Inception report to Community Managed WASH Project (CMP) Implementation Manual Development -Final- 12 th March 2014, Addis Ababa, Ethiopia

Inception report to Community Managed WASH Project (CMP) Implementation Manual Development -Final- 12 th March 2014, Addis Ababa, Ethiopia

Table of Content 1. Introduction... 1 2. Objective, scope and inputs of CMP manual development... 3 2.1 Objective and scope... 3 2.2 Inputs... 4 3. Methodology... 5 3.1 Preliminary Document Review... 5 3.2 Meetings and Discussions... 6 3.3. Inception workshop... 7 4. Preliminary standpoints Main questions and... 7 4.1 Principles and core elements of CMP... 7 4.2 Fund Channelling and Financial Management... 7 4.3 Institutional Arrangement... 9 4.4 Key issues raised... 9 5. Key challenges... 10 6. Team, work plan and deliverables... 11 6.1 Consultancy team and Taskforce... 11 6.2 Work plan and deliverables... 12 Annex 1: Annex 2: Suggestions for accommodating CMP in the Programme Operation Manual (POM) of the OWNP. Additional reflections of the consultants towards CMP in POM

1. Introduction The Government of Ethiopia (GoE) is being implementing the Universal Access Plan (UAP) and Growth and Transformation Plan (GTP) for improved water supply, sanitation and hygiene (WASH). The final aim of this plan is to achieve universal access to safe water for 98.5% of the country s population and 100% coverage of basic latrine by 2015. Despite the significant acceleration in coverage and a relatively favorable policy environment, a considerable amount of work needs to be done to achieve the Ethiopian Government (GoE) Growth and Transformation Plan (GTP) 1. For the substantial acceleration towards reaching the UAP/GTP targets, the government is integrating innovative and less expensive models with the conventional ways of implementation. An external evaluation undertaken by the Water and Sanitation Program in 2010 2, established that CMP approach, previously called Community Development Fund (CDF) is highly efficient, cost effective and sustainable compared to other WASH implementation modalities. Up to this point, the key feature of CMP is that it transfers funds and project management responsibilities for physical construction directly to communities via a micro credit institution. The communities, through Water, Sanitation and Hygiene Committees (WASHCO), are responsible for the full development process through planning, financial management, implementation and maintenance. The unique feature in CMP approach is that the WASHCO manages not only community-generated funds but also the government subsidy provided for capital expenditures. This approach/model is pioneered and developed in Amhara Region. Because of the added values of this approach, the Government of Ethiopia (GoE) has taken the initiative to scale up with the intention of including CMP-based implementation into the National WaSH Program (WASH GTP/UAP) for its wider application. CMP is now being scaled up into other regions such as Benishagul Gumuz, Tigray, Oromiya and SNNPR. In September 2013, the Ethiopian government launched its (multi-sectoral) Sector-Wide Approach (or SWAp) for water, sanitation and hygiene (WASH) called the One WaSH programme. The plan brings together four ministries- Water Resources, Health, Education, and Finance & Economic Development- in a bid to transform the way water and sanitation services are delivered to the people of Ethiopia. It is a further step in the gradual development of the essential policies, guidelines, financing and coordinating mechanisms to deliver universal access to water and sanitation, and to sustain services, across the country. It consolidates planning, budgeting and reporting activities of WASH in a broad sector wide approach with the catchphrase One plan one budget one report, highlighting the harmonizing of WASH efforts around the country. OWNP reflects the ambition of contribution significantly in meeting both the Growth and Transformation Plan (GTP) and Millennium Development Goals (MDG) targets. With One WASH, management of water and sanitation is planned to be better, along with a consolidated WASH account at the Ministry of Finance and Economic Development. There are many innovations in the OWNP, one of which is the inclusion of Community Managed Projects (CMP) as an approach and component part of the OWNP. CMP is an implementation modality alongside the service delivery models of Self-supply (SS), Woreda-Managed Projects 1 WASH Implementation Framework (WIF), 2013 2 See Mainstreaming the Community Development Fund Financing Mechanism, Final Evaluation Report, Water and Sanitation Program, April 2010 1

