Liberia Reconstruction Trust Fund Implementation Manual

Liberia Reconstruction Trust Fund Implementation Manual Updated November 2009 2011-02-28 LRTF Implementation Manual 1

I. Background... 3 II. Coverage... 3 III. General Principles... 4 IV. Project Development and Approval... 4 V. Project Execution... 5 VI. Project Supervision and Monitoring & Evaluation... 6 Administrator... 6 Oversight Committee... 6 Links to Government and Civil Society... 7 Reporting... 7 VII. Modalities of Administration... 8 Donor Contributions... 8 2011-02-28 LRTF Implementation Manual 2

I. Background 1. Liberia s reconstruction and development present extraordinary challenges for the people and government of Liberia, and for the international community which pledged to support the reconstruction effort. The country has been devastated by a 15-year long civil war, near complete collapse of physical infrastructure and erosion of institutional and human capital. 2. The rationale behind taking a multi-donor approach to infrastructure rehabilitation stems from the sheer scale of infrastructure needs. The funding requirements to re-establish minimum service provision (such as electricity in Monrovia and a few secondary cities, year-round passable roads, and provision of minimum clean water) are immense. World-Bank financed feasibility studies alone focusing on ports, airports, water supply, sanitation, solid waste, drainage, power, and roads in various towns in Liberia identified funding gaps that amount to approximately 350 million USD. 3. Liberia s Poverty Reduction Strategy (PRS) includes Infrastructure and Basic Services as one of its four priority pillars. At a high level, the country s reconstruction efforts are overseen by the Liberia Reconstruction and Development Committee (LRDC), chaired by the President of Liberia. Though the LRDC drives the planning and coordination of the reconstruction process, existing mechanisms for implementation of that process are sub-optimal and capacity-constrained. The result is that partners who are not represented in Liberia have limited choices for channeling their resources. Given the importance of mobilizing as much funding as possible to meet the needs of the country, this issue requires an innovative solution. The creation of multi-donor trust fund provides partners with a mechanism through which they can contribute to Liberia s reconstruction and development efforts. Additionally, the creation of a multi-donor fund simplifies aid flows, facilitating Government ownership of the reconstruction process. II. Coverage 4. The PRS serves as the overall framework under which allocation decisions are made. Within the framework of the PRS, the LRTF provides support for meeting national priorities in infrastructure. Individual projects are aligned with the Government s broader sectoral policies, ensuring that the LRTF contributes to meeting Liberia s longer-term as well as its more immediate needs. 5. Furthermore, LRTF projects will, to the extent possible, accomplish two additional objectives: employment creation and capacity development. Consistent with current Bank practice in Liberia, laborintensive work methods will be utilized wherever feasible, although there will be cases for which other implementation modalities are needed. These projects will also promote capacity development, both within Government and the private sector. Private sector development will result naturally from the increased opportunities available to contractors, while Government s capacity will increase as a result of Government involvement in project planning and execution. Most projects will include a specific capacity-building component. 2011-02-28 LRTF Implementation Manual 3

