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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 56099
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED REGIONAL IDA GRANT
IN THE AMOUNT OF SDR 16.3 MILLION
(US$25.0 MILLION EQUIVALENT)
AND A MULTI-DONOR TRUST FUND IN THE AMOUNT OF UP TO
US$51.6 MILLION
TO THE
AFRICAN CAPACITY BUILDING FOUNDATION
FOR AN
ACBF REGIONAL CAPACITY BUILDING PROJECT
February 10, 2011
Public Sector Reform & Capacity Building Unit (AFTPR)
Africa Regional Integration (AFCRI)
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
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i
CURRENCY EQUIVALENT
(Exchange Rate Effective December 2010)
Currency Unit = US$
US$ = SDR 0.652
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AAP Africa Action Plan
ACBF African Capacity Building Foundation
AERC African Economic Research Consortium
AFCRI Africa Regional Integration Unit
AFDB African Development Bank
AFTFM Africa Technical Financial Management Unit
APIF African Policy Institutes Forum
BIDPA Botswana Institute for Development Policy Analysis
BOG Board of Governors
CAPAN Projet de Renforcement des Capacités de l’Assemblée Nationale (National
Assembly Capacity Building Project )
CAPES Centre d’Analyse des Politiques Economiques et Sociales (Center for Economic
and Social Policy Analysis)
CAS Country Assistance Strategy
CEPA Centre for Policy Analysis
CEPOD Centre d’Etudes pour les Politiques de Développement (Center for Development
Policy Studies)
CGIAR Consultative Group on International Agricultural Research
CLK-Net Country Level Knowledge Networks
COI Conflict of Interest
COSO Committee of Sponsoring Organizations of the Treadway Commission
CDMAP Capacity Development in Africa Management Action Plan
CESAG Centre Africain d’Études Supérieures en Gestion (African Center for Graduate
Management Studies)
CODESRIA Council for the Development of Social Sciences Research in Africa
COMESA Community of East and Southern African States
CQS Selection Based on Consultants‘ Qualifications
CSD Corporate Services Department
DGF Development Grant Facility
EB Executive Board
ECCAS Economic Community of Central African States
ECOWAS Economic Community of West African States
ii
EPAM Economic Policy Analysis and Management
EPM Economic Policy Management
ERM Enterprise Risk Management
ES Executive Secretary
ESAMI Eastern and Southern African Management Institute
ESRF Economic and Social Research Foundation
FBS Fixed-Budget Selection
FMA Financial Management & Accountability
GIMPA Ghana Institute of Management and Public Administration
HESPI Horn Economic and Social Policy Institute
HR Human Resource
IBRD International Bank for Reconstruction and Development
IA Internal Audit
IC Individual Consultant Selection
ICB International Competitive Bidding
ICT Information and Communication Technologies
IDA International Development Association
IFR Interim Financial Report
IS Implementation Support
KIPPRA Kenya Institute for Public Policy Research and Analysis
LCS Least-Cost Selection
LIB Limited International Bidding
MDAs Ministries Department and Agencies
MDTF Multi-Donors Trust Fund
MAP Management Action Plan
MEFMI Macroeconomic and Financial Management Institute of Eastern and Southern
Africa
M&E Monitoring and Evaluation
NCB National Competitive Bidding
OPCFM OPCS Financial Management Unit
OPD Operational Program Department
ORAF Operational Risk Assessment Framework
PACT Partnership for Capacity Building in Africa
PARP Policy Analysis and Research Project, National Assembly
PDO Project Development Objectives
PRC Project Review Committee
PRCS-RCA Projet de Renforcement des Capacités en Statistique - République Centrafricaine
(Central African Republic - Statistics Capacity Building Project)
PTIC Programme de Troisième Cycle Inter-universitaire
(Post-Graduate Inter-University Program)
PWC Price Waterhouse Coopers
QBS Quality Based Selection
QCBS Quality and Cost-Based Selection
RBM Results-Based Management
REC Regional Economic Communities
REMDTF Recipient Executed Multi-donor Trust Fund
iii
RMF Results Monitoring Framework
RIDA Regional IDA
SADC Southern African Development Community
SIG Specific Investment Grant
SMTP Strategic Medium Term Plan
SOE Statement of Expenditure
TAP-NET Technical Advisory Panels and Networks
UNDP United Nations Development Programme
WAMI West African Monetary Institute
Vice President: Obiageli K. Ezekwesili
Director, Regional Integration : Yusupha B. Crookes
Sector Director: Marcelo Giugale
Sector Manager: Anand Rajaram
Team Leader: Mamadou L. Deme
iv
Table of Contents
I. Strategic Context .................................................................................................................. 7 A. ACBF Context ............................................................................................................... 7
B. Sectoral and Institutional Context: SMTP2 implementation ........................................ 8 C. Higher Level Objectives to which the Project Contributes ......................................... 12
II. Project Development Objectives........................................................................................ 12 A. PDO ............................................................................................................................. 12 B. Project Beneficiaries ................................................................................................... 12
C. PDO Level Results Indicators ..................................................................................... 12
III. Project Description.......................................................................................................... 13 A. Project components ..................................................................................................... 13
B. Project Financing......................................................................................................... 14 C. Lessons Learned and Reflected in the Project Design ................................................ 16
IV. Implementation ............................................................................................................... 16
A. Institutional and Implementation Arrangements ......................................................... 16 B. Results Monitoring and Evaluation ............................................................................. 17
C. Sustainability ............................................................................................................... 18 D. Key Risks and Mitigation Measures ........................................................................... 18
V. Appraisal Summary ........................................................................................................... 22
A. Economic and Financial Analysis ............................................................................... 22 B. Technical ..................................................................................................................... 22
Annex 1: Results Framework and Monitoring........................................................................... 26
Annex 2: Detailed Project Description ...................................................................................... 29 Annex 3: Implementation Arrangements ................................................................................... 32
Annex 4: Operational Risk Assessment Framework (ORAF) ................................................... 57 Annex 5: Implementation Support Plan ..................................................................................... 60 Annex 6: World Bank/IDA staff and consultants who worked on the project .......................... 63
Annex 7: ACBF Recent Developments ..................................................................................... 64
Box 1: ACBF AT A GLANCE .................................................................................................. 11 Box 2: ACBF Project Cycle Overview ...................................................................................... 34
Box 3: Historical Timeline of ACBF Partnerships‘ Evolution and Major Events .................... 65 Box 4. Forensic and HR reviews by the Executive Board ......................................................... 66 Box 5: Forensic review by the Bank .......................................................................................... 69
Table 1: ACBF Financial Status and SMTP2 financial projections at end of 2011 .................. 15 Table 2: Project Costs by Component and Source of Financing ............................................... 15 Table 3: Project Disbursement by Category and Source of Financing ...................................... 45
1
PAD DATA SHEET
AFRICA
ACBF REGIONAL CAPACITY BUILDING PROJECT
AFRICA, AFCRI/AFTPR
Date: February 10, 2011
AFCRI Director: Yusupha B. Crookes
Sector Manager: Anand Rajaram, AFTPR
Project ID: P122478
Lending Instrument: SIL
Team Leader: Mamadou L. Deme
Sector(s): General public administration sector
(50%); Central government administration (50%)
Theme(s): Other economic management (30%);
Managing for development results (20%);
Poverty strategy, analysis and monitoring (20%);
Other rule of law (15%);Other social
development (15%)
EA Category: C
Project Financing Data:
Proposed terms:
[ ] Loan [ ] Credit [ X ] Grant [ ] Guarantee [ ] Other:
Source Total Amount (US$76.6 million)
Recipient
IDA 15
New
Recommitted
Others(MDTF)
$ 0.0 million
$25.0 million
$25.0 million
$51.6 million
Recipient : African Capacity Building Foundation (ACBF)
The African Capacity Building Foundation
Intermarket Life Towers, 7th floor
C/r Jason Moyo Av/Sam Nujoma Streets
Zimbabwe
Tel: (263-4) 702931 Fax: (263-4) 702931
www.acbf-pact.org
Responsible Agency: ACBF Contact Person:
Contact Person: Frannie Leautier
Telephone No: +263-4-700208 / 700210
Fax No.:+263-4-702915
Email:[email protected]
2
Estimated Disbursements (Bank FY/US$ million)
FY FY11 FY12 FY13 FY14 FY15 FY16
Annual 10.5 26.0 6.0 6.4 5.7 22.0
Cumulative 10.5 36.5 42.5 48.9 54.6 76.6
Project Implementation Period: April 2011 - December 2015
Expected effectiveness date: April 30, 2011
Expected closing date: December 31, 2015
Does the project depart from the CAS in content or
other significant respects?
○ Yes ○ No
Not applicable
If yes, please explain:
Does the project require any exceptions from Bank
policies?
Have these been approved/endorsed (as appropriate
by Bank management?
Is approval for any policy exception sought from
the Board?
○ Yes x No
○ Yes ○ No
○ Yes x No
If yes, please explain:
Does the project meet the Regional criteria for
readiness for implementation?
x Yes ○ No
If no, please explain:
Project Development objective
The project‘s objectives are to contribute to: (i) enhanced capacity for effective policy
formulation and management in ACBF sub-grant recipients‘ countries; and (ii) improved and
sustained management of ACBF‘s operations.
3
Project description.
The proposed project includes two components:
The first component ―Capacity Building Sub-Grants‖ will finance ACBF sub-grants to
public and private beneficiaries in Sub-Saharan African countries and to Regional
Organizations serving these countries. The sub-grants will finance technical assistance sub-
projects approved under SMTP2 to enhance the institutional capacities of these beneficiaries
in the following areas: (i) Economic policy analysis and development management;
(ii) Financial management, accountability, and transparency; (iii) National Statistics and
Statistical Systems; and (iv) Regional economic cooperation and integration and provision
of regional public goods.
The second component “Institutional Development‖ will consist of (a) continued
implementation of the Management Action Plan, (b) development of a forward looking
medium term strategy (SMTP3), including enhancement of the monitoring and evaluation
system; and (c) appraisal, supervision and evaluation of subprojects; and (d) development
and implementation of knowledge and learning activities designed to enhance skills and
peer learning in economic and public sector management in Africa; all through the
provision of goods, services, training and operating expenses, including staff salaries.