(WMP), NGO projects and multi-village schemes. The Woreda Managed Project (WMP) Approach Implementation Manual has already been tested and implemented through the support from WB, DFID and AfDB. The Self-supply Implementation Manual is under development by the Self-supply Working Group (SSWG) and is being tested in the regions piloting and accelerating Self-supply. The initial Community Managed Project (CMP) Implementation Manual has been developed and Implemented by COWASH and FinnWASH in 45 woredas using MFIs as financial intermediaries in transferring funds to the community and communities have been procuring the goods, materials and services for their projects. In 2006 EFY COWASH and FinnWASH will implement CMP in 70 woredas. The main strategy set in the One WaSH plan is to develop and implement low cost technologies as much as possible. According to the One WaSH National Program (OWNP) document the number of communal and institutional water and sanitation facilities are needed to be constructed: Item Number of Water Schemes Number of new Sanitation Facilities Communal water points 55,865 6,724,676 Rehabilitation of water points 20,010 Town water supplies 777 Self Supply schemes 42,529 Schools 22,985 6,122 Health Facilities 7,772 7,037 The implementation strategy, defined in the revised WASH Implementation Framework (WIF) and signed by the four ministries of Water, Health, Education and Finance would follow an accelerated demand responsive stepped approach in which awareness creation and capacity building would be followed by implementation. The WIF signed in March 2013 defines the CMP approach as follows: In the CMP, the representative of the user-group (WASHCO or Institutional WaSH Committee) i.e. the Community is the Project Manager. Allocated funds are transferred to a special CMP account through a financial intermediary (e.g. micro-finance institution) with WWT authorization, are withdrawn by community signatories for approved expenditures on water point construction/upgrading. The WASHCO is directly responsible for contracting, procurement, quality control and financial accountability to the community and to the Kebele and Woreda Administrations. There is no hand-over. The user-community owns the project from the beginning. Basically CMP is characterized that communities implement and manage projects. In terms of technology simple and low cost schemes will be the priority area for implementation. Higher levels of technology service are also for consideration, albeit this will not receive major focus in the revised CMP Implementation Manual at this point of time. Sustainability of the services through focused and improved operation and management (O&M) of schemes is also one of the strategies. It is assumed that 60-70 % of the communal and Self-supply targets can be implemented by using the low-cost technologies. The CMP approach is specifically designed for low-cost technology implementation. CMP approach is to improve the implementation efficiency, increase the community contribution and ownership and accordingly improve the sustainability and functionality of the WASH facilities. 2

In this ambition, the OWNP and the innovations in financing in the sector also face some serious challenges. Ethiopia is home to the CMP approach, based on over 10 years of piloting and now in a nationwide scaling-up phase, which is widely cited as a good example for its use of MFIs to route money to communities to build their water schemes. With the OWNP however, the Ministry of Finance and Economic Development (MoFED) has requested that the Public Funds in CMP shall be transferred to communities through Woreda Finance Office and the use of MFIs is not accepted. Furthermore, the Public Finance and Procurement Directives do not recognize community-groups as eligible organizations to receive and use Public Funds. Therefore the existing CMP Implementation Manual for Communal and Institutional Water and Sanitation implementation is to be revised to follow the Public Finance and Procurement Systems. These amendments will facilitate the application of CMP implementation modality in the enactment of One WASH National Program. The State Minister of MoWIE has requested the preparation of the CMP Implementation Manual that is based on the Public Finance and Procurement Management Systems of Ethiopia. The question is whether -or to what extent- this can be complied to, and how this would impact the CMP modality. Questions and concerns arise, such as: Can CMP maintain core modality of community institutional representatives (such as WASHCOs or PTAs) procure and manage their CMP schemes?; In aligning CMP to Public Systems, what would the future difference between CMP and WMP?; If CMP would adjust or compromise on various essential key characteristics of communities management and ownership, is there a risk that along the way, CMP goes offbudget with donors preferring to fund CMP through MFIs but then government funding not being routed this way? These questions impact the objective, scope and input of CMP manual development, described in the next section. 2. Objective, scope and inputs of CMP manual development 2.1 Objective and scope The objective of this assignment is to review the existing CMP manuals and guidelines and prepare a revised Community Managed WASH Project (CMP) implementation manual based on the National WASH Implementation Framework, current improvements of the approach, components of WASH and feedback from national and regional level consultations of the relevant partners. The scope of the consultancy is to focus on considering institutional WASH (sanitation and hygiene facility construction and its management for and by school and health institutions), community sanitation and hygiene components, and worked-out funding modalities in which the communities through Water, Sanitation and Hygiene committees (WASHCos) are responsible for the planning, financial management, implementation and maintenance of their WASH facility. Community contracting includes concepts of pricing and legalization, supply chains and financial viability of WASHCos. The CMP Implementation Manual is to provide clear guideline if and how (to what extent) communities and their representative bodies such as WASHCOs and PTAs can implement the water supply and sanitation facilities themselves using the Public Funds transferred to them from 3