III. General Principles 6. In terms of financing arrangements, a key objective of establishing a pooled donor fund is to simplify flows of external financing, which facilitates aid management and enables donors without a presence in the country to finance projects. 7. The following are the general principles underlying the trust fund: (i) recognition of the ownership and leadership of the Government in the context of a comprehensive reconstruction and development framework; (ii) full transparency and openness in the process; (iii) mutual accountability between the Government and the donors; (iv) a recognition of the need to build the capacity of the Government; and (v) a commitment to distributing funds in a conflict-sensitive and peace-promoting manner. IV. Project Development and Approval 8. As described above, the LRTF will support activities in the infrastructure sectors. Specific project concept notes will be developed jointly by Bank task teams and relevant Government line Ministries and/or agencies. 9. A guiding principle of the LRTF is that projects are to be prepared, appraised, and supervised in accordance with the Bank s existing operational policies and procedures 1. LRTF projects are expected to be prepared specifically under the Bank s Rapid Response procedures, which allow for accelerated response times while still adhering to the Bank s overall operational policy guidelines. 2 A summary of the major steps involved in project development and approval is summarized here. 10. Funding Priorities. The Government members of the LRTF Oversight Committee (Minister of Finance, Minister of Public Works, and National Coordinator of the LRDC) are in continuous dialogue on current and future infrastructure funding priorities, as well as how best to meet those priorities. (In addition to leading discussions on these issues within Cabinet, these three Government officials help to set the country s infrastructure priorities as the members of the IIU Oversight Committee.) With support from the Bank, the Government maintains a list of those infrastructure funding priorities, including candidates for financing by the LRTF. At OC meetings, the Government presents these candidates to the OC. 1 The Bank s Operational Manual sets out all operational policies and procedures. See:http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXTOPMANUAL/0,,menuPK:6 4142516~pagePK:64141681~piPK:64141745~theSitePK:502184,00.html 2 The Bank s Rapid response policy and procedures are described in OP/BP 8.00 Rapid Response to Crises and Emergencies. See :http://web.worldbank.org/wbsite/external/projects/extpolicies/extopmanual/0,,contentmdk: 21238942~menuPK:64701637~pagePK:64709096~piPK:64709108~theSitePK:502184,00.html 2011-02-28 LRTF Implementation Manual 4

11. Development and Presentation of Concept Notes. With support from the Bank Task Team for infrastructure, the Government prepares Project Concept Notes for review and approval by the OC. The LRTF Secretariat circulates a Project Concept Note at least one week before the OC Meeting during which the proposed project is to be discussed. 12. Approval of Concept Notes. It is expected that the OC will accept projects on an as-needed basis according to its agreed Terms of Reference. At an OC Meeting, the Government presents the Project Concept Note. The Bank Task Team Leader will attend the meeting to answer question about the Concept Note. If the Project Concept Note is approved, the Bank Task Team and Government line Ministry/agency move forward to Project Appraisal. 13. Project Approval, Effectiveness, and Disbursements. Following OC approval of the project concept, Bank task teams appraise the projects according to the Bank s Rapid Response Procedures (see above). For each project an Emergency Project Paper is prepared and a Bank Rapid Response Committee decision meeting is held to determine whether a project moves to negotiations. Projects are negotiated with Government according to Bank procedures. Final approval is given by the Bank Regional Vice President for Africa. 14. Projects are declared effective and disbursed according to Bank policies and procedures, and more specifically, arrangements made in the Emergency Project Paper and the Financing Agreement signed with Government. V. Project Execution 15. The Government will be responsible for the majority of project execution, in accordance with Ban k procedures. The following structures, already executing a number of Bank projects, will be generally utilized, although projects will be designed on a case by case basis and all implementation arrangements will be in accordance with Bank policies and procedures. Project Financial Management Unit (PFMU): The Government of Liberia has established this unit within the Ministry of Finance as the sole project disbursement and accounting unit for donor-funded projects. The unit has been strengthened and utilized for disbursement of government-executed project funds. Over time, some Government agencies are expected to develop their own financial management capacity. As with all World Bank projects, project management agencies would have to be certified by World Bank fiduciary staff before undertaking financial management duties. Special Implementation Unit (SIU): The Government of Liberia, supported by the World Bank, established the SIU within the Ministry of Public Works in order to execute donor-funded projects. The SIU plays a key role in any infrastructure funding mechanism, both through participation in project selection and development, and in project execution. During the lifetime of the LRTF, the SIU will evolve into the Infrastructure Implementation Unit (IIU) and assume all duties and responsibilities previously entrusted to the SIU. 2011-02-28 LRTF Implementation Manual 5

