Public Disclosure Authorized AFRICA Nigeria Governance Global Practice IBRD/IDA Technical Assistance Loan FY 2010 Seq No: 11 ARCHIVED on 20-Mar-2017 ISR26980 Implementing Agencies: Public Disclosure Authorized Key Dates Key Project Dates Bank Approval Date:29-Jun-2010 Planned Mid Term Review Date:-- Original Closing Date:30-Nov-2015 Project Development Objectives Effectiveness Date:08-Nov-2012 Actual Mid-Term Review Date:08-Dec-2015 Revised Closing Date:31-Oct-2017 Public Disclosure Authorized Project Development Objective (from Project Appraisal Document) The project development objective is to improve transparency, accountability and quality in public finance and human resource management systems, with a view to strengthen governance in the participating states. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Development and Modernization of Public Financial Management Systems:(Cost $39.10 M) Public Disclosure Authorized Human Resource Managemnent Strengthening:(Cost $9.30 M) Monitoring and Evaluation System Development:(Cost $7.50 M) Improvement of Public Financial Management in Selected States:(Cost $24.00 M) Scaling up of Selected Activities Under Original Project:(Cost $22.00 M) Project Coordination:(Cost $8.50 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory 3/20/2017 Page 1 of 12
Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions Background: 1. The project was approved on June 29, 2010, the Financing Agreement was signed on June 29, 2012 and the project became effective on November 8, 2012. Since approval, the project has been restructured twice - (i) on December 28, 2011, and (ii) on December 21, 2016. The last restructuring extended the implementation period to October 31, 2017 and expanded the scope of implementation by opening up some activities (i.e. tax administration reforms and implementation of basic/simple financial management information systems in treasuries and budget offices), hitherto available to only Tier I States to the Tier II States. Summary of Performance to date: 2. The summary of the performance of the participating States is as follows: Components A, B and C (Kogi & Ondo) - (a) As at the last ISR, one key outstanding activity across both Kogi and Ondo States was the delay in the implementation of the States Integrated Financial Management information Systems. This sub-component, incidentally, accounts for the greater part of the project funds and was thus responsible for the largest part of the undisbursed credit funds. In the course of the last implementation support mission, issues around the activity have been resolved in Ondo State and implementation has commenced. (b) Though there are still some outstanding issues in Kogi (like the renewal of bid security, agreement on a sustainable recurrent cost structure and verification of financial statements), there are assurances from the State that these issues had been resolved at the pre-contract meeting which held just before the last implementation support mission. The team is hopeful that contracting can be sorted out and implementation would commence very soon. Based on contract figures cleared, it is projected that the implementation of the SIFMIS in both States will contribute to a disbursement of of about US$15 million for both core and ancillary infrastructure and services. (c) The project is also contributing to the improvement of internally generated revenue (IGR), thus assisting in amelioration of fiscal constraints in both Kogi and Ondo States. In supporting the States to carry out taxpayer surveys and enumeration, the taxpayer bases have increased from 47,000 to 447,000 in Kogi State and from 70,268 to 280,882 in Ondo State. Presently, Kogi State's IGR has increased from a monthly average of NGN400million to NGN1.9 billion and NGN1.3 billion in December 2016 and January 2017 respectively. (d) On efforts to develop monitoring and evaluation (M&E) frameworks, as well as build the requisite capacity for M&E in the States, both States have now developed State M&E systems. In each of the two States, five pilot MDAs now submit annual reports on agreed results indicators. (e) On accounting and financial reporting, both states have adopted and are implementing the new National Budget Classification and Chart of Accounts system, which is Government Finance Statistics/Classification of Functions of Government (GFS/COFOG) compliant. Importantly too, both states are gradually