The original estimated cost of the Project was US$654 million, of which the government was expected to finance US$479 million, and donors US$175 million (26.8% of the total costs). At the beginning of the program donors were able to commit only US$l50 million (22.9% of the program costs), reducing the original financing to US$629 million. The cost of the program is now estimated to increase to US$994 million. Of the proposed additional financing of US$365 million, US$247 million will be borne by the government, and ADB and UNICEF have committed US$30 million and US$l million respectively. The proposed additional financing of US$60 million from IDA will reduce the funding gap to US$27 million. A significant portion of this gap is likely to be met from the requested assistance from EC. 22. In spite of the large increase in the cost of the program (about 52%7), the donor share in program financing is expected to be close to the planned-i.e., 27.0% against the originally planned 26.8%. This indicates that donor financing has not displaced government financing and that the government has mobilized additional resources for EFA. The additional financing will fund expenditures incurred till the end of FY08/09 only. In relation to the original program cost of US$654 million. 6
23. A detailed account of changes in the structure of expenditures is also presented in Annex 5. EFA Agreement has only one expenditure category Eligible Expenditures under AWPBs*. The classification of expenditures into categories, shown in Annex 5, into salary grants, nonsalary grants, scholarships, classrooms and other physical facilities, and incentive grants is merely for understanding the nature of changes in the structure of expenditures that the additional financing may bring. Overall the structure of expenditure has remained similar in spite of the considerable increase in the program costs. 24. As the proposed additional financing to EFA will be pooled with funds from other sources it will not be possible to link this financing with a particular set of EFA activities. The budget heads of the GON Red Book to be financed by this additional financing, consistent with the Joint Financing Arrangement entered by GON and SWAP donors, are as follows: 65-3-1409 - Education for All Primary Education, 65-3-1 69 - School Teachers Documentation, 65-3-1 76 - Teacher Pension Facilities, 65-3-1 67 and 65-4-1 67 Non-Formal Education Center, 65-3-1 70 - Special Education Council, 65-3-417 and 65-4-41 7 Education for All Program Center, 65-3-804 and 65-4-804 - Education for All Program District. 25. Out of the IDA Credit of US$50 million, US$11.4 million is yet to be disbursed. The remaining funds are expected to be disbursed within FY07/08. The proposed additional financing needs to be committed for expenditures incurred from the beginning of FY07/08. Therefore, the proposed additional financing will be effective retroactively from July 17, 2007. The amount of retroactive financing will not exceed SDR 7.6 million (equivalent to US$l 1.8 million). Before drawing the grant proceeds from the proposed additional financing GON will use the balances available under the existing Credit. IV. Consistency with Country Assistance Strategy (CAS)/ISN 26. Supporting continuation of reform efforts aimed at building a new prosperous and peaceful Nepal is the core theme of the Bank s 2006 Interim Strategy Note (ISN). Following the Seventh Amendment of the Education Act in 2001, the education sector has witnessed bold reforms that have started to reshape the sector by changing the role of government from being a provider of education services to being a facilitator for ensuring efficient delivery of education services through communities. These reforms constitute the state s response to the strong public discontent over the failing public education system, but have endured opposition from teachers unions and the political turmoil because of the strong popular appeal. The success being achieved through these reforms does provide some hope to the population that a New Nepal can be built. 27. Supporting community management of schools is consistent with the Bank s strategy-as reflected in the ISN-of protecting the reform process. The proposed additional financing will significantly help to accelerate the pace of transfer of schools to community management. 8 Annual Work Plan and Budget. These numbers are budget codes. lo The beginning of Nepali fiscal year FY07/08. At one stage the student union affiliated to the Maoists also supported teachers unions, but now this support has withered. 7
~~ 28. Political interference in the selection and deployment of teachers constitutes a major hindrance for equitable and efficient allocation of public resources as it disempowers SMCs, which are responsible for the management of schools. The proposed PCF to finance teachers salaries will go a long way towards protecting communities from such interference, and as a result strengthen community management of schools. Financing for both physical facility upgrading and salaries-which is a long overdue obligation of the state-will send a strong message across the country that the government cares about its citizen s needs. This will help sustain peace, a key objective of the ISN. V. Economic Analysis of Financing Gap 29. The results of the revised economic analysis remain largely the same as for the original project, and as such, the project remains economically justified. Using the original analytical framework and accounting for the additional project costs, the net present value (NPV) is revised to US$136 million from the original US$235 million. Similarly, the revised internal rate of return (IRR) is estimated at 14.2% from the original 16.2%. 