the Woreda Finance Office. There is need for innovation and finding solutions towards this management model. In the CMP Inception workshop, the MoWIE s request was not to detail a CMP accommodating higher level of technical service (including service associated with piped water supplies and drilled boreholes). In this initial stage, the revised CMP implementation manual is to focus on low-cost simple technologies, acknowledging rapid and high increase in coverage levels. 2.2 Inputs The inputs would be based on meetings, review of existing CMP implementation guideline, formats and related documents, reports and follow-up discussions with (Regional) CoWASH teams and partners who are currently implementing CMP both at national and regional level. Focus group discussions and in-depth and interviews with selected national regional, zonal and woreda CMP staff will be part of information gathering and analysis. The following inputs were proposed as per the ToR: I. Review the existing CMP implementation guideline and other WASH implementation manuals including WIF as to revise the implementation manual to address sanitation and hygiene part of WASH. This revision will be done at the level of community based sanitation and hygiene works, as well as for institutional WASH. Illustrate and example other possible funding mechanisms other than what is stated in the current CMP implementation guideline with their cons and pros of each recommended funding modalities; II. Review the current CMP formats and develop the revised formats with short size; III. Prepare trainers guide for each manual, which will help to make the trainings more active and live (participatory learning). The training guide is to e.g. highlight different trainings to be provided at different levels, propose who are trainees, identify contents of the training, and describe training modality. The guide coming into about will support the future preparation of the actual training manuals; IV. Align these implementation modalities of the WIF and current CMP implementation approaches with One WASH Program Approach; V. Review the existing spare part supply systems implemented with different organizations in the country as well as international experiences and recommend the best option(s) to be integrated with CMP implementation modalities; VI. Review different approaches to set the minimum amount to be contributed by communities and the required follow up by WWO experts in continuing the O&M fund contribution for each scheme type; VII. Review the existing artesian payment systems and indicate the minimum payment scheme for the required activities for each type of scheme; investigate the advantage of partial contract agreement where WASHCOS give only labour contract over full contract agreement where WASHCOS give labour and all procurement to be made by artisans/contractors; VIII. Review the different regions experience on WASHCO legalization and recommend the best lessons that should be replicated in other regions; IX. Investigate if there is any means to legalize the community procurement in the WASH implementation and seek examples where community procurement is done, how well it has worked and how it can be made possible in GoE financed WASH implementation; X. Assess the funding modality (MFI as financial intermediary in fund transfer) and document that the use of MFIs in the fund transfer is legal and recommended. 4

As mentioned, at request of the MoWIE, the initial input Review experiences of CMP applications including levels of service associated with piped water supplies and drilled boreholes and recommend on the methodologies on how CMP address higher schemes is not priority at this stage and will not be detailed in the revised CMP implementation manual. 3. Methodology Desk review, in-depth interviews, discussions, report writing and presentations will be taken up as to assure a high-quality review of the existing CMP manuals and guidelines and prepare a revised Community Managed WASH Project (CMP) implementation manual. The added value of accommodating fieldwork as part of this assignment was discussed in the Inception workshop. For time constraints as well as for acknowledging one of the team members substantial CMP implementation- and research exposures in the field over the past years (which includes discussions with regional, zonal and woreda WASH offices and WASHCO members), no field visit will be undertaken. Instead, in a later stage, a complementary workshop in a Region will be arranged as to review and discuss the draft CMP Implementation manual. With regard to ownership and sustainability, the MoWIE has assigned the MoWIE Rural Water Supply Team Coordinator (Ato Tamene Hailu) supporting to the Community-Managed Approach as part of One WaSH National Programme. The MoWIE promised effort to involve MoFED along the process of drafting and approval of the revised CMP Implementation manual, which includes invitation of MoFED to the Inception and Manual review workshops. The upcoming section provides an overview of the activities undertaken in the inception report phase by the consultants, as to acquire pertinent information and to arrive at a full understanding of the tasks to be addressed. Additionally, brief highlight on consultative meetings with the key stakeholders and review of primary and secondary have been undertaken is presented here under. 3.1 Preliminary Document Review The Consultant has been given access, through the COWASH Project, Ministry of Water, Irrigation and Energy to relevant documentation and supporting materials necessary to commence the study. These documents have been reviewed where required, but primarily, in overview since it will be studied, reviewed and updated in greater detail later. The following documents are part of the review: CMP Fund Management Guideline, 2012 CMP Fund Management Guideline Annexes,2012 CMP Implementation Manual for Manual Drilling,2012 CMP Implementation Manual for Institutional Sanitation,2012 CMP Implementation Manual for Institutional Sanitation Annexes,2012 CMP Communication Strategy,2011 Communication and Training Methodology Guide,2011 Mainstreaming cross cutting issues in CMP, 2011 5