transitioning to the use of International Public Sector Accounting Standards (IPSAS) in their public financial reporting practices.ondo State submitted the audited account of the State to the SHOA within a period of six months while Kogi is yet to complete the process. Component D (Abia, Adamawa, Ekiti, Imo, Kebbi, Niger and Plateau) (f) Since the last ISR, further progress has been recorded in this set of States. While all Tier II States have passed Fiscal Responsibility and Procurement Laws, as well as established the Regulatory Agencies for Procurement in their States. Progress has also been recorded in tax administration reforms, a component just extended to these States following the last restructuring. An Audit Law has just been passed in Adamawa. (g) On efforts at strengthening accounting and financial reporting standards, there has been some progress in the implementation of this initiative. Adamawa, Kebbi, Niger and Plateau States have adopted the new GFS/COFOG compliant harmonized National Chart of Accounts and Budget Classification and have transitioned to the use of International Public Sector Accounting Standards (IPSAS) (Cash Basis) for their public financial reporting. (h) The last restructuring introduced support to these States to implement simple/basic Financial Management Information System (FMIS) in their Treasuries and Budget Offices. Niger, Ekiti, Kebbi and Plateau States have made considerable progress by reviewing the existing PFM system in the States and produced roadmaps for enterprise resources planning. Bid documents have been issued in Niger and Kebbi States and there are indications that implementation can start by April 2017. (i) In Imo, Abia and Ekiti States, there are fragmented legacy PFM systems and the States have not implemented the new GFS/COFOG compliant harmonized National Chart of Accounts and Budget Classification. These States have been advised to resolve all outstanding legacy issues to enable the States move on and consolidate on PFM reforms already ongoing. 3/20/2017 Page 2 of 12
(j) Finally, on the Status of Abia State regarding the implementation of the project, the State government has agreed on terms with the Federal Ministry of Finance for the signing of the Subsidiary Credit Agreement (SCA), which has been outstanding since 2012. Meanwhile, the State has fully constituted the implementation team and has commenced all preliminary processes to engage consultants to commence work with relevant state MDAs. Component E (Bauchi & Kaduna), (k) Since the last ISR, Kaduna State has made further progress on its SIFMIS implementation. While the State s financial statements for 2016 were prepared using the SIFMIS, presently, the 13 big spending MDAs are carrying out their financial transactions on the SIFMIS platform. The HRMIS, Payroll and State s Treasury Single Accounting System (TSA) are also fully operational on the SIFMIS platform. In Bauchi, a consultant has been engaged to drive the re-implementation of the SIFMIS. (l) On strengthening of tax administration, the project has continued to provide support to Kaduna State Board of Internal Revenue. The Board s contribution to the State s IGR collection grew from NGN9 billion in 2015 to NGN13 billion in 2016. A consultancy is currently on for a comprehensive reorganization and re-engineering of the assessment and collection processes in the State, particularly in light of the introduction of a presumptive and consumption tax regimes in the State. 3. Other Project Management Matters & Challenges: (a) Safeguards: The project is a Category B Project with minor anticipated adverse environmental and social impacts. There are currently no safeguards issues and safeguards performance of the project is presently rated satisfactory (b) Procurement: Overall procurement capacity remains satisfactory in all the PIUs. There is currently a portfolio wide procurement post review exercise ongoing and any issues that emerge will be reported in the next ISR. (c) Financial Management: Financial Management in all implementing States remains appropriate and adequate, having the basic internal control mechanisms in place. On the strengthening of the NPCU, the Bank s Financial Management Unit is still liaising with the Federal Project Financial Management Department at the Officer of the Accountant General of the Federation, to address the short-staffing and internal control arrangement at NPCU. Currently, while all the IFRs from the implementing States were received in good time, that for the NPCU was only just received last week and was returned for revision. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial Macroeconomic -- High High Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- Moderate Moderate Institutional Capacity for Implementation and Sustainability -- Substantial Substantial Fiduciary -- Substantial Substantial Environment and Social -- Low Low Stakeholders -- Low Low Other -- -- -- Overall -- Substantial Substantial Results 3/20/2017 Page 3 of 12