The proposed Recipient Executed Multi-donor Trust Fund (RE MDTF) will co-finance the IDA
Grant so as to build synergies between the financiers and minimize transaction costs for ACBF,
the Bank, and other donors.
Safeguard policies triggered?
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Forests (OP/BP 4.36)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Indigenous Peoples (OP/BP 4.10)
Involuntary Resettlement (OP/BP 4.12)
Safety of Dams (OP/BP 4.37)
Projects on International Waters (OP/BP 7.50)
Projects in Disputed Areas (OP/BP 7.60)
○ Yes x No
○ Yes x No
○ Yes x No
○ Yes x No
○ Yes x No
○ Yes x No
○ Yes x No
○ Yes x No
○ Yes x No
○ Yes x No
4
Conditions and Legal Covenants
Financing Agreement
Reference
Description of
Condition/Covenant
Date Due
Section 4.01
(Suspension Remedies)
Failure of RE MDTF Grant
Agreement to become
effective1
April 30, 2011
Section 4.01
(Suspension Remedies)
Failure by ACBF‘s host
country or a sub-project‘s
country to comply with its
respective agreement of
non-interference in the
Project or sub-project
NA
Section 5.01
(Effectiveness
Conditions)
1. Adoption of a revised
Operations Manual
acceptable to IDA.
2. Compliance with
conditions of disbursement
of the 2nd
and 3rd
tranches
of both the FY09 DGF
Grant Agreement and the
PACT-ACBF
Memorandum of
Understanding, to the
satisfaction of the
Association..
3. Adoption of the
Governance Action Plan
(together with timetable)
taking into account IDA‘s
comments on it.
[4. The agreement between
ACBF‘s host country and
the Bank confirming the
country‘s non-interference
in the Project has been
executed on behalf of all
the parties thereto.]2
The date ninety (90) days after the
date of the Financing Agreement
1 A similar remedy will be included in the MDTF Grant Agreement. In this way, each agreement can be signed
independently of the other, but the other would need to be effective by a particular deadline. 2To be deleted if this agreement is signed before the signing of the Financing Agreement.
5
Conditions and Legal Covenants
Financing Agreement
Reference
Description of
Condition/Covenant
Date Due
Schedule 2, Section I.C Sub-grants to be made
according to criteria and
procedures acceptable to
IDA, including: (a)
requirement that the Sub-
grantee be eligible for IDA
financing;3 (b) IDA prior
review of selected Sub-
projects;4 (c) maximum
amount of (i) any Sub-
grant set at US$5 million
equivalent; and(ii) all Sub-
grants to a given Sub-
grantee set at US$7 million
equivalent; and
(d) requirement that for
non-sovereign Sub-
grantees, the Member
Country involved confirm
its support for the project
and provide non-
interference undertakings
to ACBF.
NA
Schedule 2, Section I.D ACBF to commence M&E
reporting on a quarterly
basis on all ACBF
activities, including Sub-
projects, in a manner
acceptable to IDA
Quarterly, commencing no later than
June 30, 2011
3 Sub-grants to IBRD-only countries or countries in arrears would be financed exclusively out of the RE MDTF.
4 Seven Sub-projects have been selected by the Bank for prior review (see Annexure 1 of Annex 2).
6
Conditions and Legal Covenants
Financing Agreement
Reference
Description of
Condition/Covenant
Date Due
Schedule 2, Section I.D ACBF to adjust the
responsibilities of its M&E
staff in a manner
satisfactory to the
Association, so as to
ensure that assessment of
the Sub-grants‘ monitoring
and evaluation systems are
conducted by the Recipient
during the preparation of
each Sub-project, prior to
its approval for financing
June 30, 2011
Schedule 2, Section III ACBF to conduct annual
procurement audits.
Annually, commencing with FY 2011,
due 6 months after the end of the
Fiscal Year.
Schedule 2, Section IV Retroactive financing for
eligible payments under
―Institutional
Development‖ Component
made from July 1, 2010
onward up to an aggregate
amount of US$5 million
equivalent5.
NA
Schedule 2, Section V ACBF to continue to carry
out its activities in
accordance with the MAP
and to implement the GAP
in accordance with its
terms.
Ongoing
5 In addition, up to 20% of the MDTF Grant amount would be allocated for retroactive financing.
7
I. Strategic Context
A. ACBF Context
1. The Bank decided to support the “African Capacity Building Initiative” in the
early 1990s within the framework of its strategy to develop government capacity at the
continent level. The African Capacity Building Foundation (ACBF) was established in 1991
under the sponsorship of the World Bank, the United Nations Development Programme
(UNDP) and the African Development Bank (AfDB) to enhance institutional capacity for
policy making in Africa. In 1995, following a broad consultative process involving the Bank‘s
African Governors and a study which yielded a strategy on how the World Bank might
enhance the impact of its operations in Africa, the Bank initiated the Partnership for Capacity
Building in Africa (PACT) as a collaborative effort among the World Bank, AfDB and UNDP
to take concrete steps towards improving economic and public management capacity in Africa.
Implementation of the PACT was entrusted to ACBF from 2000 onward and ACBF, under its
first Strategic Medium Term Plan (SMTP1), provided grants and technical support to some 40
countries in Sub-Saharan Africa and to about 34 regional and continental institutions until
2005. The World Bank supported SMTP1 by providing multiple DGF Grants for a total of
US$147.6 million which represented 56 percent of the total amount mobilized by ACBF under
SMTP1, as well as by serving as Trustee of the multi-donor trust fund for SMTP1 (SMTP1
MDTF) under which donors provided US$85.4 million.
2. The Executive Directors, on September 5, 2006, endorsed management’s proposal
to extend Bank support to the new SMTP2 program and objectives over 2007-2011
through a series of DGF grants totaling up to $150 million to be approved annually. The
Bank funding to SMTP2 was justified on the basis that it not only “fits within the Bank’s
framework for supporting capacity development in Africa, as articulated in the CDMAP6, [but]
independent evaluations [of ACBF programs] have confirmed the effectiveness of ACBF/PACT
in addressing several aspects of the capacity development challenge in Africa”7.
3. The impact of SMTP2 has been mixed. Started in 2007 with the endorsement of up to
US$150 million in DGF funding and corresponding pledges by other donors of up to
US$67 million, SMTP2 implementation was stalled by the delay in reaching agreement with
ACBF on the terms of the new MDTF as well as the delay in appointment of a new Executive
Secretary (ES) following the end of tenure of the previous ES in December 2007. Anonymous
allegations of human resource and financial malpractices at ACBF made in September 2008
further compounded the problem as they inevitably necessitated a review of management
practices and governance issues within the Foundation.
4. The ACBF governing bodies with support of the Bank undertook a series of
actions, notably: (i) instituted a freeze on approval of new projects; (ii) commissioned a
consultant to undertake an independent review of the corporate governance framework at
ACBF; (iii) adopted and implemented a Management Action Plan to strengthen the Internal
6 Capacity Development in Africa: Management Action Plan (CDMAP), Report SecM2006-0323
7 African Capacity Building Foundation (ACBF)/ Partnership for Capacity Building in Africa (PACT), A Proposed
Strategy For Further Bank Support to ACBF/PACT (2007-2011) . World Bank Report No36976, August 8, 2006.
8
Control Framework; and (iv) commissioned a forensic audit and human resources audit of
ACBF. In its capacity as trustee of the MDTF and on its own behalf in respect of the DGF, the
Bank took the following additional actions: (i) funds allocated for the FY09 DGF
(US$26 million) were frozen, as were the balance of undisbursed funds under the SMTP1
MDTF (US$42 million); (ii) additional audits were conducted to identify if fraud or corruption
had in fact taken place at the sub-grantee level. (see Annex 7 for more details on forensic
reports‘ findings and recommendations).
5. The new Executive Secretary hired in July 2009 moved aggressively to design and
implement a far reaching Management Action Plan (MAP) in order to restore good
management of the Foundation. A new management team was recruited, with half of the
positions being externally filled. With Bank and AfDB support, ACBF management
implemented MAP actions designed to restore (i) effective internal controls and financial
procedures within ACBF; (ii) effective controls for existing projects implemented by ACBF
grantees as well as for the selection and approval of new projects; and (iii) effective oversight
of ACBF management. The MAP progress has revived ACBF with better-motivated staff,
strengthened internal controls, and enhanced systems and tools allowing for swift resumption
of the SMTP2 program.
6. As a consequence, and with the progress registered under the MAP, the Bank,
following consultations with donors, approved the release of an initial tranche of both the
FY09 DGF Grant and the SMTP1 MDTF to ACBF. Based on positive assessment of the
implementation of management actions conditioning the availability of an initial tranche of
each of the FY09 DGF Grant and undisbursed amount of the SMTP1 MDTF and intended to
restore effective internal controls and financial procedures within ACBF and for ACBF
grantees of existing and upcoming grants, the Bank disbursed a total of US$17 million in June
2010. It is expected that remaining conditions, which are prerequisites to availability of a
second and third tranche of each of the FY09 DGF Grant and SMTP1 MDTF aggregating a
total of US$51 million will be met in early 2011. Concurrently, the Bank decided to resume
support to implementation of SMTP2 program.
B. Sectoral and Institutional Context: SMTP2 implementation
7. The initial SMTP2 (2007-2011) objectives supported under the DGF are still
relevant and are reflected in the grants made by ACBF so far. These goals were to:
(i) increase effectiveness of governments in designing and managing public policies;
(ii) strengthen the interface between development stakeholders (public sector, private sector,
civil society and local communities); and (iii) enhance the capacity of Africa Regional
Economic communities, institutions and networks.