CMP and gender step by step guide WASHCO legalization Proclamation for Benishangul Gumz Region WASHCO legalization Regulation for Benishangul Gumz Region Rural Water Supply O & M management manual for point water supply Report on Mainstreaming CMP in to OWNP in line with Public Finance regulation of Ethiopia, 2013 Generic CMP Financial management Guideline, 2012 Guideline For The Implementation of High Technology Water Supply Options In CMP, 2013 Concept Paper on Women and Youth Led Supply Chain RWASH, 2013 COWASH M &E Framework, 2011 COWASH M&E Tools, 2011 RWSEP Reinvestment Finance Study, 2005 Evaluation and Mainstreaming of CDF, 2010 OWNP POM Zero Draft, 2014 OWNP Program Document, 2013 WIF Summarized and Signed Document, 2013 Public Procurement Directive of FDRE, 2010 Financial administration of the Federal Government, Regulation, No. 190/2010 Federal Government Accounting Guideline No 5/2010 Wash Implementation Framework, March 2003 One WASH National Program Document, August 2013 Ministry of Water Resources, Ministry of Health, Ministry of Education, Ministry of Finance and Economic Development: WaSH Implementation Framework, August 2011 Ministry of Water Resources: National Water Resources Management Policy, 1999 Of this elaborate list, main focus will be on reviewing the existing guidelines of CMP: the CMP Fund Management Guideline; CMP Implementation Manual for Manual Drilling; CMP Implementation Manual for Institutional Sanitation; and Generic CMP Financial Management Guideline. Whilst reviewing these guidelines, the consultancy team will focus on questions and challenges brought forward in section 4 and 5 of this inception report. 3.2 Meetings and Discussions Besides document review, the team held discussions with COWASH, MoWIE, SNV, World Bank, UNICEF and POM experts who currently consider or implementing CMP both at national and region level, as to understand their perceptions and concerns. Meetings and discussions were held with the following sector experts: Ato Abiy Girma Ato Nuredin Mohamed, Ato Tamiru Degeffa, Mr. Arto Suominen Ato Yohannes Melaku Ato Tesfaye Bekalu Dr. Samuel Godfrey Mr. Bruck Aregai Yemareshet Yemaneh National WASH Coordination Office, National Coordinator Director, Water Supply and Sanitation Directorate, MOWIE Coordinator, national WASH Program Management Unit Chief Technical Advisor, COWASH, MoWIE CMP Specialist, COWASH MoWIE Senior Water and sanitation Specialist, World Bank Chief, WASH Section UNICEF Senior WASH Expert, SNV Consultant/POM 6

Key staff in regional bureaus of Oromia, Amhara and Benishangul Gumuz regions will be consulted and invited in drafting and review of inception report and revised CMP implementation manual. Bilateral consultation meeting with Finland Embassy is yet to be scheduled and highly valued for drafting the revised CMP manual. 3.3. Inception workshop The final Inception report has been concluded after valuable inputs from a participatory, half-day Inception Workshop taking place on February 6 2014 (Desalegn Hotel). The State-Minister MoWIE H.E. Kebede Gerba opened the CMP Inception workshop, and representatives of MoWIE, Finland Embassy, SNV, Federal and Regional CoWASH Staff, MWA, IRC, UNICEF, Amhara and Benishangul- Gumuz regions and WB provided input, suggestions and directions towards basic and essential components of CMP, which are incorporated into this final CMP Inception report or will be taken into account in the upcoming revised CMP Implementation Manual. 4. Preliminary standpoints Main questions and 4.1 Principles and core elements of CMP The key questions with regard to core elements of CMP are the following: What makes a rural WASH intervention a Community Managed Project (CMP) project? What are the key principles that should not be violated and compromised? How to create an enabling environment at community level for them to operationalize CMP? Bearing these questions into account, suggestions and guidance was provided to the Program Operation Manual (POM) of the One WASH National Programme (OWNP) as how to accommodate CMP. These suggestions need review (are they viable?) and endorsement. Reference is made in Annex 1. Annex 2 provides additional reflections of the consultants towards CMP in POM. One main exemption will be to allow the implementers of the CMP projects to procure goods and services in accordance with the Government Procurement Directive and Manual. Without this exemption, the CMP model would intrinsically fall. It is yet to be decided by the Taskforce/relevant stakeholders if CMP receives green for this exemption, or if the consultants shall write an Implementation Manual based on the assumption that the exemption will be granted. Another question that needs to be answered is whether an exemption still is required where WASHCOs are legally recognized. Governed by the suggested and MoFED s yet to be accepted core-guiding principles of the POM (Annex 1), detailed guidance for operationalization of CMP will be provided in the upcoming revised CMP Implementation Manual. 4.2 Fund Channelling and Financial Management One of the most critical elements of project management is fund channelling and financial management. As shown above, what makes CMP a distinct implementation modality is that community representatives access funds and manage the entire project process including procurement of services. 7