Project Development Objective Indicators Annual State Auditor General's Report submitted to the legislature within 6 months from end of financial year (Tier I States) (Number, Custom) Value 12.00 8.25 10.00 6.00 Ondo State has met the expected result and submits Auditor General's Report to the Legislature within 6 months of end of financial year; but Kogi State is in arrears by 8 months. Thus, the actual current result reported is based on the average for the two States. State Government entities representing at least 75% of the total expenditure are audited annually in any State (Tier I States) (Number, Custom Breakdown) Value 50.00 75.00 94.00 85.00 Date 30-Jul-2009 19-Aug-2016 17-Feb-2017 31-Oct-2017 Decrease in deviation of actual expenditure from budgeted capital expenditure in the Tier 1 states (Percentage, Custom) Value 55.00 44.79 29.40 35.00 Kogi State had a deviation of 23 percent in 2016; while Ondo had a deviation of 35.8 percent. Actual current result reported in based on the average for the two States. Growth in percentage of actual collection of projected IGR in Tier 1 states (Percentage, Custom) 3/20/2017 Page 4 of 12
Value 60.00 84.80 73.00 90.00 While Kogi State achieved 88 percent in 2016, Ondo dropped to 58 percent in the same year. The drop in Ondo State was essentially as a result of the failure of the State Government to pay salaries of civil servants for several months. This inaction negatively impacted on revenues from Pay-as-you-earn, which is currently the most essential component of personal income tax in the State. Growth in percentage of public contracts above threshold awarded through open competition (Percentage, Custom) Value 20.00 61.35 61.35 70.00 Reduced discrepancy between personnel database and payroll database in partiicipating (Tier 1) states (Percentage, Custom) Value 25.00 11.11 10.23 5.00 Ondo State has reduced the discrepancy to below 1%, whilst Kogi still has a discrepancy of 20% Direct project beneficiaries, % of which female (Tracked on the basis of persons trained under the project). (Percentage, Custom) Value 10.00 26.50 32.80 35.00 3/20/2017 Page 5 of 12
The actual current figure is based on the average from figures reported by all 11 implementing States. Overall Intermediate Results Indicators Adoption of revised legal framework for commitment control and payment authorization/approval limits In all implementing States (Number, Custom) Value 0.00 8.00 10.00 9.00 With the singular exception of Ondo State, all the other ten States have achieved this result. Development and use of medium-term (3 year rolling) sector strategies and fiscal planning in at least 5 MDAs in Tier I States (Number, Custom) Value 1.00 16.00 16.00 10.00 Kogi has eleven sectors while Ondo has five sectors. 3/20/2017 Page 6 of 12
The dimensions presented in budget classification using GFS/COFOG standards in Tier I States (Number, Custom Breakdown) Value 0.00 2.00 2.00 2.00 Date 29-Jun-2012 15-Dec-2015 17-Feb-2017 31-Oct-2017 Number of MDAs in each participating state producing financial statements using new SIFMIS - Tier I States (Number, Custom) Value 0.00 0.00 0.00 5.00 Implementation has just commenced in Ondo and will commence soon in Kogi State. The team will provide update on implementation progress in the next ISR. Time taken by state legislature to scrutinize and issue report on external audit report in participating States (Tier I) (Months, Custom) Value 48.00 18.00 14.00 12.00 Kogi State is 20 months in arrears, while Ondo is at 8 months. Thus, the actual current result reported is based on the average for the two States. 3/20/2017 Page 7 of 12