30. The revised fiscal analysis, assuming that the benefits remain unchanged, indicates that the extra EFA costs are financially sustainable. This is based on the recent increasing trends in education spending as share of Gross Domestic Product (GDP) (about 3.6% of GDP in FY07/08) and commitment to maintain education spending at around 17% of overall government expenditures. VI. Expected Outcomes 3 1. The most significant outcomes of the additional financing are: (a) enabling government to pursue significant reforms in school education that will help to enhance the effectiveness of investments in primary education by improving accountability of schools to beneficiaries; (b) ensuring access to primary education for all children, including to socially and economically disadvantaged children by increasing investment in primary education; and (c) improving school infrastructure to help enhancing access to good quality education and retention of children. The above outcomes will translate into the following changes in the end of the program targets for outcome and results indicators: (a) the survival rate to grade 5 of 85% will increase to 88%; (b) the share of sub-sector budget transferred to schools as grants of 65% will increase to 75%; (c) the number of schools transferred to community management will increase from 10,000 to 16,000; (d) the number of recipients of scholarships from 1.7 million to 7.1 million *; (e) the number of students getting per capita salary grants will increase from 0 to 1,000,000. VII. Benefits and Risks 32. This additional financing will support the continuation of a series of ground breaking reforms that will increase the returns from investments being made in the primary education sub-sector. This will in turn help to achieve the objective of improving access to and quality of primary education, and improving efficiency and institutional capacity. Because of the likely resistance l2 In terms of recipient (student) years. 8
to reforms from vested interest groups and the continuing political instability, implementation of the program continues to be risky. Given that the resurgence of conflicts in Nepal can not be ruled out, the risks associated with a potential expansion of the conflict also need to be considered in design of the program. The potential risks, measures for mitigating them and risk ratings are given in the table below. beneficiaries behind the reforms Risk Rating: H (High); S (Substantial); M (Modest); N (Negligible or Low) 33. During the conflict, schools not only continued to function, but also educational indicators improved significantly. The risks associated with the conflict can be reduced by speeding up the transfer of schools to community management, which strengthens community ownership of schools. The transfer of schools to community management, salary grants for teachers, per capita salary grants, transparent resource allocation criteria, and opening textbook supply to the private sector are all reforms aimed at reducing the chances of elite capture. However, efforts to reverse these reforms cannot be ruled out. To help mitigate this risk a communication campaign to rally the beneficiaries behind the reforms is critical and will be carried out. VIII. Financial Terms and Conditions for the Additional Financing 34. The additional financing will be on IDA grant terms, instead of the IDA credit terms applicable for the original operation. The terms and condition for the Grant will be standard. 9
~ ~~~ Annex 1: School Education Reforms in Nepal NEPAL: EFA Additional Financing Historical context 1. The regime of the Ranas13 tightly controlled access to education fearing that educated people would not tolerate their tyranny. During the Rana period, there were only a few government schools catering to the ruling elite. As such, mass education in Nepal started only after the overthrow of the Rana regime and establishment of democracy for the first time. At that timei.e., in 1951 when the population of the country was about 8.3 million (as compared to 26.5 million today)-total primary enrolment was barely 9,000, Inspired by the advent of democracy, people started a mass campaign for opening public school^'^. Communities decided when and where to open schools. They built classrooms and hired teachers. Schools were funded through philanthropic donations and fees. The government, instead of opening government schools, started giving grants to schools covering around 25% of operating costs. With little government funding and intervention, by 197 1 primary enrolment reached 4 10,000, In 1 97 1, all community schools were nationalized, but the tradition of community initiation of schools continued, which helped Nepal to make remarkable achievements in improvement of access to primary education. By 2006 primary enrolment reached 4.3 million, and the percentage of primary age children in school at 87% is one of the highest in South Asia. Reforms 2. During the last seven years, Nepal has introduced two major reforms in primary education: transferring management of schools to communities and introduction of salary grants. 