Major questions in channelling of funds and financial management of CMP that need to addressed and agreement needs to be found on are: I. How can channelling to communities be arranged with in the public finance management system of the Government of Ethiopia? II. How can the WASH grant be channelled to community representatives in order implement CMP effectively? III. How to establish adequate financial control mechanism to ensure fiduciary accountability and monitoring at all level? IV. How to establish enabling environment and capacities ( minimum capacity building package ) so that community representatives can effectively manage rural WASH projects? To address these questions, the following steps are suggested for CMP to operate in Rural WASH Programme. The first step in RWASH plan development is creation of awareness of the community. Communities will be sensitized and trained to identify their development priorities. Based on communities demand, Woreda WaSH Team (WWT) will develop a Woreda Strategic WASH Plan. The Woreda WASH plan will identify physical and financial targets of RWASH. The WWT will decide the implementation modality of the proposed WASH plan, guided by the WaSH Implementation Framework (WIF) and the One WASH Approach. For each WASH project in the Woreda WASH plan, the WWT will consider the most appropriate model for implementation out of the four RWASH modalities. In areas where the WASH intervention is determined to be CMP -determining factors towards this choice may still need to defined-, the following framework should be adopted as to align to the CMP implementation model, in line with the Public Finance and procurement management System: The annual Woreda WASH plan will be the basis for the annual Woreda WASH budget; The CMP investment grant should be separately budgeted in the Woreda WaSH budget; After Woreda s approval of the Woreda WASH plan and budget, the CMP investment grant as part of the WASH Budget, will be channelled from BoFED to WoFED; Communities and institutions, through the WASHCOs, will prepare and submit CMP project application for WASH grant; WWT will appraise communities application. The final design and cost estimate will be decided in the appraisal stage and separate financing agreement for each project will be signed by the WWT and the WASHCO; After signing the project financing agreement, WoFED will open individual accounts for the respective WASHCOs in Commercial Bank of Ethiopia (CBE); WASHCOs delegate bank signatories for withdrawal and will implement the project; WASHCO will procure the required services and goods for the CMP project using the Government procurement system; The WASHCO chair will report quarterly on expenditures and bank balances and submit the receipts of the CMP expenses to WoFED at the end of the project at which the project account will be closed; Woreda WASH team provide technical support, capacity building and monitoring of works to the WASHCOs and Kebeles; 8