8. SMTP2 implementation was impacted by the reforms at ACBF through cancelled
disbursements to projects due to the freeze and as a result of portfolio restructuring. For
much of the last 18 months ACBF, with support from the Bank, was focused on management
reforms and strengthening fiduciary controls and capacity of the institution. Comprehensive
portfolio reviews have been undertaken to close or restructure projects over this period. Now
that ACBF management has begun to restore trust and commitment from internal and external
9
stakeholders (staff, donors including the Bank, and African governments), its adjusted strategy
for the remaining 18 months of SMTP2 is to: (i) pursue and consolidate the results achieved so
far in strengthening the organization internal controls, (ii) meet its SMTP2 objectives while
increasing performance and operational efficiency of ACBF; and (iii) finalize its new strategy
(SMTP3) for the period 2012-2016 which will define the basis for continued financial support
from African and external stakeholders to capacity development efforts throughout the
continent.
9. The proposed Regional IDA Grant and its associated Recipient Executed Multi
donor Trust Fund (RE MDTF) are warranted by the Bank management decision to
change instruments designed to support ACBF. As part of a broader decision regarding the
appropriate use of DGF resources, Bank management has decided that institutions such as
CGIAR8 and ACBF, which will require long term funding, are better funded through other
sources. Accordingly, Bank financial support to ACBF will be provided under this Regional
IDA (RIDA) Grant. At the same time, the historical pass-through SMTP1 MDTF is to be
replaced with a new Recipient Executed Multi-donor Trust Fund (RE MDTF), which would be
governed by the same operational policies as the RIDA Grant.
10. ACBF and this operation meet the eligibility criteria for a regional IDA Grant.
(a) While ACBF was not formally established as a regional organization by member states, it
was created as an ―autonomous non-profit agency‖ with ―full juridical personality‖ to serve a
regional function in Africa and has the legal status and fiduciary capacity to receive grant
funding and the legal authority to carry out the SMTP activities proposed to be financed under
the proposed IDA Grant (and RE MDTF) (see paragraphs 32 below and following); (b) ACBF
does not meet eligibility requirements to take on an IDA credit because it is not generating
revenue and would not be in a position to repay the credit; (c) the costs and benefits of the
activity to be financed with an IDA grant are not easily allocated to national programs (see also
paragraph 11); (d) the activities to be financed under the IDA grant are related to coordinated
interventions to provide regional public goods in capacity building (see also paragraph 11);
(e) while grant co-financing for the activity from other donors is expected under the new RE
MDTF, as elaborated in Annex 3, such co-financing will not be sufficient for ACBF‘s planned
activities; and (f) under this operation, ACBF would be the recipient of an IDA-funded
regional operation involving many of IDA‘s Member Countries.
11. Regional IDA support to ACBF is justified by the regional focus of many of
ACBF’s interventions in the past that would be consolidated in the SMTP2 program to be
financed under the proposed project. ACBF has assisted in moving forward the regional
integration agenda through strengthening capacities of regional economic communities (such
as ECOWAS, ECCAS, COMESA and SADC)9 which provide a platform for policy
harmonization and enhanced trade among member countries. The current ACBF SMTP2 grant
pipeline continues to build upon this and will provide funding to COMESA, CODESRIA10
,
8 CGIAR is a global partnership for agricultural development research. See www.cgiar.org.
9 ECOWAS = Economic Community of West African States;, ECCAS= Economic Community of Central African
States; COMESA= Community of East and Southern African States; and SADC = Southern African Development
Community. 10
Council for the Development of Social Sciences Research in Africa.
10
and West African Monetary Institute (WAMI). ACBF has also been instrumental in leveraging
several institutions for regional higher education and skills development in the fields of
economics, public policy, public sector management, financial management and accountability
as well as banking sector and capital market regulation. Under its proposed SMTP 2 grants,
ACBF will continue to support regional based research and education institutions such as
EPM11
in Uganda, GIMPA12
in Ghana, and HESPI13
in Addis-Ababa. Regional think tanks
such as the African Economic Research Consortium (AERC) which benefited from ACBF
support now provide a significant source of economic policy capability to the region. Finally,
ACBF has established and is poised to continue nurturing a number of Technical Advisory
Panels and Networks (TAP-NETs) which have fostered communities of practice and peer
learning networks with substantial regional benefits that spill over national boundaries. (for
details on the current pipeline of SMTP 2 subprojects proposed for support under this Project,
see annexure 1 of Annex 2; for ACBF recent developments generally, see Annexure 1 of
Annex 7).
12. Continued World Bank engagement in ACBF remains valid for the same reasons
that underpinned the decision to support the SMTP2 program in 2006.14
ACBF remains
an important provider of capacity building support in Africa and has unique access to African
institutions given its nature and composition. It complements the World Bank and other
donors‘ efforts to increase capabilities in Public Management, Civil Society Organizations and
Parliaments.
13. Supporting the development of indigenous African institutions remains critical to
development success in Africa. Technical and managerial capacity needs at the continental
level will require sustained long-term effort, and in this regard management believes that
continued support to ACBF is an effective way of leveraging capacity development in Africa.
14. Having restored good management through the MAP implementation, ACBF needs
continued Bank and broad donor support to achieve sustainable impact on capacity
building throughout the continent. In this context, management proposes that the Bank
support ACBF by providing IDA financing in FY11 to complete the final year of SMTP2
(instead of the usual DGF contribution), to consolidate the results achieved under the MAP,
and to finalize the preparation of the new medium term strategy, SMTP3, so as to allow timely
preparation and implementation of donors‘ support to this new strategy.
11
Economic Policy Management at the University of Makerere. 12
Ghana Institute of Management and Public Administration. 13
Horn Economic and Social Policy Institute. 14
See pages 1-2 and 13-14 of the World Bank Report No 36976, August 8, 2006 cited above.
11
Box 1: ACBF AT A GLANCE (Extract from ACBF 2009 Annual Report)
DATE OF ESTABLISHMENT
9 February 1991
VISION
To be the leading African institution, in partnership with other stakeholders, in building
sustainable capacity for good governance and poverty reduction in Africa.
MISSION
To build sustainable human and institutional capacity for poverty reduction in Africa.
CORE COMPETENCY AREAS
1. Economic policy analysis and management; 2. Financial management and accountability;
3.Public administration and management; 4.National statistics and statistical systems; 5.National
parliaments and parliamentary institutions; 6. Professionalization of the voices of the private
sector and civil society
MODE OF INTERVENTION.
Grant-making; Technical advice and support; Knowledge-based products and services;
Partnerships
SPONSORING AGENCIES
The African Development Bank (AfDB); The United Nations Development Programme
(UNDP); The World Bank
MEMBERSHIP
Full Members (48), comprising:
4 international development institutions (the African Development Bank, United Nations
Development Program, The World Bank and International Monetary Fund); 44 countries
(Benin, Botswana, Burkina Faso, Burundi, Cameroon, Canada, Central African Republic,
Chad, Republic of Congo (Brazzaville), Democratic Republic of Congo, (DRC), Côte
d'Ivoire, Denmark, Djibouti, Finland, France, Gabon, Ghana, Greece, India, Ireland, Kenya,
Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, The Netherlands, Niger, Nigeria,
Norway, Rwanda, Sao Tomé & Principe, Senegal, Sierra Leone, Sudan, Swaziland, Sweden,
Tanzania, Uganda, the United Kingdom, the United States of America, Zambia and
Zimbabwe); and One honorary member, the African Union.
12
C. Higher Level Objectives to which the Project Contributes
15. ACBF is an integral part of the World Bank’s strategy on capacity building and a
key Africa Region partner. It has proven to be an effective instrument in scaling up capacity
building in Africa and it can contribute to the implementation of the Africa Action Plan (AAP)
priorities. ACBF is working regionally, increasing the capacity of countries to improve
capabilities of policy and economic analysis units, including independent think tanks, and of
research and knowledge, institutions and networks to become centres of excellence that
provide support to national programs. ACBF interventions also involve non-traditional partners
such as national parliaments, civil society organizations and the private sector and, therefore,
can provide complementary support for the achievement of some AAP and CDMAP objectives
as well as support in other areas where the Bank is less active.
II. Project Development Objectives
A. PDO
16. The proposed project’s objectives are to contribute to: (i) enhanced capacity for
effective policy formulation and management in ACBF sub-grant recipient countries; and
(ii) improved and sustained management of ACBF‘s operations.
B. Project Beneficiaries
17. Direct beneficiaries of the project consist of core central government ministries and
agencies, regional organizations and non-traditional actors including civil society
organizations and the private sector. It is expected that the project will strengthen capacity of
direct beneficiaries to participate in or to influence government policy formulation. Indirect
beneficiaries include local researchers and experts in beneficiary countries who get new
opportunities to enhance their capacities and expertise through interventions supported by
ACBF projects.
C. PDO Level Results Indicators
18. Achievement of the development objective will be measured through the following
two key performance indicators:
a) Number of recommendations, submitted by ACBF grantees, and used by
government in policy formulation. This indicator will track the increased use of output of
ACBF grantees toward improved economic formulation in beneficiary countries ; and
b) Ratio of Total Budget to Total Active Portfolio Value (in percent). This indicator
will show how much ACBF is spending to deliver and manage US$1 of grant. It will
track the evolution in operational efficiency which is critical to a sustainable program as
well as the Foundation‘s effectiveness.
13
19. Additional intermediate and output based indicators for each component and
baselines and targets for the project life time have been developed and are described in
the Result Monitoring Framework (RMF), included in Annex 1. The RMF is designed to
ensure effective monitoring of the Project‘s achievements during its execution (2011-2015).
Component 1 key performance indicators will track outputs from the Sub-projects in the three
major types of institutions (Economic Policy Units; Public Sector Management; and Training
Institutions) included in the 2011 pipeline. Component 2 indicators will focus especially on
budget efficiency ratios and portfolio management performance during the whole period. The
Project RMF would be the first step toward the development of a broader set of indicators and
measurement framework based on the overall ACBF portfolio for the upcoming Third
Strategic Medium Term Program (SMTP3).