3. Transferring management of schools to communities: Nationalization of schools led to the serious deterioration of their accountability, and as a result the decline in the quality of education. Responding to the demand for quality education by parents, the government was forced to open school education to the private sector in the beginning of 1980s. Private schools m~shroorned~~, and private education soon became synonymous with quality education. The gap between private and public schools became wider and wider, which fueled serious public discontent. Responding to this discontent, in 2001, the Parliament passed the Seventh Amendment of the Education Act paving the way for reforms in school education. This amendment renamed public schools as community schools. This was a symbolic gesture recognizing the failure of the public school system, and expressing the hope that communities would be able to rescue the failed system. The cornerstones of the amendment were the provisions for formation of school management committees (SMCs) accountable to parents, and recruitment of teachers by SMCs. In 2002, Government of Nepal (GON) announced the policy of 13 The Rana dynasty ruled Nepal from 1847 to 1951 and was an autocratic and repressive regime. During this period Nepal was isolated from rest of the World. l4 In those days, schools established by communities were referred to as public schools (public schools in the conventional sense are government schools). After 1951 the government did not open schools. l5 There are about 8,000 private schools in Nepal catering to about 10% of school enrolment. 10
transferring management of schools to communities on voluntary basis16. Schools volunteering to become community-managed were offered incentive grants of NPR 100,000 (equivalent to around US$1,540), and assured of continued government funding. This reform, which has no precedence world-wide, constitutes one of the most radical reforms in school education aimed at addressing poor governance of public schools wide spread in many developing countries. 4. Soon after the announcement of this reform, an intense political debate started, which continues to date. The fiercest resistance to this reform came from teachers unions though there was no dearth of teachers who stood behind the reform. Notably breaking the ranks of the unions, some union activists also supported the reform. At one stage, the student union affiliated to Maoists also joined the opposition from teachers unions. The reform seriously slowed down because of the agitation of the Maoist Student Union, which resorted to coercive means to arrest the expansion of community-managed schools (CMSs). Notwithstanding all the odds, community management of schools is expanding. To date 3,607 out of about 23,000 aided schools have been transferred to community management. Now the opposition from the Maoist student union has withered, and the teachers unions have become more conciliatory to the reform. 5. This reform is already showing results. The mobilization of community resources has increased, regularity of teachers and students has improved, and there is greater transparency and accountability in schools. The best indication of the positive results from this reform is the incidence of movement of students from private schools to CMSs. The following factors have contributed to the success of this reform: (a) the strong popular support for community management of schools associated with a long tradition of community delivery of school education; (b) the consistent support from GON notwithstanding that the government has changed six times since the implementation of this reform; and (c) the positive results shown by CMSs. 6. The government has set a target of transferring an additional 2,500 public schools to community management in FY07/08, and has also announced a plan to bring unaided schools to the fold of CMSs. Approximately 7,000 unaided schools are expected to be converted into CMSs by the end of EFA. 7. Introduction of salary grants: All schools in Nepal are initiated by communities with permission from the government but without its financial support. Such schools are called unaided schools. Subsequently, the government provided teachers to these schools converting them into aided schools. The government has not increased the number of government teachers since 1998. The implications of this action were: (a) all schools established after 1998 have remained unaided; and (b) the shortfall of teachers in aided schools increased with the rise in enrolment. As a consequence, communities had to fund and recruit more and more teachers. To reduce burden on communities and fulfill the commitment to free primary education, since 2003 the government introduced the policy of providing salary grants to schools instead of supplying 16 The decision to accept community management is made by the SMC and endorsed by a parents meeting. A school gets the status of a community-managed school by entering into an agreement with the district education office. 11
government teachers allowing SMCs to recruit teachers financed through public resources (SMCs have always been recruiting teachers funded by community resources). At present, over 40,000 community recruited teachers are working in community schools. This policy has encouraged communities to open new schools as well as upgrade the existing schools. The number of unaided schools has reached about 7,000, and all higher secondary schools in Nepal are unaided. Notwithstanding the stoppage in supply of government teachers, the net enrolment rate in primary education increased from 70.4% in 1998 to 87.4% in 2006. This stands as a unique example of how community initiative can help in delivery of school education. 12