Kebele Administration provides financial and procurement oversight and support to the WASHCOs. For institutional (schools and health institutions) WASH facility construction the same principle will be applied with Parent Teacher Associations (PTA) as implementers in schools and the Health Facility Committees for health instituties. Status of these bodies compared to WASHCOs still need to be clarified/ agreed upon. Through this line of order, the CMP service delivery modality aligns to the Public Finance & Procurement Management System of Ethiopia and the One WASH programme institutional arrangements. 4.3 Institutional Arrangement Currently CMP is supported federally through COWASH project and Regional support teams at regional level. Both at federal and regional level the required Technical Assistance (TA) is facilitated through these arrangements while the Water Supply and Sanitation Directorate and the Water Supply Core Process at regional level are to provide oversight and coordination. As technical assistance is required and should be maintained to effectively implement CMP, it is essential to critically think about institutionalizing CMP in WASH structures. CMP should follow the WASH structures as agreed on WIF and One WASH National Program (OWNP) document. Towards this, a number of issues need to be addressed in due course of implementing the OWNP: a) It is essential to look as how CMP expertise is or can be included in WaSH structures at all levels; b) Even within existing WASH structures, within the Program Management Units (PMU), no unit/focal person is responsible for CMP. A key issue to address is what is the best way to strengthen the Program Management Units (in all sector institutions) by including responsible CMP expertise/unit? c) Within the operational structures of MoWIE and regions there are no units responsible for CMP. What is the best way to create CMP capacity and expertise at federal and regional level? 4.4 Key issues raised In principle, there seems general consensus by sector partners that CMP is an effective implementation arrangement and can significantly contribute to addressing sector capacity limitations and ensuring sustainable WASH service. Both government and donor partners appreciate moving fund channelling and management of CMP towards the public finance and management rules of the GOE and OWNP. All sector partners recognize the need for organizing CMP with in WIF and public finance management rules of the GOE so that it can be implemented nationwide. Partners also recognize that the understandings reached in WIF should be the basis for any future action including the development of the CMP implementation guideline. Preliminary discussions highlight the following key issues that needed immediate consensus: I. PMU initially questioned the need for a separate CMP implementation guideline in the presence of POM. While it is a valid point to have one programme implementation manual, it is also important to understand that the POM is a guiding document with principles and 9

arrangements that does not provide detailed procedures for operationalization of CMP. This, the CMP Implementation Manual need to provide for; II. There are differing views on the type of technologies and level of service provision that can be implemented through CMP. While some partners favour not to be exclusive and see the (gradual) inclusion of higher service-level provision and higher technology levels, some partners see CMP only being effectively implemented by communities when it involves for simple and low cost technologies; III. There is a general understanding for streamlining CMP with in the existing WASH structures. Up to date, no units supporting CMP are embedded within the existing WASH structures. Strengthening the structures and creating capacities and expertise is critical. Concerns are raised whether this is practical, feasible and replicable over the 70+ woredas where CMP is to be implemented; IV. Creating enabling environment at community/user level is seen critical for effective implementation of CMP. The sector has to determine the minimum capacity support required for the CMP to work effectively; V. The issue of assuring quality construction, ensuring the reliability of the schemes and sources (especially at higher levels of technical service) and effective auditing and spot check within community contracting should be addressed in order to make CMP an effective and viable implementation modality; VI. When CMP would be modified in essential conception principles (for example, communities not being in the position to contract or procure on behalf of their CMP scheme) as to align to OWNP or certain donors requirements, CMP risks drifting off from its original and connectional implementation modality. The initiator and major donor Government of Finland might consider withdrawing from financial or technical support to a greatly amended CMP model in Ethiopia. All these areas of discussion need to be addressed and a consensus on practices and priorities has to be reached first and foremost for the consultancy team being able to develop a CMP implementation guideline acceptable by all major OWNP implementing partners. This leads us to the next section highlighting some key challenges in drafting a revised CMP Implementation manual. 5. Key challenges The teams initial -and by donor s confirmed- understanding on the ToR is that solutions for the revised CMP Implementation manual were already identified and agreed upon. The assignment was to focus on writing the manual based on already identified solutions and decisions. However, preliminary discussions in the inception phase show that modalities and communitymanaged implementation still need to be identified and solutions have to be negotiated. Discussions with Government and partners reveal that the process is not as straightforward as assumed, and the fundamental question arises whether it is possible to deliver a CMP manual that meet the requirements of the ToR, and solve disparities within the given consultancy timeframe. 10

Besides this fundamental challenge in delivering the assignment against ToR and consultancy timeframe, intrinsic key challenges in mainstreaming and effectively implementing CMP with in the OWNP and the public financial and procurement rules of the GOE are: I. Making CMP work effectively using channel 1b. The detailed arrangements have to be worked out how the fund will be channelled to community representatives and community institutions, such as WASHCOs and Parent-teacher Associations (PTAs). Related to this, bank availability and accessibility in woredas or the capacity of WASHCOs to report quarterly to Woreda Bureaus needs to be sorted out; II. III. IV. Developing and mainstreaming decentralised roles and responsibilities of all actors including WoFED, WWT, Woreda Water Office, Kebeles and Community representatives. This has to be developed in line with their mandates and in accordance with WIF; Building capacities of all actors from federal to community level. What kind of capacity or so-called minimum capacity building package is required for CMP to be implemented effectively under the new arrangement? High social cohesion is required to make CMP work. Certain livelihood systems -such as pastoralist communities or communities in conflict- are challenging for implementing and sustaining CMP modalities. V. What kind of fiduciary control and safeguard can be put in place that are acceptable to public finance management structures without compromising the core elements of CMP and its effectiveness? VI. What kind of procurement flexibilities can be built in to the system without violating public procurement directives of GoE? Solutions to these questions need to identified first, as to get to an agreed upon revised implementation manual. In the Inception workshop, the MoWIE suggested two solutions regarding procurement flexibilities to be built into the system: i) Review extension and delegation to communities, kebeles and woredas, optimizing kebele structures (e.g. exampling in Tigray) that effectively manage CMP; ii) Give the mandate to communities to delegate tasks to Woredas to handle procurement 6. Team, work plan and deliverables 6.1 Consultancy team and Taskforce SVN and COWASH have jointly employed a consultant team to carry out the preparation of CMP Implementation Manual. The following expertise has been employed: Inge Klaassen John Butterworth Eyob Defere Editor 11