III. Project Description
A. Project components
20. The proposed project will have two components.
21. The first component “Capacity Building Sub-Grants” will finance ACBF sub-grants
to public and private beneficiaries in Sub-Saharan African countries and to Regional
Organizations serving these countries. The sub-grants will finance technical assistance sub-
projects approved under SMTP2 to enhance the institutional capacities of these beneficiaries in
the following areas: (i) economic policy analysis and development management; (ii) financial
management, accountability and transparency; (iii) national statistics and statistical systems;
and (iv) regional economic cooperation and integration and provision of regional public goods.
22. To be eligible for financing under the proposed RIDA Grant and RE MDTF, the
Sub-projects should meet explicit eligibility criteria. These would include, inter alia, the
following key criteria. The maximum amount of any Sub-grant would be limited to
US$5 million equivalent, and the maximum amount of all Sub-grants made to any one Sub-
grantee would be limited to US$7 million equivalent, so that funds are not concentrated in a
particular area or entity. To be eligible for financing under the RIDA Grant, Sub-projects
would have to be for the benefit of, or be carried out in, countries that are eligible for IDA
financing. Thus, Sub-grants to IBRD-only countries and countries in arrears to the Bank
would be ineligible for financing under the RIDA Grant; the RE MDTF could, however
finance such Sub-grants. Moreover, any proposed Subproject involving feasibility studies or
engineering designs for specific investments, and which might therefore trigger the Bank‘s
safeguard policies, would not be eligible for financing under either the RIDA Grant or the RE
MDTF Grant. Sub-grants would be subject to the Bank‘s fiduciary requirements (e.g., relating
to procurement, financial management and audit). Given ACBF‘s lack of experience with
World Bank policy requirements, seven (7) sub-projects out of the twelve (12) projected in the
2011 pipeline, have been identified for prior Bank review (see list in Annexure 1 to Annex 2);
any adjustments to the pipeline would have to be submitted to the Bank for approval and
decision regarding Bank prior review of the new Sub-project.
14
23. The second component “Institutional Development” will consist of (a) continued
implementation of the activities under the Management Action Plan, (b) development of a
forward looking medium term strategy (SMTP3) for ACBF, including enhancement of the
monitoring and evaluation system; (c) appraisal, supervision and evaluation of Sub-projects,
and (d) implementation of knowledge and learning activities designed to enhance skills and
peer learning in economic and public sector management in Africa; all through the provision of
goods, services, training and operating expenses, including ACBF staff salaries.
24. The proposed RE MDTF will co-finance the IDA operation so as to build synergies
among the various donors to ACBF and minimize transaction costs for ACBF, the Bank,
and other donors. RE MDTF resources will also enable ACBF to support programs in non-IDA
countries and countries in arrears.
B. Project Financing
25. In line with ACBF planning needs, Bank assistance through the proposed RIDA
Grant and RE MDTF was initially considered under an Adaptable Program Grant (APL)
with two phases and triggers. However, it was ultimately decided to design the proposed
RIDA Grant of US$25.0 million equivalent and RE MDTF of US$51.6 million as Specific
Investment Grants (SIL) that will support the achievement of SMTP2 objectives ending in
December 2011, given that the ACBF strategic medium-term plan (SMTP3) for 2012-2016 is
yet to be finalized. When IDA16 resources are identified and a new SMTP3 is endorsed by
ACBF‘s governing bodies for the period 2012-2016, a follow-up operation supporting the
implementation of the said strategy will be prepared in FY12. New financial support from IDA
and under a RE MDTF for the next operation will be dependent upon evidence of continued
satisfactory implementation of the MAP and satisfactory execution of the proposed Project.
Project Cost and Financing
26. The Project costs depend on the scope of ACBF’s grants program, which, in turn,
will depend on available donor resources. Based on ACBF‘s ―best scenario‖ projections, and
given the volume of operating costs (US$37 million including MAP implementation costs of
US$3 million) before SMTP2 ends, ACBF would be able to fund US$38 million worth of new
grants. However, given the uncertainties surrounding some donors‘ pledges, especially
contributions by the UK (US$6 million) and some African countries (US$2.7 million), the
prospect is for ACBF to only finance its current pipeline (around US$30 million).
15
Table 1: ACBF Financial Status and SMTP2 financial projections at end of 2011
27. The detailed information on costs and financing sources is provided in Table 2 below.
Table 2: Project Costs by Component and Source of Financing
Project Cost By Component RIDA
$ million
RE -MDTF
$ million
Total
$ million
A. Capacity Building Sub-Grants 15.0 22.6 37.6
B. Institutional Development 10.0 27.0 37.0
C. RE MDTF Supervision costs 1.0 1.0
D. RE MDTF program management 0.5 0.5
E. RE MDTF fees 0.5 0.5
Total Financing Required 25.0 51.6 76.6
ACBF BEST CASE SCENARIO: Commitment Situation At End of June 2010 and Projections at Dec. 2011 (at End of SMTP2)
1/19/2011
Cumul at
end of 2010
(estimated)
2011
Projections
2007-2011
Total
estimated
SMTP2 Total
for the
remaining 18
months
1/ Total pledges/Disburs 576.9 402.3 87.3 87.3 174.6 88.6
(of which WB) 280.6 172.6 83.0 (c) 25.0 108.0 25.0(of which AfDB) 36.1 24.1 (a) 0.0 12.0 12.0 12.0
(of which Non African donors) 188.8 146.2 (b) 1.2 41.4 42.6 41.4
(of which African) 18.7 7.3 2.5 8.9 11.4 10.2
(of which UNDP-Greece) 0.6 0.0 0.6 0.0 0.6 0.0
2/ Total Investment Income 35.1 23.3 0.0 11.8 11.8 11.8
3/ Total uncommitted balances (*) 21.4 0.0 21.4 (d) 21.4 21.4
4/ Total Resources (1 + 2 + 3) 633.4 425.6 87.3 120.5 207.8 121.8
5/ Use of resources (6 + 7 + 8) 633.7 425.8 147.7 60.2 207.9 75.8
6/Commitments to projects (**) 478.9 358.1 82.8 38.0 120.8 38.0
7/ Operating costs 150.9 67.7 61.0 22.2 83.2 34.9
of which staff costs 88.8 38.4 37.8 12.6 50.4 18.5
of which Admin cost 30.7 17.0 10.3 3.4 13.7 5.8
of which Program Delivery 31.4 12.3 12.9 6.2 19.1 10.68/ MAP costs 3.9 0.0 3.9 0.0 3.9 2.9
9/ Deficit/Surplus (4-5) -0.3 -0.2 -60.4 60.3 -0.1 46.0
Source: ACBF projections and calculations of the mission
(b) = A balance of $31 mill ion remains from the MDTF and is expected to be disbursed by end of June 2011 under tranche 2 and 3
(c) = A balance of $19.5 mill ion remains from the DGF and is expected to be disbursed by end of June 2011 under tranche 2 and 3
1/ WB and AfDB deliver their projects respectively for $25 mill ion and $12 mill ion during the last 18 month of SMTP2
2/ MDTF Donors disburse the total amount of their $51.6 mill ion during the last 18 month of SMTP2
3/ ACBF will potentially be able to deliver $38 mill ion worth of new grant during the last 18 month of SMTP2
Assumptions:
TOTAL
FROM
INCEPTION
Total
Before
SMTP2
SMTP 2
(a) = AfDB arrears in an amount of US$15.0 from Phase 2 and SMTP1 were disbursed in December 2010
(d) = uncommitted balances from closed projects of Phase I to SMTP II that can be re-committed
16
C. Lessons Learned and Reflected in the Project Design
28. Three important lessons were drawn from the past Bank support to ACBF
programs:
29. The first lesson is the need to enhance a systematic approach to track results:
While ACBF SMTP2 has a RMF with objectives and predetermined indicators at development,
operational and institutional levels, there is an absence of a systematic approach for measuring
results and impact. Under the proposed project, a new RMF will be initiated with a dual focus
on (i) tracking ACBF‘s operational performance through December 2011; and (ii) enhancing
the M&E system for proper monitoring of the future strategy (SMTP3).
30. The second lesson relates to appropriate management of fiduciary risks in past
operations. The pass-through arrangements for donors‘ financing and the DGF grants and the
consequent limited contractual fiduciary oversight role of the Bank as donor and as trustee in
relation to disbursements made to ACBF, proved in this case to be inadequate (see para. 31
below). The proposed financing under the IDA Grant and RE MDTF will require application
of standard Bank fiduciary policies and technical supervision to provide better assurance that
Bank and donor funds are spent for the intended purposes.
31. Finally, the Bank’s role as a member of ACBF’s Executive Board has raised issues
of conflict of interest with the Bank's role as financier and trustee. While the Bank‘s
representation on ACBF‘s Executive Board has been valuable in responding to the governance
crisis and addressing the issues raised during the last 2 years, including with respect to the
Bank‘s role as donor and pass-through trustee, the Bank‘s continued presence on the Executive
Board poses issues of conflict of interest (COI) between (i) the Bank‘s role as executive
director of ACBF endorsing ACBF managerial actions and approving projects for funding, and
(ii) the Bank‘s role as trustee and financier, with fiduciary and supervision responsibilities and
arms-length agreement terms. In connection with the proposed project, the Bank has
determined that its formal supervision role would be incompatible with its continued
representation at the Executive Board. Proposed transitional measures to address the COI issue
are detailed in paragraphs 45 and 46 below in Key Risks and Mitigation Measures.
IV. Implementation
A. Institutional and Implementation Arrangements
32. Implementation of the proposed operation will be carried out by ACBF, which is
governed by a three-tier structure with mandates clearly defined in its Constitution15
.
ACBF is an autonomous non profit agency with full juridical personality. The organization of
the ACBF consists of a Board of Governors (BoG), an Executive Board (EB), and an
Executive Secretary (ES) supported by staff. The Board of Governors, which determines
ACBF‘s overarching policies and appoints members of the EB (other than the ―sponsoring‖
members), is made up of representatives of African governments who contribute to ACBF, the
15
ACBF Constitution was adopted by Agreement among the Bank, AfDB and UNDP, the three sponsoring agencies
on February 9, 1991.