Annex 2: Donor Harmonization NEPAL: EFA Additional Financing 1. Donor harmonization in the education sector in Nepal began with the implementation of the five-year Basic and Primary Education Program I1 (BPEP 11) in 1999. The Government, Denmark, European Commission (EC), Finland, Norway and the World Bank pooled together resources into a basket to fund BPEP I1 - a primary education sub-sector development program. The distinctive feature of the basket-approach was the joint financing of each expenditure item according to the pre-agreed shares. This became possible after all parties agreed to: (a) fund the government sub-sector program; and (b) use IDA financial management and reporting procedures, and procurement guidelines. The basket funding approach helped to significantly reduce the transaction costs, strengthen government leadership, and improve donor cohesion. 2. Building on the successful implementation of BPEP 11, the Sector-Wide Approach (SWAp) was used for the follow on program - Education for All Program (2004-2009). At the beginning, the program was funded by GON, Denmark, DFID, Finland, Norway and the World Bank. Donors, who were not able to join the SWAP supported the program through parallel financing. Donors joining the SWAP became known as pooled donors and others non-pooled donors. Subsequently, ADB and UNICEF joined the pool. Owing to the success of the SWAp, the share of pooled funding in the total program funding has been increasing over the years. Non-pooled donors include JICA, UNESCO and World Food Program (WFP). Pooled donors, non-pooled donors, and INGOs participate in annual missions facilitating primary education sector wide coordination. 3. The Core Document outlining the sub-sector goals, strategies, polices and the program underpinned the SWAp. The Joint Financing Agreement signed by pooled donors and the government sets the basic principles for SWAP operation. The Code of Conduct signed by all donors sets the basic principle for donor harmonization. 4. EFA SWAP uses the government s financial management system that includes planning, budgeting, accounting, reporting and auditing systems. It uses the government regulations for procurement using national competitive bidding, and the World Bank Procurement Guidelines for international competitive bidding. Disbursements are based on trimester implementation progress reports, which give account of physical and financial progress, and procurement activities. 5. An important feature of the SWAP is financing of both recurrent, including salaries, and capital expenditures. This approach has helped to enhance the effectiveness of donor support by bringing the whole primary education sector under the purview of collaborating partners. 13
Annex 3: Progress on Key Indicators NEPAL: EFA Additional Financing Indicator Baseline, April End Remarks April 2006 2004 Net enrolment rate (NER) Survival rate to grade 5 Gender parity index (GPI) Percentage of teachers with required qualifications and training (for government teachers) Literacy rate for 15-24 age population Literacy rate for 15-45 age population Literacy rate for 15-45 age female population Share of schools completing social audit Share of subsector budget transferred to schools as " wants 84.2% 76.2% 0.87 3 0% - 0% 25% 87.4% 80.3% 0.94 60.2% 79.4% 55.3% 70% Project Target, July 2009 96.0% Expected to reach 92.2% at the current pace of progress, but successful implementation of PCF is likely to move much closer to the attainment of the project target. The net attendance ratio" in 2006 was 86.6% according to Demographic and Health Survey (DHS) - an independent 85.0% 18 99% survey. The project target is expected to be met. GPI for 2006 according to DHS was 0.95. GPI for hills was 0.99. The project target is expected to be achieved. 82% The target likely to be met. 75% According to DHS between 2001 and 2006 increased from 46% to 55%. According to DHS between 200 1 and 2006 increased from 40% to 50%. Not monitored by MOES. Target likely to be met. 65% The reform moved faster than anticipated. Net attendance rate is as a rule lower than net enrolment rate because of student absenteeism or dropout. No GPI target set. 70% in 200 1. 14
Adequacy of FM Arrangements Annex 4: Fiduciary Risk Assessment NEPAL: EFA Additional Financing 1. The World Bank commissioned financial management review of EFA for FY04/05 and FY05/06. Based on the review a set of actions for the short-term was agreed upon in the Joint Annual Review (JAR) of EFA in May 2007. Key results expected are in seven areas: (a) timely fund release; (b) timely submission of Implementation Progress Reports (IPR); (c) improved quality of school audit; (d) compliance with social audits in all schools; (e) submission of Department of Education () computerization plans for all districts; (f) simplified and harmonized Program Implementation Manual (PIM) and School Grants Operation Directives (SGOD) to be made applicable for all education programs; and (g) preparation of medium to long term capacity development plan. 2. In a recent assessment of the implementation of these actions, there was good progress. has been regularly monitoring the implementation of these plans. In view of the progress made the FM arrangements are found to be adequate for the current funding level. From the fiduciary perspective, based on current assessment of the progress made in the implementation of the action plan, the FM risk rating is modest. Attachment 1 provides the FM Risk Rating Summary. Agreed Action Plan for Financial Management Improvement Issue Delayed first trimester fund release Delayed submission of Financial Monitoring Reports (FMRsY Implementat ion Progress Reports (WW Action Fund Release on Time 1. Agree on the modality with National Planning Commission (NPC) and Ministry of Finance (MOF) regarding timely first trimester fund release based on agreed Annual Strategic Imdementation Plan (ASIP). 2. Ensure timely submission of Form Number 2 (Trimester Progress Report) to DTCO for timely release of funds for the second and third trimesters. Timely submission of FMR/IPR 1. Assign a coordinator and team members for FMWIPR preparation and internal quality control. 2. Provide online access to Financial Comptroller General s Office (FCGO) database (read only). 3. Completion of respective draft by concerned units. Responsible Agency /MOES/ NPCMOF DEOs Timeline May 25,2007 (before annual review). Within 30 days of the end of each trimester First Trimester by December 3 1 ; Second by April 30; Third by September 30 May 3 1,2007 July 15,2007 First: December 15 Second: April 15 Third: September 15 15