Project Implementation Unit at Monrovia City Corporation. This agency has not yet been established. However, it is the intention of the MCC to set up a small project office to implement projects financed by the LRTF (or other donors.) 16. Although most projects will be executed by the Government of Liberia (through the Ministry of Public Works), there may be cases when third parties, such as UN agencies, execute projects. In addition, certain TA or project start-up activities, including procurement of small goods and works and feasibility studies, may be executed by the Bank. Occasionally, Bank-executed projects are justified by the urgent need to move forward with rehabilitation works in Liberia; given the lack of capacity on the ground, Bank execution in certain cases will allow the activities to proceed more rapidly. VI. Project Supervision and Monitoring & Evaluation 17. All LRTF projects will be supervised with the same diligence and rigor applied to regular Bank projects in accordance with Bank operational policies and procedures. Approved project documents and Supervision Aide Memoires will be shared with Government and donors. 18. Regarding Monitoring and Evaluation, all projects will be prepared under regular World Bank procedures and will include a results framework with measurable indictors. These indicators will be followed throughout the life of the project and will be included in regular project reporting as with any World Bank project. The OC will discuss project implementation on a regular basis. At the broader, strategic level, the overall monitoring and evaluation framework for the LRTF would be the framework detailed in the PRS. As such, the LRDC would be an appropriate venue for broad-based discussions on LRTF progress. Governance Structures and Processes 19. Based on the above principles, and recognizing the modest scale of the LRTF (at least at the outset), the governance structure is comprised of a single Oversight Committee (OC). The World Bank is the Administrator of the LRTF and will co-chair the OC, along with the Government of Liberia, represented by the Minister of Finance. Administrator 20. As Administrator, the World Bank carries the fiduciary responsibility for the management of LRTF funds, and will be responsible for supervising all uses of the funds and ensuring that projects are subjected to the same policies and procedures as regular World Bank funds. Oversight Committee 21. The Terms of Reference of the Oversight Committee (OC) provides a detailed description of the OC s operations, policies, and procedures. See Annex A for the full TOR. 22. The OC is co-chaired by the Government and the World Bank. It includes three permanent members from the Government of Liberia: the National Coordinator of the Liberia Reconstruction and 2011-02-28 LRTF Implementation Manual 6

Development Committee, the Minister of Finance, and the Minister of Public Works. Other OC members include the World Bank, represented by its Country Manager, and contributing donors to the LRTF. Observers will include other potential donors to the LRTF and other donors active in Liberia s infrastructure sector. The OC uses its best efforts to reach all decisions through consensus of contributing members. 23. The main responsibilities of the OC will be: a) to ensure that LRTF programs support national priorities as articulated in the Liberia Poverty Reduction Strategy, as well as national strategies guiding the infrastructure sectors; b) to review and approve initial project concepts received from the Government of Liberia, based on the above criteria; c) monitor the implementation of activities funded by the LRTF and address any bottlenecks facing LRTF operations. Links to Government and Civil Society 24. Although the OC is the only body explicitly charged with governing the LRTF, it is expected that the Liberia Reconstruction and Development Committee (LRDC), a structure which includes government and international partners, will offer a forum for high-level discussions about the LRTF s performance. Either in conjunction with a Liberia Partners Forum meeting, or as an event connected with regular LRDC meetings, the OC may request that the LRDC convene a meeting to review the status of the LRTF. Attendees to this meeting will include not only the sitting members of the LRDC and the OC, but also regional organizations, non-lrtf donors, and civil society and community representatives. The meeting will allow broad and transparent communication on the work of the LRTF, including progress made, obstacles encountered, and the expected path forward. These meetings will provide a natural juncture for decisions to be announced with regards to the evolving portfolio of the LRTF and changes that may be proposed for its structure and/or operations, such decisions having been debated and decided in advance by the OC. Reporting 25. Regular Bank project implementation status reporting will be provided to the OC by project task teams. The LRTF TTL will also submit reports summarizing the operations of the LRTF, including the receipt and use of contributions, with an account of activities financed. The OC will then make all reports available to the LRDC. 2011-02-28 LRTF Implementation Manual 7