Increase in taxpayer coverage/tax database in participating states (Tier I States) (Percentage, Custom) Value 0.00 400.00 400.00 30.00 Number of participating states with FMIS (Tier I, Tier II and Original Project States) (Number, Custom) Value 0.00 0.00 1.00 5.00 1. The SIFMIS in Kaduna State has become operational. 2. Significant progress has also been made in Kogi and Ondo, where contracts for SIFMIS have been signed implementation has just begun. 3. In Niger, Kebbi and Plateau States, where the process of implementing basic financial management information systems (FMIS) in their treasuries and budget offices, fine-tuning of Charts of Accounts and preparation of business process requirements (BPRs) have been completed and bidding documents have been issued. Based on the commitment demonstrated and state of readiness in these States, the team is optimistic implementation will have advanced significantly by the time of filing the next ISR. Procurement legislation enacted and regulatory unit established in participating and selected states (Number, Custom) Value 0.00 7.00 8.00 2.00 Procurement Laws have been passed and Regulatory Units established in eight out of the nine States that fall within Tiers I and II of the project (Kogi, Abia, Adamawa, Ekiti, Imo, Kebbi, Niger, Plateau). The only outstanding State is Ondo State. 3/20/2017 Page 8 of 12
Frequency of reconciliation between personnel records and payroll database in participating states (Tier I States) (Number, Custom) Value 0.00 2.00 2.00 4.00 Growth in the number of key MDAs that submit annual reports with updated data on agreed results indicators in participating State (Tier I States) (Number, Custom) Value 0.00 3.00 10.00 10.00 In each of Kogi and Ondo States, the five key, high spending MDAs now submitting performance results based on agreed indicators. Growth in the percentage of public contracts published (Tier 2 States) (Percentage, Custom) Value 0.00 22.50 35.00 35.00 Date 29-Jun-2012 15-Dec-2015 17-Feb-2017 31-Oct-2017 1. The result reported for this indicator is based on the average performance for the seven States in the Tier II category. While the consolidated results looks good on the surface, performance of States on this subject matter is mixed. While States like Adamawa, Ekiti and Plateau have fared well at 92 percent, 80 percent and 68 percent respectively, Imo, Kebbi and Niger have still not adjusted to the practice of publishing contracts awarded and have reported results of 0 percent, 0 percent and 5 percent respectively. 2. The team will continue to engage with the Regulatory Agencies that were recently established to ensure this good practice is adopted. 3/20/2017 Page 9 of 12
Number of selected (Tier 2) states with draft fiscal responsibility legislation submitted to state legislature (Number, Custom) Value 2.00 6.00 7.00 6.00 Date 30-Dec-2011 15-Dec-2015 17-Feb-2017 31-Oct-2017 All seven States in the Tier II category have enacted Fiscal Responsibility Legislations. BATMIS implemented in line ministries in original project states (Kaduna and Bauchi States) (Number, Custom) Value 0.00 20.00 20.00 15.00 Date 30-Jul-2009 30-May-2015 17-Feb-2017 31-Oct-2017 MTEF/MTSS implemented in at least 10 sectors in each original project states (Number, Custom Supplement) Value 10.00 -- 24.00 20.00 Number of Tier 2 States using the GFS/COFOG standards New National Chart of Accounts for budget presentation (Number, Custom) Value 0.00 -- 4.00 6.00 Date 22-Nov-2016 -- 17-Feb-2017 31-Oct-2017 GFS/COFOR standards New National Chart of Accounts is currently in use in four States (Niger, Kebbi, Adamawa and Plateau). 3/20/2017 Page 10 of 12
Increase in taxpayer coverage/database in Tier 2 states beyond the public service PAYE taxpayers (Percentage, Custom) Value 7,500.00 0.00 0.00 300.00 Date 22-Nov-2016 -- 17-Feb-2017 31-Oct-2017 Taxpayer Survey to increase the base has been completed in Kebbi State with 160,000 additional taxpayer added to the base from the previous figure of 101,827. 2. The assignment is still on in Adamawa, Imo and Ekiti States. Thus, the team will report on this indicator by the next ISR when the assignment would have been completed across the States. Overall Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P097026 IDA-46670 Effective XDR 75.80 50.54 25.26 23.43 27.11 46% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P097026 IDA-46670 Effective 29-Jun-2010 29-Jun-2012 08-Nov-2012 30-Nov-2015 31-Oct-2017 3/20/2017 Page 11 of 12
Cumulative Disbursements Restructuring History Level Approved on 28-Dec-2011,Level 2 Approved on 20-Dec-2016 Related Project(s) There are no related projects. 3/20/2017 Page 12 of 12