Issue Audited financial statements of schools were either not submitted or delayed Social audits not performed and schools not aware of requirement S Action Responsible I Agency 4. Compile internal review of the first draft. I 5. 6. Submit final FMWIPR to MOES, MOF, NPC, Pooling Partner Contact Point Review and submission of comments by pooled partners. coordinator 7. Compile feedback from pooling partners I and forward final FMWIPR to MOES, MOF, NPC, Pooled Partner Contact Point. Improved quality of school audit. 1. 2. Prepare Audit Guide and standards for the audit of schools by coordinating with Institute of Chartered Accountants of Nepal (ICAN) and/or Auditing Standards Board. Audit Guide to specify that auditors would be appointed as per the Education Regulations. New Audit Guide to be made effective 4. Dissemination and orientation of the new Audit Guidelines. 5. Assign a task force in to monitor compliance of school audits. 6. Arrange quality review arrangements of school audits and monitoring of actions reported by auditors and remedial measures on a sample basis. 7. Report on audit compliance of school audits with a separate section in each year's status report. Compliance with social audits in all schools. 1. Ensure that Social Audit Committee is constituted in all schools. 2. Issue circular that schools will get third trimester budget released only upon submission of the social audit report for the previous year. Use radio notice as well as newspaper notice three times. 3. Revisit the Social Audit Guide, and revise, as necessary, to make it Contact Point from FY07108. 3. Publish roster of qualified auditors for all 1 Regional districts - (registered with ICAN). Education Directorate (RED) District Education Offices (DEOs) Timeline Within one week of the respective dates in (3) As per the agreed timeline Within two weeks of the receipt of reports Within two weeks of receipt of reports July 15, 2007 September 30,2007 September 30, 2007 December 3 1,2007 September 30,2007 March 3 1,2008 (before Joint Annual Review Mission) December 3 1,2008 (before Annual Consultation Meeting) December 3 1,2007 August 3 1,2007 August 15,2007 1. Dissemination and orientation on the revised Social Audit Guide specifying DEOs December 3 1,2007 16
Issue Accounts still being maintained manually Most DEOs and schools are not able to comply with Program Implementat ion Manual (PIM) and School Grants Operation Directives (SGOD) Inadequate capacity at various level including accounting staff Action minimum requirements for social audits: students attendance records, class occurrence records, community recruited teachers recruitment practice, reward practices for best performing teacherskudents, disclosure to public, etc. 5. Assign a task force in to monitor compliance of social audits. 6. Report on audit compliance of school audits with a separate section in each year s status report. 7. Arrange quality review arrangements of social audits and monitoring of actions reported by auditors and remedial measures on a sample basis. 8. Periodically review audit findings, identify key issues, and capacity gaps. Prepare Strategy and Computerization Plan in all districts 1. Prepare computerization plan to connect those DEOs which have electricity and telephone facilities and transmit information directly by DEOs to and vice versa. 2. Start computerization in and a few districts to start with. Simplified and harmonized PIM and SGOD to be made applicable for all programs. 1. Revisit and revise the Program Implementation Manual (PIM) and SGOD to harmonize with overall requirements with other programs with a view to simplify it to forms and templates 2. for use by all schools. Dissemination and orientation on the Revised Manual to all concerned and with follow-up orientation. 1. Prepare medium to long term capacity development plan Responsible Agency MOES DEOs Timeline September 30, 2007 December 3 1,2008 (before Annual Consultation Meeting) March 3 1,2008 (before JAR Mission) March 3 1, 2008 (before JAR Mission) August 3 1,2007 March 3 1,2008 September 15, 2007 December 3 1,2007 I/REDsD December 3 1,2007 17
Status of Implementation of Action Plan 3. Fund Release on Time. Compared to the previous year, there are improvements that will contribute to timely fund release during the first trimester in FY07/08. For FY07/08, a total budget of about US$245.9 million was approved. The Annual Work Program and Budget (AWPB) was approved on July 26,2007. Based on this, authorization for spending has already been sent to DEOs. Orientation programs for District Education Officers, Resource Persons and Accountants have also been organized. Because of these actions, fund release is now expected to take place during the first trimester (this otherwise used to happen only in the second trimester until last year). Since AWPB was approved on time, there is no need to release funds based on ASIP. will closely monitor the timely submission of Form Number 2 (Trimester Progress Report) to enable timely release in the second and third trimesters. 