17
Bank, the AfDB, and the UNDP (these three are known as ―sponsoring agencies‖), and other
bilateral donors.16
33. The Executive Board, which is responsible for the conduct of ACBF’s general
operations, is comprised of 11 members, including a representative of each of the
sponsoring agencies, and 8 independent members appointed through a search and
selection process. Each member has one vote, with decisions being taken by majority
vote. The EB approves ACBF‘s annual work plans and budget (including grants made by
ACBF) and appoints the ES. The ES serves as the chief executive officer of the organization
and is responsible for conducting ACBF‘s business under the control and direction of the EB.
ACBF is based in Harare, with a headquarters agreement signed in 1991 with the Republic of
Zimbabwe, and is currently staffed with 75 African Specialists and Managers to support
preparation and implementation of its programs and oversight of grants it makes, which
involve 40 African countries and 26 regional organizations and initiatives.
34. Because the proposed Project is an integral part of ACBF’s normal activities, it will
be implemented by its staff using ACBF’s existing institutional structures, which have
been reinforced as a result of the MAP execution. ACBF has several units and staff
dedicated to appraising and supervising individual projects and negotiating the related grants
made by it, which are supported by FMS, procurement and disbursement specialists and legal
counsel. These staff have been found by the Bank to have the requisite qualifications and
experience to manage the Project. Sub-grants made under the Project will be reviewed by the
ES, the Project Review Committee and ultimately approved by the EB but will involve more
internal peer-reviewing among Operations and M&E staffs.
B. Results Monitoring and Evaluation
35. M&E capacity at ACBF and Sub-grantee levels presents some challenges and will
need strengthening to ensure a proper monitoring of ACBF’s strategies and activities. An
audit undertaken by ACBF in September 2008 determined that its strategies need to be
underpinned and supported by a suitable M&E system and recommended an action plan
divided into three broad ―phases‖ (Phase I: System Design and Preparation; Phase II: System
Implementation and Operation; Phase III: System Automation) and six themes17
to address
deficiencies in the M&E capacity and systems in place at ACBF and in the projects it finances,
including the issues related to institutional structure, reporting mechanisms and performance at
an organizational and individual level as well.
36. Implementation of the adopted action plan was delayed, partly because of ACBF’s
management crisis. While the implementation of the MAP resulted in enhancement in
performance management including in the reporting, audit and information systems, ACBF
16
ACBF‘s BoG currently includes representatives from over 30 African countries and a dozen European and North
American countries. 17
The themes are: Promote and strengthen a culture of M&E and Results Based Management (RBM) in
ACBF; Increase ACBF project M&E capacity; Increase ACBF ability to monitor and evaluate projects;
Increase ACBF ability to evaluate departments‘ performance, and; Enable ACBF to measure their own
organizational achievements against the ACBF Strategic Plan.
18
still needs to strengthen its ability to properly monitor and evaluate its operations and results,
its projects and its own performance.
37. Under the proposed operations, an appropriate M&E system is required to ensure
an adequate monitoring of the PDO and key results. To the extent possible, the Project‘s
M&E system will be embedded into ACBF‘s own monitoring and evaluation organization,
tools and systems. Hence, building ACBF capacity for collection of data, reporting on
activities and outcomes, and tracking of key results at corporate and grantee levels will be a
priority activity supported by the Project. With a systematic implementation of the M&E action
plan throughout the Project life, it is expected that ACBF will lay the groundwork for its next
strategy to be more results oriented.
C. Sustainability
38. The Bank support to the SMTP2 program has been positively acknowledged by key
stakeholders since its inception in 200718
. The SMTP2 program (2007-2011) is a
continuation of the effort initiated by the World Bank, AfDB and UNDP in the early 1990s to
address African capacity building needs through the ACBF. The ultimate beneficiaries
(African governments) as well as other donors involved in the SMTP2 program are still
committed to supporting ACBF and expect the Bank to maintain a strategic leadership role in
supporting this program.
39. Hence, sustainability of the proposed Project will ultimately be determined by
tangible results of ACBF’s operations, including proper implementation of the Sub-
projects, and effective and transparent management of donors’ resources. The recent
management challenges experienced at ACBF, coupled with the pressures of the global
financial crisis, have resulted in the withdrawal of one important donor and could lead to more
withdrawals if ACBF‘s recovery is slow or new allegations of misuse of funds re-emerge.
Therefore, in order for ACBF to regain its reputation as a key partner in capacity building in
Sub-Saharan Africa, the effective and satisfactory implementation of the proposed Project
during this transition period will be critical.
D. Key Risks and Mitigation Measures
40. In addition to the risks associated with ACBF’s governance and capacity (discussed
further below), a critical risk identified during the preparation of this operation is the
capacity of ACBF management to maintain a sustainable cost structure over the Project
execution period.
41. Cost Sustainability and Financial Risks. ACBF remains in a potentially precarious
financial position since the level of donor support continues to be uncertain. ACBF‘s
financial situation will be affected by the spillover of the recent international financial crisis
and the delays in establishing the MDTF for SMTP2. ACBF anticipates a loss of more than
18
The recent Board of Governors meeting in Paris held on September 30, 2010, recognized the Bank‘s positive role
and contribution to ACBF‘s turnaround and requested the Bank to continue its support to ACBF management in this
defining moment.
19
US$23 million that had been expected from European and North American donors and from
African countries. Additional funding received from the Bank19
will help mitigate the risk of
reduced grants to ultimate beneficiaries.
42. However, internal cost reduction efforts are required and ACBF must actively and
carefully manage its operating costs, in order to make available more resources for Sub-
projects and to increase ACBF’s efficiency. To that end, the ACBF management has adopted
the following measures:
ACBF will contain operating and overhead expenses during the remainder of
SMTP2. Caps and limits on staff, travel, consultants, administrative and knowledge
activities costs have been introduced and will be maintained for 2011.
Broader commitment to performance and cost-efficiency measures will be adopted
as part of the governance framework defined and monitored by the Executive Board.
ACBF will make budget or grant commitments based on resources available.
Recently negotiated agreements with its grant recipients already contain a clause
stating that grant disbursements are dependent upon availability of funds.
ACBF will consider cancelling some grants awarded in 2008 (or earlier) but not yet
concluded and recommit these resources when possible. It will also continue
aggressive collection of unretired advances (US$6 million) under closed grants, even
though likelihood of recovery is low, partly because some of these funds have been
used for eligible expenses, but have not yet been properly accounted for.
43. Another risk related to ACBF’s financial condition is the possibility that should
any of the proceeds of the RIDA Grant or RE MDTF Grant be misused, ACBF may not
be in a position to refund them to the Bank. This risk is always inherent in making regional
IDA grants to non-revenue generating organizations such as ACBF. However, it is
significantly mitigated by virtue of (a) the development under the MAP of a strong team of
professionals and sound fiduciary systems, (b) training provided by the Bank to ACBF staff on
Bank policy requirements, which will continue throughout Project implementation; and
(c) ACBF‘s contractual right to a refund of amounts misspent by grantees, which is included in
its grant agreements with its grantees.
44. Governance Risks. Concerns about oversight over ACBF management practices
highlighted the critical role of its governance organs. A Corporate Governance Review
(CGR) was initiated in mid-2009 by ACBF‘s Executive Board (EB) to assess the relevance and
effectiveness of the management and EB functions in order to strengthen the corporate
governance of ACBF. The BoG meeting in September 2010 approved a governance action
plan based on the CGR that aims to bring governance practices at ACBF in line with good
practice principles in similar institutions. The plan addresses the functions and relationships
among the various governance organs of ACBF as well as the competencies required of EB
members for effective leadership and for effective oversight and audit functions. The
governance action plan was approved by the BoG in September 2010, subject to nuancing the
19
Final support of $25 million compared to initial level of RIDA project financing of $10 million.
20
confidentiality provisions as they apply to representatives of the sponsoring agencies on the
EB, given that these members have obligations towards their respective organizations.
45. Establishing a proper governance relationship between the Bank and ACBF also
requires resolution of the conflict of interest (COI) inherent in the Bank's multiple roles. The Bank has participated in ACBF's Executive Board (EB) since its inception and its
participation is memorialized in ACBF's constitutive documents. The proposed Project will be
placing the Bank in an unprecedented position of having concurrent executive and supervisory
functions in an IDA-recipient organization, which creates both real and apparent conflicts of
interest that potentially could undermine the legitimacy of EB decisions and put the Bank's
reputation at risk. At the same time, the Bank's departure from the EB needs to be
appropriately managed to address transitional issues for ACBF, the Bank, and other donors and
stakeholders. With due regard to the need to balance all these concerns, a withdrawal from EB
participation by the Bank will be formalized at the September 2011 Board of Governors
meeting. Actual withdrawal would occur upon the adoption of those formalities and in no
event later than March 31, 2012. Any extension of time beyond September 30, 2011 would be
based on compelling business reasons and implementation of appropriate risk mitigation
measures.
46. The following steps will be taken in order to mitigate COI concerns during this
transition period: (i) Full disclosure to stakeholders of the Bank's dual role within the context
of its decision to disengage from the EB; (ii) measures to facilitate prompt effectiveness of the
IDA Financing Agreement and RE MDTF Grant Agreement and ensure effective supervision
of the Project (see Annex 5), with adequate supervision resources; (iii) project supervision to
address explicitly any remaining institutional issues (Section IV-A); (iv) ACBF and the Bank
to ensure effective communication of the shift in the Bank's role as it disengages from the EB;
(v) the World Bank Group staff member appointed to serve on an interim basis on the EB will
not be nominated by or be mapped to any VPU involved in preparation or supervision of the
proposed Project; (vi) clear terms of reference for the appointed staff member will be prepared,
requiring recusal of him/herself from EB discussions and decisions that involve the RIDA
Grant or RE MDTF Grant, including Sub-project approvals, budgets or resource allocations;
(vii) Establishment of effective information and decision firewalls between the EB and Bank
staff involved in Project oversight; and (vi) a regular stock-taking by IDA management,
aligned with the supervision process, will be conducted to ensure that these safeguards are
operating as intended.