Participants of the Inception workshop did not find it necessary to establish a Task Force to review the CMP Implementation Manual preparation. Instead, a similar workshop as the Inception Workshop would be sufficient to oversee the appropriate preparation and drafting of the CMP Implementation Manual so that it fulfils the requirements of the Public Finance and Procurement Management Systems. 6.2 Work plan and deliverables i) Inception report and presentation: an inception report with oral presentation including: Summary of desk review Objectives and questions Methods and justification of the proposed methodology for diagnostic List of key informant interviews Key implementation challenges and risks Implementation work plan and time table ii) Presentations of draft findings from diagnostic, mapping and recommendations iii) Final report on the revised CMP implementation manual. The report will include detailed results from the diagnostic and key recommendations (region specific). iv) Copy of the final version of the actual revised CMP implementation Regarding the timeline of the CMP consultancy: at the end of 2013 the revised ToR for CMP Implementation, clearly serving the One WASH National Program -with inputs from an Economist - was agreed upon. Contractual engagement of the consultancy team effectively started at the beginning of the year 2014. The start-up meeting for the consultancy could only be scheduled after the festive season, which was arranged for by mid January 2014 in the COWASH office, MoWIE. From 15-31 st January, desk-review and interviews took place. As discussed in the Inception workshop -and afterwards worked out further by the consultancy team and key stakeholders- the onward timeframe as to fulfil the assignment and the above-mentioned deliverables is the following: 3 rd February 2014: Draft Inception report, shared range of Stakeholders 6 th February 2014: Presentation Inception Report, half-day workshop with relevant Stakeholders 17 th March 2014: Zero Draft CMP Implementation Manual, shared with CoWASH, SNV, UNICEF, Embassy of Finland (client) 24 th March 2014: Consultants receive comments from CoWASH, SNV, UNICEF, Embassy of Finland 31 st March 2014: Draft CMP manual shared with wider group of stakeholders 7 th -14 th April 2014: Workshop Review of CMP Implementation Manual with relevant Stakeholders 21 st April 2014: Final draft CMP implementation manual (taking into account feedback of relevant Stakeholders). To be send to the editor 10 th May 2014: Final, edited revised CMP Implementation Manual However, consensus towards core CMP implementation modalities and the conceptual borders of the management model needs to be defined first, otherwise meeting these milestones against deadline are under pressure. A revised work process and work plan may need to be negotiated. 12