4. Timely Submission of IPWFMR. All sub-actions agreed on these indicators have been complied with. On line access to Financial Comptroller General s Office (FCGO) database was provided to in the first week of August after submission of the second trimester FMR. was able to submit the second trimester report for FY06/07 within the due date. The third trimester report was also submitted within the deadline agreed in the mission. Improved Quality of School Audit. has asked the Institute of Chartered Accountants of Nepal (ICAN) to submit a proposal, and this has recently been submitted to prepare an Audit Guide to schools. There has been a slight slippage in the time table due to closure of ICAN due to internal strike. 5. Compliance with Social Audits in all Schools. has already sent circulars to all schools conveying the need for complying with social audits as per the Social Audit Guide. has also used mass communication such as, newspapers and radios, for dissemination of the existing Social Audit Guide. plans to discuss the preliminary draft of the Guide in the workshop. Based on the testing of the existing Guide, plans to move ahead revising the Guide, and take further actions as laid out in the sub-actions. 6. Prepare Strategy and Computerization Plan in all Districts. Danida is providing direct funding support to the implementation of this action. has already recruited the Financial and Information Technology Experts, and the work has been initiated. plans to prepare the Strategy and Computerization Plan with the help of these consultants and also prepare detailed technical specifications. This would be first piloted in ten districts. 7. Simplified and Harmonized Program Implementation Manual (PIM) and School Grants Operations Directives (SGOD). Draft PIM and SGOD have now been prepared. Revised PIM has been disseminated to DEOs. Revised SGOD will be disseminated to schools during School Improvement Plan (SIP) training. 8. Prepare Medium-to-Long-Term Capacity Development Plan. is planning to prepare the medium-to-long-term capacity development plan. A focal person has been identified to initiate this action. 18
Disbursements 9. Current IDA disbursements under the ongoing EFA are US$40.44 million or 78% of the total credit allocation of US$50.0 million. The remaining amount is expected to be fully disbursed during FY07/08. Of the total approved budget of US$245.9 million, the pooled partners have committed during the recent JAR to contribute about US$47.1 million (about 19%) of the total EFA budget. GON is expecting a total contribution of US$73.5 million (about 30% of the total EFA budget) from the pooled partners for FY07/08. Of the total committed US$49.4 million from pooled partners, the following are the contributions of each partner: ADB - US$11.8 million, Denmark - US$7.5 million, DFID - US$8.0 million, Finland - US$3.2 million, Norway - US$7.3 million, UNICEF - US$0.2 million, and the World Bank - US$l 1.4 million from the existing credit. From the additional financing, IDA i s expected to pick up the funding gap of about US$24.1 million, if no other commitments are obtained to fill up this gap. Disbursements will continue to be report-based. All pooled partners will continue to disburse their portion of funds as determined by the FMRs to the designated Foreign Exchange Accounts maintained at the Nepal Rastra Bank. External Audit 10. The Office of the Auditor General audits the accounts of EFA. There are no pending audit reports. Issues raised by Auditors such as, strengthening the monitoring of scholarship distribution and making social audits effective, were noted during the financial management review, and hence, they have been appropriately incorporated into the Action Plan. FY05/06 audit was submitted three months late from the due date (was March 15,2007). With the current efforts in, it is expected that FY06/07 audit report will be on time (March 15, 2008). The following audit reports will be monitored in the Audit Report Compliance System (ARCS) : Implementing Agency Audit Auditors Audit Due Date EFA Financial Office of the Auditor 8 months after the Statements General (OAG) end of each fiscal year (March 15th) I I I I Implementation Progress Report 1 1. The third trimester IPR of FY06/07 was submitted on September 30,2007 - within the due date. The second trimester report of FY06/07 was also submitted within the due date for the first time. This marks considerable progress in terms of timely submission of IPRs. Generally reports have been of acceptable quality. In the interim, the current processes and financial reports are adequate. 19
Procurement 12. The report on the ex-post procurement review carried out by the World Bank recommended.the need for strengthening procurement monitoring system at. Other than this, the existing procurement arrangements and designated procurement staff are adequate. 