47. Capacity Risks. The forensic and human resource audits conducted in 2009 revealed
a number of lapses in internal control processes and in general compliance with ACBF’s
policies. The implementation under the MAP of the recommendations coming out of these
audits led to a profound restructuring of ACBF involving re-engineering of its systems,
policies, processes and procedures and adjusting its staffing to develop a strong cadre of staff,
update ACBF‘s policies and create a culture of compliance with ACBF‘s policies.
48. At the operational level, the implementation of the MAP through the end of July
2010 has yielded important results in a very short period of time: (i) Internal controls have
been enhanced and the Enterprise Risk Management (ERM) framework is now being used for
21
risk management; (ii) systems and processes as well as their supporting manuals are being
continuously improved for increasing institutional effectiveness; (iii) a human resources
development and management strategy, in line with those of similar international
organizations, is being implemented to attract and retain the best talent; (iv) knowledge
creation is becoming more effective through an internal expertise, and channels for
communicating new knowledge to Operations Departments; (v) an operations evaluation
function has been institutionalized and evaluation findings, lessons and recommendations are
being implemented; (vi) business continuity has been strengthened; (vii) resource mobilization
and partnership building have been streamlined in all of ACBF‘s activities;
(viii) communication and visibility have improved regarding ACBF‘s activities; and
(ix) corporate governance is being enhanced through better delineation of responsibilities and
further collaboration between the three governing bodies (BoG, EB, ES), improved EB
oversight responsibilities, as well as better recruitment processes and requirements for EB
members.
49. The challenge remaining for ACBF is to manage carefully this transition period
toward the “new ACBF”. The objective is to consolidate the MAP results by ensuring that
with the new organizational structure staff are able to effectively use the new systems and
processes so as to deliver quality products and achieve expected results. The proposed Project
will integrate conditions and measures so to ensure that the MAP achievements and results are
continuously maintained and enhanced during the remaining SMTP2 period and mainstreamed
into the upcoming SMTP3.
50. Overall Risk Ratings. The ORAF rated the proposed Project as Medium-I. It will be
implemented in a context in which the Bank is acutely conscious of the reputational risks
associated with mismanagement or poor governance by ACBF. An anonymous complaint
in September 2008 triggered a number of forensic and human resource management audits and
a corporate governance review of ACBF. While no evidence of fraud or corruption was found
by the various audits, the financial and management problems and weak oversight revealed at
ACBF highlighted the potential reputational risks to ACBF as well as to the Bank given its role
as a lead donor under the DGF program as well as trustee of the MDTF and member of both
the Board of Governors and Executive Board of ACBF.
51. A new ACBF management team, far-reaching management systems reform and
ongoing corporate governance reforms, mitigate the control and use of fund risks at the
corporate level. The recent crisis has stimulated the implementation of major managerial
reforms at ACBF as reflected in the MAP. The reform of financial, human and portfolio
management systems have made ACBF a much lower risk organization. Newly introduced
strengthened controls and oversight over grantees will also reduce the risks at the level of
ACBF‘s grant beneficiaries. In addition, the implementation of the corporate governance
action plan would strengthen skills and committee structures to clarify and strengthen oversight
arrangements and managerial accountability at the Executive Board and the Board of
Governors levels.
22
52. Applying standard Bank operational policies and project supervision to the RIDA
Grant and RE MDTF will provide an additional level of oversight that will help identify
and address in a timely manner some of the potential risks. Taken together with the actions
to strengthen management and corporate governance, the proposed operation will incorporate
appropriate conditions and monitoring modalities that would allow for successful
implementation of the SMTP2 with reduced risks regarding fund use and project execution.
V. Appraisal Summary
A. Economic and Financial Analysis
Not Applicable
B. Technical
53. Recent assessments conducted by the Bank team concluded that ACBF has in place
adequate financial management and procurement systems and capabilities that would
allow for proper implementation of the proposed Project, contingent on implementation of
an action plan in some areas indicated below.
54. Monitoring and Evaluation. The Monitoring & Evaluation (M&E) of progress
towards achieving the objectives of the project will entail a process of continuous and
systematic collection of data on the inputs, outputs and intermediate outcome indicators
of the Project, as set out in the arrangement for results monitoring (see Annex 1). This effort
will be aimed at enabling timely management decision making by providing regular and up-to-
date information on the performance of the Project and on actual/potential problems in
implementation. The findings of relevant M&E activities will be reflected in quarterly and
annual progress reports that will be submitted to IDA and the management of ACBF. The
progress reports will cover the implementation of activities under the various Sub-projects
managed by ACBF Sub-grantees, institutional activities, training and studies, performance
indicators, and Financial Monitoring Reports (FMR). They also will cover any other issues
identified during project supervision and the effect of actions taken to resolve such issues. The
fourth quarterly report of each year will be an annual report, covering progress during the past
year.
55. Following the M&E assessment, the ensuing action plan has been adopted by
ACBF:
A draft Results Monitoring Framework (RMF) for the Project has been developed and
found acceptable by the Bank. In addition, a draft RMF for the third Strategic
Medium Term Plan (SMTP3) of ACBF will be completed when the strategy is
finalized.
Under the project, and no later than June 30, 2011, ACBF will: (i) adjust its staff
responsibilities in a manner satisfactory to the Association, so as to ensure that
assessments of the M&E systems to be used under proposed Sub-grants are conducted
by the Recipient upstream, during the preparation of each Sub-project, prior to its
approval for financing; (ii) prepare quarterly monitoring and evaluation reports on all
23
of ACBF‘s activities (including Sub-projects) in form and substance acceptable to the
Association.
As a condition of effectiveness, ACBF will revise its Operations Manual; inter alia, to
further enhance its Sub-project monitoring and evaluation.
56. Financial Management. A financial management (FM) assessment was undertaken
of the financial management system of ACBF to determine whether ACBF has the capacity
to carry out the financial management functions required for the proposed RIDA and MD-
RETF Grants.
57. Subject to a few improvements suggested in the FM action plan, ACBF has the
capacity to carry out the FM functions required for implementation of the proposed
project. During the last year, ACBF has been continuously working with the support of the
Bank and AfDB on improving its FM and governance as part of its MAP. As a result ACBF
has developed and substantially implemented improved Manuals to guide FM, Procurement
and Operations activities. It has also strengthened the staffing in its FM units. This has had the
overall effect of enhancing, among others, internal controls and audit systems as well as
controls at sub-grantees‘ level.
58. The FM assessment has, however, through risk evaluation, noted that there are
some outstanding weaknesses in the system requiring attention. First ACBF needs to
complete the IT systems integration. ACBF is using the SUN system for accounting. This
system is only interfaced with the payroll system and allowing for manual intervention
between the subsystems and sometimes within the subsystems. This makes the internal controls
less effective. Second, other areas of improvement needed for the project include (but are not
limited to) the full adoption of International Financial Reporting Standards and the regular
issuance of Interim Financial Reports (IFRs) in format and substance satisfactory to the Bank.
The action plan in Annex 3 of this PAD details the additional actions required and timetable to
strengthen the FM function.
59. Procurement. Procurement under the Project would be carried out in accordance
with the World Bank's Guidelines. The use of the World Bank's "Guidelines: Procurement
under IBRD Loans and IDA Credits" dated May 2004, revised October 2006 and May 2010;
and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers' dated
May 2004 revised October 2006 and May 2010 and the Bank‘s Standard Bidding Documents
and Request for Proposals Documents would be mandatory for all contracts financed under the
RIDA and RE MDTF Grants. At Sub-grant level, these requirements and the particular
procurement methods to be used and institutional arrangements to be maintained by the Sub-
grantees, would be elaborated in ACBF‘s Procurement Guidelines, which will be updated and
finalized as part of the updated Operations Manual, required as a condition of effectiveness.
Specific procurement methods are detailed in Annex 3.
60. The overall capacity of ACBF to manage procurement under the proposed
operation is deemed adequate and the risk medium driven by likelihood (ML). ACBF has
adequate institutional arrangements with clear roles and responsibilities for procurement. In
addition to the existing procurement unit, ACBF has recruited an international Procurement
24
Specialist to strengthen procurement management of its internal procurement as well that of
Sub-grantees. Several operational guidelines have been developed and adopted by ACBF that
will mitigate the identified risks. The envisaged contracts to be procured are generally of small
value.
61. The capacity of Sub-grant recipients would only be known after the Sub-projects
have been appraised by ACBF. Historically, the majority of ACBF grant recipients have been
government and quasi government agencies that have procurement knowledge based on their
national procurement laws. The contracts envisaged though many and scattered are expected to
be small in value. In addition, ACBF has put in place policies and procedures to assess Sub-
grantee capacity and mitigate against potential risks.
62. Actions that remain to be taken under the proposed operation (and included in the
Procurement Action Plan in Annex 3) are as follows: (i) Revision by ACBF as a condition
of effectiveness of its Operational Manual (including Procurement Guidelines for its Grant
Recipients) to ensure consistency with other Manuals and with Bank policies; and (ii) Training
(with ongoing assistance from the Bank) of Project Officers in procurement and financial
management for Sub-grants, in particular, familiarization with the Bank‘s specific procurement
requirements for RIDA and RE-MDTF Grants. In addition, ACBF would be required to
conduct an annual procurement audit (commencing FY 2011) with experts whose terms of
reference, qualifications and experience are acceptable to the Association, and furnish the
report of the audit to the Bank not later than 6 months after the end of the year.
63. Disbursement. The proceeds of both the IDA Grant and the RE MDTF Grant
would be disbursed against eligible expenditures incurred under SMTP2. These
expenditures would comprise eligible goods, services, training and operating costs.
Retroactive financing of up to US$5 million equivalent of the IDA Grant and 20% of the RE
MDTF for operating expenses under Component 2 (Institutional Development) and for which
payment is made between July 1, 2010 and the signing of the Financing/Grant Agreement
concerned. ACBF‘s financial statements, including those for the Project, would be audited
annually by independent auditors acceptable to the Bank.