Figure 2: Schematic of LRTF Governance Structure Donor Contributions LRDC LRTF Oversight Committee GOL, Donors, WB Projects Executing body: Government, occasionally other Project Supervision: Bank Task Teams VII. Modalities of Administration Donor Contributions 26. As a multi-donor trust fund, the LRTF commingles all donors contributions into a common pool, administered in accordance with World Bank trust fund procedures. As a matter of Bank policy, contributions earmarked for specific components, activities, or programs will not be accepted. However, given that the trust fund will have established a limited number of core priorities, donors will be aware of the likely uses of all contributions to the trust fund. Contributions to the LRTF will be held in trust by the Bank and, pending disbursement, invested in accordance with the Bank s practices on investment of Bank-administered funds. 27. A 1% charge is levied on all contributions to the LRTF to cover the cost of Administration to the central units at the World Bank. All other operational costs, including project identification, appraisal, and supervision, will be charged to the fund directly, and quarterly reporting on use of funds will be provided to the OC. 2011-02-28 LRTF Implementation Manual 8

Annex A: Oversight Committee (OC) Terms of Reference Revised 9 September 2008 PREAMBLE With the full support of the Government of Liberia, the Liberia Reconstruction Trust Fund (LRTF) has been established for support to building infrastructure, as articulated in the Poverty Reduction Strategy. The LRTF is administered by the World Bank and supervised by an Oversight Committee comprising GoL, the World Bank and contributing donors. These Terms of Reference serve as the framework within which the Trust Fund Oversight Committee (OC) will oversee the development, allocation, and implementation of the Fund. The Fund will be consistent with the Financing Agreements between each contributing donor and the World Bank. The OC shall be supported by a Secretariat. Any modifications to these Terms of Reference will require the approval of the OC. Article I Responsibilities 1. The OC will ensure that LRTF programs support national priorities as articulated in the Liberia Poverty Reduction Strategy, as well as national strategies guiding the infrastructure sectors. 2. The OC will review and approve initial project concepts received from the Government of Liberia, based on the above criteria. 3. The OC shall monitor the implementation of activities funded by the LRTF and address any bottlenecks facing LRTF operations. 2011-02-28 LRTF Implementation Manual 9

Article II Procedures 4. The OC will be co-chaired by the Government of Liberia, represented by the Ministry of Finance, and the World Bank 3. Administrative support for the OC will be provided by the LRTF Secretariat. 5. The OC will generally meet on a quarterly basis, but ad-hoc meetings can be called asneeded. 6. The OC will accept project proposals from the Government of Liberia on a rolling basis. Proposals will be submitted to the OC through the LRTF Proposal Form 4. 7. The LRTF Secretariat will screen project proposals to ensure that they meet the minimum funding threshold and support Liberia s Poverty Reduction Strategy. The LRTF Secretariat will then submit those proposals for review by the OC. 8. The OC shall use its best efforts to reach all decisions through consensus of contributing members. 9. The LRTF Secretariat, in consultation with the co-chairs, shall propose the agenda for OC meetings. Members may submit additional agenda items to the Secretariat at least one week in advance of the scheduled meeting. The Secretariat will send meeting announcements, along with agendas and all relevant meeting materials, to OC members at least one week in advance of the meeting. 10. The discussion and outcome of each meeting will be recorded in Agreed Minutes. The Agreed Minutes will be drafted by the Secretariat and a draft will be sent to all OC members for their approval/comments within one week after the meeting. The members will inform the Secretariat of their approval/comments within seven working days of 3 The World Bank will be represented by its Country Manager. 4 To be developed. 2011-02-28 LRTF Implementation Manual 10

receipt of the draft. The Secretariat shall understand no reply to mean that the member agrees with the draft minutes. Article III Membership 11. The OC shall have three permanent members from the Government of Liberia: the National Coordinator of the Liberia Reconstruction and Development Committee, the Minister of Finance, and the Minister of Public Works. 12. OC members will include: World Bank, represented by its Country Manager Contributing donors to the LRTF 13. Observers will include other potential donors to the LRTF and other donors active in Liberia s infrastructure sector. 14. OC co-chairs will agree on the invitation list one month in advance of each OC meeting. 2011-02-28 LRTF Implementation Manual 11