13. The Parliament has enacted the Public Procurement Law based on UNCITRAL model, and the Government has subsequently approved the related Procurement Regulations. In this project, though no ICB procurement is foreseen, any ICB procurement related to project activities which is to be financed under the Grant shall be procured in accordance with the procedures in the Bank s Guidelines for Procurement under IBRD Loans and IDA Credits (May 2004, revised October 2006) using the Bank s Standard Bid documents. All procurement through national competitive bidding using the proceeds of this additional financing will be carried out following procedures prescribed in the above Law and Regulations with the caveat that no preference of any kind will be given to any bidder. The bid documents for NCB shall be those reviewed by and agreed with the Bank. The Procurement Section of the EFA Program Implementation Manual (PIM) will be revised to incorporate the above change. The revised PIM will also specify measures for enhancing governance and accountability. has prepared a Governance and Accountability Action Plan. 14. To address the issue of weak monitoring capacity, shall be responsible for implementing its procurement monitoring system, which the is currently in the process of strengthening. Disclosure of Information and Corporate Governance 15. With recent enactment of the Rights to Information Act, 2007, disclosure requirements under EFA are expected to be even more transparent and all information readily available for public disclosure. will post in its website all available guidelines, procedures, and other key information related to EFA. has already established a mechanism for publicly disseminating the information on community grants through Display Boards in schools. has specifically agreed to disclose the following through its website: Procurement Plan; Procurement Complaints Mechanism; Trimester Implementation Progress Reports (approved versions); Invitation for Expression of Interest, Bid Documents, Request for Proposals, Minutes of Pre-bid Conferences, Contract Awards; and Annual Audited Financial Statements. Proposed Legal Covenant 16. The legal covenant for the Additional Financing should include the following clause: Additional Financing shall be retroactively effective from FY07/08 (July 17,2007) to cover the financing gap of up to SDR 7.6 million (US$1 1.SO million equivalent). The balances available under the existing Credit will be entirely used before using the grant proceeds from Additional Financing. Supervision 17. In close cooperation with the pooled partners, the FM supervision activities will follow up on the implementation of the agreed Action Plan. The next JAR will closely review the 20
implementation of the Action Plan. If unsatisfactory results are observed, the FM rating will be downgraded and the risk rating will also be modified. But, this situation is unlikely to happen with the joint efforts of the pooled partners. On the other hand, if good progresses continue, the FM rating will be upgraded. As project implementation moves forward, desk reviews of internal, external, and social audit reports will be conducted. A follow-up FM review will also be carried out during next fiscal year to determine the impact of the implementation of the agreed Action Plan. 21
3 E + z d
E -1 E -1 E E %1 E n n n 3 I m 4 4 n l x >c >c 4
Annex 5: EFA Financing NEPAL: EFA Additional Financing Tablel. Structure of EFA Financing expenditure categories US$M Yo of original financing Total Share, Salary 443 grants 70 224 61 51 667 67 Non-salary 45 grants 7 36 10 79 81 8 Scholar- 12 ships 2 29 8 249 41 4 Classrooms 32 and other physical facilities 5 35 10 109 67 7 Incentive 7 grants 1 25 7 3 62 Others 90 14 16 4 17 Total 629 100 365 100 58 Year FY05 FY06 FY07 FY08 FY09 Total ActualProjected 92.5 102.4 126.8 172.2 232.1 726.0 Donors Planned 18.3 26.4 32.4 37.6 35.3 150.0 ActuaVProjected 29.9 38.8 45.6 73.5 80.0 268.0 24
Table 3. EFA Financing Plan (in US$ million) Estimated costs Gap Available Estimated financing Government Donors Original financing I 654 I I 25 I I 629 I Additional financing 365 27 338 629 365 479 247 150 91 "of which" DFID Denmark Norway Finland World Bank ADB UNICEF Gap Estimated total cost/financing*' 35 I 28 I I 23 I 14 50 60 30 1 27Lu 994 2o A significant portion of this gap is likely to be covered by EC. The gap of US$25million in the original financing is not included, as this has been accounted for in the additional financing. 25
Annex 6: Governance and Accountability Action Plan of the Department of Education NEPAL: EFA Additional Financing For the Central Level Disclosure of Information and Corporate Governance 1. With the recent enactment of the Rights to Information Act, 2007, information under the Education for All (EFA) program will be made transparent, which will be available for public disclosure. In this context, shall disclose the following information in its website: (1) Agreed Procurement Plan; (2) Procurement Complaints Mechanism; (3) Trimester Implementation Progress Reports (approved versions); (4) All Expression of Interests (EOIs), Bid Documents, Request for Proposals, Minutes of Pre-bid Conferences, awards of contract details; (5) Annual Work Plan and Budget; (6) Annual Audited Financial Statements; (7) Program Implementation Manual; (8) School Grants Operation Directives; (9) Per Capita Funding Grants Implementation Directives; (1 0) Flash Reports; (1 1) Number of permanent teacher positions, rahat teacher positions and number of per capita (student) grants by districts. 2. The Government of Nepal in its efforts to improve the governance, has already revised the Anti-Corruption Act, enacted the Public Procurement Act 2007 and Right to Information Act 2007, and has initiated the revision of the Financial Administration Regulations. 3. MOES/ will undertake the following specific actions: 0 Disclosure oflizformation: Ensure full implementation of the recently enacted Procurement Act, 2007 and Right to Information Act 2007, in particular related to the disclosure provisions. External Complaints: Develop a functioning, independent, and credible system to deal with external complaints on procurement, fraud/corruption. Monitoring: Strengthen Monitoring Mechanism to monitor compliance to the agreements with development partners and the provisions made in the law of the Land together with assessing impact on outcomes. Disclosure of Information 4. Disclosure ofprocurement Information: will make available the following information in its website: 0 Promptly post S annual procurement plans and schedules; Post all bidding documents and requests for proposals issued in accordance with the procurement provisions of the agreement; 26