64. The Bank would disburse the RIDA Grant and MDTF Grant proceeds based on
consolidated and quarterly withdrawal requests sent by ACBF., The Bank would provide
ACBF with advances through two Designated Accounts opened respectively for the RIDA
Grant and the RE MDTF Grant in a reputable commercial bank, satisfactory to the Bank as
described in Annex 3, section C and, sub-section 14. To allow for proper tracking of eligible
expenditures financed under the RIDA and MDTF Grants, withdrawal requests would be
accompanied by unaudited Interim Financial Reports (IFRs) indicating sources and uses of
funds (form and content of IFRS have been agreed).While the operating costs and Sub-grants
to Sub-grantees would be committed during FY2011, the RIDA Grant and RE MDTF Grant
proceeds would be disbursed over 4 to 5 years, reflecting the normal disbursement period of
ACBF‘s sub-grants.
65. Social (including safeguards)
25
There are no social issues to be addressed under this project.
66. Environment (including safeguards).
The EA category of this project is ―C‖, since all the activities will be for technical
assistance and will not involve any environmental impacts. Sub-project proposals that
might involve design work leading to investments, such as feasibility studies and
engineering designs, would not be eligible for financing under the IDA Grant or the RE
MDTF Grant.
67. Other Safeguards Policies triggered (if required).
26
Annex 1: Results Framework and Monitoring
(ACBF Regional Capacity Building Project)
PROJECT DEVELOPMENT OBJECTIVE (PDO):
1. Enhanced capacity for effective policy formulation and management in ACBF sub-grant recipients’ countries
2. Improved and sustained management of ACBF operations
PDO Level Results Indicators*
Co
re
Unit of
Measure
Baseline
(SMTP2
average
or 2010)
Cumulative Target Values**
Frequency Data Source/
Methodology
Responsibility
for Data
Collection
Description
(indicator
definition etc.) Dec
2011
Dec
2012
Dec
2013
Dec
2014
Dec
2015
1. Number of
recommendations, submitted
by ACBF grantees, and used
by government in policy
formulation
# 0 5 10 15 20 25 Annual
Independent
Survey of
ACBF-
supported
policy units
and progress
reports of
Grantees
ACBF-M&E
unit
Count of
recommendations submitted by policy
units which the
government uses in policy formulation
2. Ratio of Total Budget to Total
Active Portfolio Value % 8 12.6 14.4 12.4 10.9 9.8 Annual
ACBF-
Finance /
Annual
Financial
Statements
audited
reports
ACBF-Finance This indicator
would show how
much ACBF is
spending to deliver
and manage 1
dollar grant.
INTERMEDIATE RESULTS
Component 1: Strengthened key institutions and human resources involved in policy formulation (new projects)
3. Economic policy researches
completed in policy institutes
supported by ACBF (number)
# 0 10 20 30 40 50 Annual
ACBF-
supported
policy units /
records
review,
interviews
ACBF –OPDs Policy papers
being developed
4. MDAs supported by the targeted
economic policy units (number)
a. Technical assistance
b. Training
# 0
0
5
5
35
55
65
155
95
205
125
255 Bi-Annual
MDAs
supported by
ACBF/
records
review,
interviews
ACBF –OPDs
Information about
the nature of the
training and the
concrete outcomes
of the support will
be available at
project level
27
during
implementation
Intermediate Results Indicators*
Co
re
Unit of
Measure
Baseline
(SMTP2
average
or 2010)
Cumulative Target Values** Frequency Data Source/
Methodology
Responsibility
for Data
Collection
Description
(indicator
definition etc.)
Dec
2011
Dec
2012
Dec
2013
Dec
2014
Dec
2015
5. Students receiving a Master‘s
degree certificates in Economic
Policy and Public
Administration by ACBF
supported programs/institutions
# 0 0 80 180 280 380 Annual
CSOs, private
sectors
institutions
supported by
ACBF/
surveys,
records
review
ACBF-OPDs This is a count of
number of students
obtaining MA
degrees in the
indicated field of
study
6. Students receiving training
certificates in Economic Policy,
Public Administration and/or
statistics
# 0 0 200 450 700 950
ACBF
Grantees
OPDs-ACBF This is a count of
number of students obtaining certificates
for short courses in the
indicate areas.
Component 2: Improved ACBF management process and structures
7. Ratio of Total Admin (Excl.
Staff) to Total Budget % 16% 16.9% 17.1% 17.2%
17.4
% 17.6% Annual
ACBF-
Finance /
Annual
Financial
Statements
audited
reports
ACBF-Finance Administrative
budget relative to
total budget
8. Ratio of Total Staff Costs to
Total Budget % 60% 51.9% 51.6% 51.4%
51.1
% 50.9% Annual
ACBF-
Finance /
Annual
Financial
Statements
audited
reports
ACBF-Finance Staff costs relative
to total budget
9. Percentage of Sub-projects in
ACBF portfolio rated satisfactory % 46 55 70 80 90 95 Annual
Independent
projects s
review and
progress
reports of
Grantees
ACBF –OPA Count of ACBF
projects rated
satisfactory and
Highly satisfactory
(annual average)
10. Ratio of amount disbursed to
amount committed in the
portfolio
% 90 95 95 98 98 98 Monthly
ACBF-
Finance/
reports
ACBF-Finance Ratio of amount
disbursed relative to
total commitments
28
review
11. Grant recipients submitting
quarterly/M&E reports in line
with the Project Results
Monitoring Framework
% 0 25 50 75 85 90 Quarterly
ACBF-M&E
unit/ project
records
review
ACBF-M&E
Unit
Count of number of
projects submitting
the progress/
quarterly report
including
status/M&E
indicators report
12. Yearly approved sub-
projects/grants # 14 24 34 44 54 64
Semi-
annual
COO/EB
Minutes
COO/BEA
ACBF
Count of number of
projects approved
by EB
29
Annex 2: Detailed Project Description
1. The proposed project will have the two following components:
a) The first component ―Capacity Building Sub-Grants‖ will finance ACBF Sub-grants to
public and private beneficiaries in Sub-Saharan African countries and to Regional
Organizations serving these countries. The Sub-grants will finance technical assistance
Sub-projects approved under SMTP2 to enhance the institutional capacities of these
beneficiaries in the following areas: (i) economic policy analysis and development
management; (ii) financial management, accountability and transparency; (iii) national
statistics and statistical systems; and (iv) regional economic cooperation and integration
and provision of regional public goods. To be eligible for financing under the proposed
RIDA and RETF Grants, the Sub-projects should meet explicit eligibility criteria. These
would include, inter alia, a limit on the total amount of (i) any Sub-grant to US$5 million
equivalent and (ii) all Sub-grants made to any one Sub-grantee to US$7 million equivalent,
so that funds are not concentrated in a particular area or entity, as well as prior Bank review
of 7 pre-identified proposed Sub-projects in ACBF‘s 2011 pipeline (see list in Annexure 1
below); if any adjustments are made to the pipeline, these will be submitted to the Bank for
approval and decision as to whether they will be subject to Bank prior review), given
ACBF‘s lack of experience with World Bank operational policy requirements. To be
eligible for financing under the RIDA Grant, Sub–projects would have to be for the benefit
of, or be carried out in, countries that are eligible for IDA financing. Thus, Sub-grants to
IBRD-only countries and countries in arrears to the Bank would be ineligible for financing
under the RIDA Grant; the RE MDTF Grant could, however finance such Sub-grants.
Moreover, any proposed Sub-project involving feasibility studies or engineering designs
for specific investments would not be eligible for financing under either the RIDA or the
MDTF Grant. Sub-grants would be subject to the Bank‘s standard procurement, financial
management and audit requirements. Results for this component would be monitored
through outcome indicators tracking recipient countries: (i) strengthened capacity for
economic policy formulation; (ii) increased utilization of performance management tools in
pilot Ministries, Departments and Agencies (MDAs); and (iii) strengthened statistical
capacity in recipients‘ countries.
b) The second component “Institutional Development‖ will consist of: (i) continued
implementation of the Management Action Plan, (ii) development of a forward looking
medium term strategy (SMTP3) for ACBF, including enhancement of its monitoring and
evaluation system; and (iii) appraisal , supervision and evaluation of Sub-projects, and
(iv) Development and implementation of knowledge and learning activities designed to
enhance skills and peer learning in economic and public sector management in Africa; all
through the provision of goods, training, consultants‘ services and operating expenses,
including staff salaries. Key results for this component will be measured through output
indicators related to (i) increased efficiency in the utilization of resources in ACBF;
(ii) improved performance of ACBF operational portfolio; and (iii) strengthened project
management capacity in ACBF.
30
2. The proposed RE MDTF will co-finance the RIDA Grant so as to build synergies
among the various donors to ACBF and minimize transaction costs for ACBF, the
Bank, and other donors. In addition to the above components, the MDTF will finance
(i) Bank supervision costs; and (ii) program and trust fund administration and management
costs. MDTF resources will also enable ACBF to support programs in non-IDA countries
and in countries in arrears.