ANNEX 1: SUGGESTIONS FOR ACCOMODATING CMP IN THE PROGRAMME OPERATION MANUAL (POM) OF THE OWNP. The following section provides suggestion how CMP can accommodate in the Programme Operation Manual (POM) of the OWNP. They still need to be reviewed and agreed upon in terms of viability and compliance to the OWNP framework: 2.4 Rural WASH Implementation Modality (reference is made to page 15) The Rural WASH- water supply sub components have four alternative implementation modalities that are described in detail here below. Community Managed Projects (CMPs): Community Managed Project (CMP) is a Rural WASH (RWASH) implementation modality under which community representatives will be responsible for planning, and implementation of the project and management of the investment funds. In the CMP, the representative of the user-group (WASHCO or Institutional WaSH Committee) is the Project Manager. The role of Government is limited to channelling of funds, administration, facilitation and training, supporting capacity building of communities, monitoring and management of the Woreda WaSH Program instead of managing the implementation of large numbers of individual projects. The core principles of CMP are the following: Channelling from MoFED to BoFED-WoFED will follow the Channel 1b and the Public Finance and Procurement Management System of Ethiopia; Woreda Finance Office opens an account to each WASHCO and deposits the CMP grant at which and the community -through the WASHCO representatives-will access the fund for the implementation of the CMP project; The WASHCO is directly responsible for contracting, procurement and supervision of the scheme construction and/or rehabilitation. As such, the WASHCOs will be responsible for core implementation management the CMP project; The WASHCO is financially accountable to the Kebele and Woreda Finance Office; Investment fund for physical construction is directly transferred to the WASHCOs via Woreda Finance Office through a regulated, Commercial Bank of Ethiopia (CBE) account; The CMP implements low-cost technologies. The type of technologies will be defined in a separate and more detailed CMP Implementation Guideline that operationalizes the One WASH National programme. How does CMP operate in Rural WASH PROGRAM? The first step in RWASH plan development is creation of awareness of the community. Communities will be sensitized and trained to identify their development priorities. Based on communities demand, Woreda WaSH Team (WWT) will develop a Woreda Strategic WASH Plan. The Woreda WASH plan will identify physical and financial targets of RWASH. The WWT will decide the implementation modality of the proposed WASH plan, guided by the WaSH Implementation Framework (WIF) and the One WASH Approach. For each WASH project in the Woreda WASH plan, the WWT will consider the most appropriate model for implementation out of the four RWASH modalities. 13

In areas where the WASH intervention is determined to be CMP, the following actions will be taken: The annual Woreda WASH plan will be the basis for the annual Woreda WASH budget; The CMP investment grant will be separately budgeted in the Woreda WaSH budget; After Woreda s approval of the Woreda WASH plan and budget, the CMP investment grant as part of the WASH Budget, will be channeled from BoFED to WoFED; Communities and institutions, through the WASHCOs, will prepare and submit CMP project application for WASH grant; WWT will appraise communities application. The final design and cost estimate will be decided in the appraisal stage and separate financing agreement for each project will be signed by the WWT and the WASHCO; After signing the project financing agreement, WoFED will open individual accounts for the respective WASHCOs in Commercial Bank of Ethiopia (CBE); WASHCOs delegate bank signatories for withdrawal and will implement the project; WASHCO will procure the required services and goods for the CMP project using the Government procurement system; The WASHCO chair will submit the receipts of the CMP expenses to WoFED at the end of the project at which the project account will be closed; Woreda WASH team provide technical support, capacity building and monitoring of works to the WASHCOs and Kebeles; Kebele Administration provides financial and procurement oversight and support to the WASHCOs. For institutional (schools and health institutions) WASH facility construction the same principle will be applied with Parent Teacher Associations (PTA) as implementers in schools and the Health Facility Committees for health facilities. Through this line of order, the CMP service delivery modality aligns to the Public Finance & Procurement Management System of Ethiopia and the One WASH programme institutional arrangements. Governed by these core-guiding principles of the POM, a more detailed guideline for operationalization of CMP will be provided in a separate document. 14

Annex 2: Additional reflections of the consultants towards CMP in POM Community Managed Project (CMP) is a Rural WASH (RWASH) implementation modality under which community representatives will be responsible for planning, and implementation of the project and management of the investment funds. The WASHCO is directly responsible for contracting, procurement and supervision of the scheme construction and/or rehabilitation. As such, the WASHCOs or representative of the Community will be responsible for core implementation management the CMP project and become the Project Manager. In the OWNP, fund Channelling of CMP is requested to follow Channel 1b, from MoFED to BoFED- WoFED and financial management will follow the Public Finance and Procurement Management System of Ethiopia, which will need to be looked into for compliance and practicality. The role of Government is limited to channelling of funds, administration, facilitation and training, supporting capacity building of communities, monitoring and management of the Woreda WaSH Program instead of managing the implementation of large numbers of individual projects. Role of Woreda WASH Team will be approving, funding, facilitating, supporting communities and monitoring and supervision of the WASH project. Woreda Finance Office opens an account to each WASHCO and deposits the CMP grant at which and the community -through the WASHCO representatives-will access the fund for the implementation of the CMP project. Investment fund for physical construction is then directly transferred to the WASHCOs via Woreda Finance Office through a regulated, Commercial Bank of Ethiopia (CBE) account. The WASHCO is financially accountable to the Kebele and Woreda Finance Office. In general, procurement under the One WASH will be carried out in accordance with the Procurement Directives of June 2010 and Public Procurement Manual of December 2011 issued by the Ministry of Finance and Economic Development. 15