0 Post all short lists of consultants and, in cases of prequalification, and lists of prequalified contractors and suppliers; 5. In addition to above, MOES/ shall also: 0 Allow representatives of the end-users of the goods or works being procured to attend the public bid openings; 0 Post in its website the contract award information for all contracts for goods and works in accordance with Clause 60 of the Public Procurement Act, 2007. Post in its website a list of all contracts awarded in the last three months, which include the name of the contractor/consultant, the contract amount, the number of bidderdmakers of proposals, the procurement method followed and the purpose of the contract. 6. Disclosure of Final Audit Report: will make publicly available its latest final audited financial statements. 7. Dealing with External Complaints on Procurement, Fraud/Corruption and Construction Quality 8. will establish a system dealing with external complaints on procurement, fraudcorruption and construction quality. This system will be publicized on the website with a log and filing to monitor status of follow up of each received comments, suggestions and grievances. The mechanisms will include provision for follow up investigations of substantial complaints by Internal Auditors, or third party audit to ensure independence and reliability of the system. 9. If as a result of any such information provided by the member of the public, cost savings are achieved or charges of misconduct and misappropriation are proven, such members of the public will be awarded some recognition such as a certificate of excellence or felicitation at a public ceremony with or without a monetary reward. Simultaneously strict disincentives will be announced for the erring members of the departments. will establish the remedial actions and sanctions for cases of fraud and corruption that are reported and for which evidence is found and charges established after due process of investigation. This will include sanctions to government staff proven to be involved in such cases. 10. Any entity that is found to have misused funds, or not effectively carried out key elements of the anti-corruption provision, may be excluded from subsequent participation in the program carried out by the. Information regarding such cases, where lessons are learned and funds are retrieved, will be widely published for information of the members of public. Strict procedures to ensure anonymity of informants will be enforced. 1 1. Tracking of the status of investigations and measures taken will be reported in trimester reports. 27
12. In the event that a complaintlallegation is received concerning an externally funded contract, the relevant funding agency shall be informed at each stage of the complaint handling process. 13. Responding to Procurement Complaints: Procurement related inquiries and complaints from suppliers, contractors or consultants occurring from time to time shall be efficiently disposed of in accordance with the provisions of the Public Procurement Act, 2007. 14. General inquiries about procurement policy, procedures and guidelines are dealt with by the within 20 working days of receipt. 15. Filing and disposal of complaints directly by the bidders relating to a specific procurement shall be in accordance with the Public Procumbent Act, 2007 and the Regulations framed under the said Act. 16. Responding to Allegations of Fraud or Corruption: All forms of complaints related to the quality of works, goods or services shall be recorded. Where allegations are shown to be valid, the matter shall be referred to PPMO who shall act, including imposing sanctions, in accordance with the Public Procurement Act provisions. 17. Individuals who choose to report allegations of fraud or corruption may remain anonymous or request that their identity not be disclosed outside of any investigating team. 18. Responding to Complaints on Construction Quality: Complaints received directly from the public relating to the quality of a specific work, goods or services shall be in writing. They are to be received and then reviewed by the Director General (DG). 19. The DG shall record all complaints, whether they are referred from other recipients or directly, in a register to be maintained in a secure location in his own office. The email and physical address of the DG is to be made public. 20. The DG shall, within five working days of receipt of complaint, acknowledge receipt in writing to the complainant indicating that the is considering the issues raised and will discuss them with the concerned officers of the. 2 1. The DG shall then consult with the relevant officers of the and, after thorough review of the facts as well as interviewing of officers concerned as necessary, shall make a judgment as to the validity of the complaint. Within twenty working days, the DG shall instruct the relevant officer to take remedial action as necessary. 22. The DG shall write to the complainant within thirty working days of the receipt of such complaint as to the final decision of the competent authority. Indicators for Monitoring the Compliance to the Agreements and Impact on Outcomes of the Provisions made in the law of nation 23. shall establish a monitoring team on the convenership of the Director, Planning and Monitoring Division for tracking the implementation of program activities. The DG will supervise the activities of the team. 28