Participation and Transparency Offering Better Fiduciary Assurance- A Case Study Tamilnadu Empowerment and Poverty Reduction Project, (TNEPRP), India Mohan Gopalakrishnan (FM) and Kalesh Kumar (Procurement) India Country Office
Project Objectives To empower the poor by improving their livelihoods and reducing poverty by: Developing, strengthening pro poor local institutions at the village level Building skills and capacities of the poor Enhancing their livelihood by financing demand driven interventions
Project Approach CDD: Village communities identify poor, needs, plan, implement and monitor project activities. Livelihood Focus: substantial technical support, technology & credit linkages with commercial banks and marketing tie ups.
Funds Flow Reporting Gram District Sabha- Societies Village Assembly (oversight over VPRC and PLF) state society Social Audit Committee Funds Flow Reporting Funds Flow Village Poverty Reduction Committee (VPRC s) Skill Development Fund Spl Assistance Fund Capacity Building Fund Achievement of triggers for fund realse to CBOs are appraised by independent teams district societies (26) Panchayat Level Federations (PLF) Credit Committee Loan Recovery Committee Funds Flow Institutions of Community Professionals ( CPLTC) PFT's (Cluster Self Help Groups Level) (SHGs) Economic Activity Federations (EAF)
Risks Fiduciary Risks The sheer scale of operations at the community level (over 2500 VPRC s and PLFs and 60,000 SHGs) with over 80% of the project funds flowing to the community institutions. Lack of experience of CBOs to manage funds, i.e take decisions in a transparent manner and disburse/ recover loans to SHG and its members. Risk of elite capture Risk of intervention by project staff in the decision making of CBOs. Capacity to maintain proper books of accounts and including interest and loan calculations and provide monthly reports to the project. Risk of mis-use of funds due to over-dependency on the book keeper.
How Addressed in project design CBO at the Center Stage Equity Participatory Identification of the poor and endorsement of the same by village forum (Gram sabha) Inclusion Facilitating Style Participation Mandated representation in executive bodies and leadership selection A glance at Ma Kolakudi indicates that even An effective though Entry Point STs make Activity, less through than 1% efforts (20 HHs) for Differently of the Abled Persons total village population (2034 HH) they Mandatory composed training on 13% COM of including the Village aspects Poverty of Reduction governance procurement and financial Committee, management. while SCs who make up 60% (1300 Project non-negotiable HH) of the population, (pillars) which composed includes 46% Transparency of the and Governance; VPRC Transparency Funds Release based on achievement of Triggers Accountability Funds released in Tranches based on achievement of triggers which included institutional (trained book keepers) and fiduciary performance conditions.
How addressed- in project design con t Additional Aspects IEC SIMPLIFIED TO DEMYSITY PROCUREMENT PROCEDURE Strong emphasis on training & capacity building on book keeping and community procurement supported by simplified procedures. Delineation of private goods procured by individuals from loans and public/common goods funded from grants; Fiduciary assurance obtained by repayment rate and credit portfolio performance. Emphasis on social audit downward accountability, transparency and disclosure. IT based MIS developed during preparation. Grievance Redressal mechanism.
Findings on Governance and Accountability CBOs analyzed on following indicators: Participatory and Consensus Oriented Decision making Transparency Accessible, Open, Well Displayed Participatory and Consensus Oriented TN ERP 4.1 Community/ 3rd Party Oversight Transparency Community/ 3rd Party Oversight 4.3 4.7 Information Documentation Mgmt. Standards Complaint Redressal System Info & Documentation Mgmt. Standards Complaint Redressal System 4.5 4.7 TN ERP
How follow up during implementation Monitoring adherence System of Independent Appraisal of achievement of triggers for fund releases introduced. Financial Incentives introduced for good performance based on an objective system of rating of VPRC s and PLFs. Formation of CPLTCs who support in community monitoring, grading and capacity building coupled with incentive for all stakeholders. Impact of social audit 100% Annual external audit of VPRC s and PLF by firms of chartered accountants & sharing of findings in State Executive Committee & the Governing Body of the project. System of rotation of office bearers in VPRC and PLFs broad basing community leadership Social Audit An Effective Anti-corruption tool In Kallapadi Panchayat in Vellore, a community disability facilitator was selected and trained to work for the disabled. An aged woman had applied for individual assistance of Rs.3000/- to buy goats. When the loan was sanctioned, the facilitator took the cheque, encashed it and gave the old lady Rs.1500/- to buy goats, and kept Rs.1500/- for himself. He made her believe that only Rs.1500/- has been sanctioned to her. The Social audit committee found out the mischief during asset verification. The community recovered the money from the facilitator and removed him from that position.
How followed up during implementation Monitoring adherence & responding to changes Credit linkage with banks created incentive for adherence to sound financial Is Information on Display Board is Updated & fiduciary performance Independent Finding from MTR Roll out of IT based accounting system (multi-lingual) at village level and its 0.0 interface No with response project 1.3 MIS to provide real time (monthly) financial 1.9 performance and progress. Transparency & disclosure 1.0 and report of SAC in the Gram sabha Meeting and distribution of No 1.2 financial information to the participants. 2.2 Fiduciary performance of CBOs an indicator for annual performance of 99.0 Project staff. Yes 95.9 Prompt action by project on mis-use. (specific and systemic) 97.5 0.0 20.0 40.0 60.0 80.0 100.0 120.0 JSDF % Phase 2 % Phase I %
Procurement Performance in TN EPRP Compared to conventional procurement cycle subprojects scored poorly on market search for bidders, tendering, tender opening and evaluation. 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 TN ERP TN ERP - The dichotomy of delivering a successful outcome while not following conventional procedures explained by practice of Relationship Based Procurement, wherein communities established a mutually beneficial and accountable commercial relationship between the purchaser and the supplier
Procurement Rating Communities excel in identifying needs and in the planning stages Performance on market search for bidders, tendering, tender opening and evaluation was poor Participation of stakeholders for ensuring right procurement outcome seen in high rating in Awards and Completion Despite poor performance in certain stages, outcomes were good and high scores were seen for completion, project implementation quality and VfM, compared to conventional procurement cycle,