31
Annexure 1: 2011 draft pipeline and Bank selected sub-projects for prior-review
Project Name Country/Region Core Grant
Amount
(US$)
Bank Selected for Prior
Review (and criteria for
selection)
1) Programme-Pays s pour le Senegal
Senegal
Economic Policy Analysis &
Management / Financial Management
& Accountability
5,000,000 Yes: (Amount, Country
program, West Africa,
francophone)
2) Ghana Institute of Management and Public Administration
(PSMTP/GIMPA
Regional based in
Accra
Public Administration and
Management
3,000,000 No
3) Projet de Renforcement des Capacités en Statistiques, Etudes
Prospectives et Planification pour la Lutte contre la Pauvrete en
Republique du Congo (RESPEC)
Congo,
Brazzaville
Economic Policy Analysis and
Management
478,550 No
4) Programme National de Renforcement des Capacités- Cellule
d’Appui a la Formation Phase III (PNRC-CAF III)
Guinée Bissau Economic Policy Analysis and
Management
484,968 No
5) Projet d’Appui a la Formation des Agents de l’Administration
Publique du Tchad (PROFAP)
Tchad Public Administration and
Management
1,765,000 Yes: (Amount, PAM
program, Central Africa,
francophone)
6) CODESRIA Capacity Building Project Phase II Regional based in
Dakar
Public Administration and
Management
2,000,000 No
7) Capacity Building Project for West African Monetary Institute
(CAP-WAMI)
Regional, Based in
Accra
Financial Accountability and
Management
2,000,000 Yes: (Amount, Regional
program, West Africa)
8) Horn Economic and Social Policy Institute (HESPI) Regional, Based in
Addis
Economic Policy Analysis and
Management
3,000,000 Yes: (Amount, Training
Institution program, East
Africa, Anglophone)
9) Enhancing Capacity of the COMESA Secretariat to Support
Economic and Trade Policy Analysis
Regional, Based in
Lusaka
Economic Policy Analysis and
Management
3,000,000 No
10) Tanzania Country Program
Tanzania
Economic Policy Analysis and
Management/ Public Administration
and Management
5,000,000 Yes: (Amount, Country
program, Southern Africa,
Anglophone)
11) EPM-Uganda Regional. Based in
Uganda
Economic Policy Analysis and
Management
3,000,000 Yes: (Amount, Economic
Policy Management, East
Africa, Anglophone)
12) PRCS-Central African Republic Central African
Republic
Enhancing National Statistics and
statistical systems
1,200,000 Yes: (Amount, Statistics,
Central Africa, francophone,
Fragile State)
Total 29,928,518
32
Annex 3: Implementation Arrangements
1. The Africa Capacity Building Foundation (ACBF) is the Recipient and implementing agency
of the RIDA Grant and RE-MDTF Grant. Recent assessment conducted by the World Bank
in August 2010 concluded that, subject to some minor modifications and enhancement,
ACBF has in place the adequate governance structure, operational arrangements, financial
management and procurement systems and staff to undertake the Project activities, as
required by the Bank.
A. PROJECT INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS
1. ACBF Governance and Management Structure.
2. ACBF is an autonomous non profit agency with full juridical personality established by
several donors in 1991 and governed by its Constitution20
. ACBF has a three-tier governance
structure comprising a Board of Governors, an Executive Board and a Secretariat. The Board
of Governors sets the overarching strategic policies of ACBF and appoints the members of
the Executive Board (except those of the World Bank, AfDB and UNDP, the sponsoring
agencies). Each government that contributes a certain amount of funding to the African
Capacity Building Fund (ACB Fund), as well as each of the sponsoring agencies may appoint
one representative to serve as a governor on the Board of Governors and may appoint an
alternate.
3. The Executive Board, which is responsible for the conduct of ACBF‘s general operations, is
comprised of 11 members, including a representative of each of the sponsoring agencies, and
8 independent members appointed through search and selection. Each member has one vote,
with decisions being taken by majority vote. The Executive Board is charged with the
responsibility to approve operational policies, manuals, strategies as well as individual
projects and programs. It also has responsibility for the appointment of the Executive
Secretary. The Executive Secretary is an ex-Officio member of the Executive Board. ACBF
is based in Harare, with a headquarters agreement signed in 1991 with the Republic of
Zimbabwe, and is currently staffed with 75 African Specialists and Managers to support
preparation and implementation of its projects and programs involving 40 African countries
and 26 regional organizations and initiatives.
4. Following the allegations of corruption in September 2008, concerns about oversight over
ACBF management practices highlighted the critical role of the governance organs of the
ACBF. Within the framework of the ACBF Management Action Plan, a corporate
governance review was completed in June 2010 and a derived action plan was approved by
the Board of Governors on September 30, 2010. In line with good practice and informed by
a review of the past governance failures, the action plan (a) strengthens the process for
selecting and inducting EB members to ensure appropriate composition and skill mix of the
EB (b) requires a code of conduct and acknowledgement of conflict of interest by Board
members and also requires members to treat some information confidentially, (c) provides an
explicit terms of reference for the chair of the EB and for chairs of the various committees of
20
ACBF Constitution was adopted with the Agreements establishing the Foundation on February 9, 1991.
33
the EB, (d) requires a periodic performance self-assessment of the EB members and a formal
performance assessment of the Executive Secretary, and (d) establishes a risk and audit
committee of the EB.
5. Nonetheless, the BoG‘s approval was conditioned on the EB ensuring that certain
amendments be made to the governance action plan relating to conflicts of interest and
confidentiality requirements as they apply to representatives of the sponsoring agencies on
the EB, given that these members have obligations towards their respective organizations. In
addition, the Bank plans to address the conflict of interest risk inherent in the Bank having a
representative on the EB while at the same time being responsible for approval of Sub-
projects for financing, supervision of the proposed Project and decisions on disbursement, in
its capacity as donor of the IDA Grant and trustee of the RE MDTF, through a proposed
amendment to ACBF‘s Constitution to remove the Bank from representation on the EB.
Under the Project ACBF will be required to finalize the governance action plan as a
condition of effectiveness and thereafter to implement it.
2. ACBF core operational systems.
6. At corporate level, ACBF has made tremendous efforts during the period July 2009-August
2010 to strengthen its management and governance. Following allegations of impropriety at
the ACBF in 2008, ACBF put in place a Management Action Plan (MAP), aimed at
addressing the weaknesses revealed by the external audits commissioned by the Executive
Board. The MAP was aimed at improving and reforming the structures, functions,
procedures, products, and performance of ACBF with a specific focus on strengthening the
approach to risk assessment and management, as well as putting in place a solid framework
for controls grouped around 8 priority areas: (i) Controls: (ii) human resources; (iii) Finance;
(iv) Risks; (v) ICT; (vi) Strategy; (vii) Operations; and (viii) Governance.
7. At the operational level, the implementation of the MAP through the end of 2010 has
yielded important results in a very short period of time: (i) Internal controls have been
enhanced and the ERM framework is now being used for risk management; (ii) systems and
processes as well as their supporting manuals are being continuously improved for increasing
institutional effectiveness; (iii) a human resources development and management strategy, in
line with those of similar international organizations, is being implemented to attract and
retain the best talent; (iv) knowledge creation is becoming more effective through an internal
expertise, and channels for communicating new knowledge to Operations Departments;
(v) an operations evaluation function has been institutionalized and evaluation findings,
lessons and recommendations are being implemented; (vi) business continuity has been
strengthened; (vii) resource mobilization and partnership building have been streamlined in
all ACBF‘s activities; (viii) communication and visibility have improved regarding ACBF‘s
activities; and (ix) corporate governance is being enhanced through better delineation of
responsibilities and further collaboration between the three governing bodies, improved EB
oversight responsibilities as well as better recruitment processes for EB composition.
34
Box 2: ACBF Project Cycle Overview
8. Operations systems and institutional arrangements. The existing institutional arrangement
in ACBF for the preparation, processing and review of projects and other operational
products mainly involves the Project Review Committee (PRC) and the Operational Program
Department (OPD). So far, the current system has been very efficient, in terms of
responsiveness to clients and meeting targets set for the number of projects submitted to the
Board for approval within a given period of time. However, there are some gaps in the
quality of project design, degree of focus on results and the quality assurance process.
Moreover, the pattern of distribution of project management responsibilities amongst the
program officers in OPD does not reflect the program officers‘ area of core competence and
comparative advantage over other staff in the department.
ACBF operations are guided by the ACBF mandate and by regulations, policies, strategies, work programs and
procedures adopted by the governance organs. ACBF strategic agenda have been encapsulated in the various
strategic documents such as Strategic and Indicative Work Program, 1992-95 (Pilot); Strategy and Indicative
Work Program for ACBF Phase II, 1998 – 2002; Strategic Medium Term Plan I (SMTP I 2002 – 2006), and
Strategic Medium Term Plan II ( SMTP II 2007 – 2011). SMTP2 has 18 months remaining before closure
expected on December 2011 and the new SMTP3 (2012-2016) starts off.
The ACBF Secretariat evaluates proposed projects to ensure conformity with the objectives of ACBF and the
policies and strategic agenda established by the ACBF Governance organs to enhance successful implementation.
For that purpose, all projects are processed through a cycle beginning with identification to Board approval. The
implementation of approved projects is closely monitored, supervised and evaluated to ensure that they achieve
their objectives, as stipulated in the Operations Manual approved in April 2010.
Project ideas originate from beneficiary countries/institutions and/or regional institutions in collaboration, if need
be, with ACBF Secretariat, development partners, individuals and bi-lateral and multi-lateral organizations. All
projects and programs seeking funding support from ACBF are carefully screened by the relevant Department
and Project Review Committee (PRC) through an evaluation process to determine their eligibility. If a project is
deemed consistent with ACBF objectives, work program and agenda, it may be accepted for preparation.
Project Preparation involves detailed articulation of the proposed project's activities, institutional and
administrative set up, financing, implementation structure and outputs to determine the project's potential for
achieving its stated objectives and contribution to capacity development. An acceptably prepared project is
approved for appraisal. Appraisal involves evaluation of the project for consistency with ACBF's mandate,
policies, priorities and strategic program. Appraisal is the responsibility of ACBF staff with the assistance of
independent consultants, where appropriate. The ACBF Executive Secretary, based upon the recommendations of
the Project Review Committee, determines if, a project proposal should be submitted to the Executive Board for
consideration and approval for financing.
The Executive Board makes the final decision, on the basis of the Executive Secretary's recommendation,
whether to approve financing for a project. If a project is approved, a grant agreement is signed following
negotiations between ACBF and the Grantee on the terms and conditions. This is followed by disbursement of
the grant funds and implementation of the project. The ACBF Secretariat closely monitors the implementation of
ACBF financed projects to ensure that the projects achieve their objectives. ACBF will offer assistance to grant
recipients, where necessary, to ensure successful implementation of projects and their contribution to capacity
development.
Extract from “ACBF Annual Report 2009”.
35
9. This arrangement raises concerns, as the program officers typically design the substance and
determine final quality of operational products with relatively little input from technical and
fiduciary staff. It has been decided that management will address these concerns by
encouraging the use of peer review mechanisms in the design of projects, strengthening
upstream reviews of operations by fiduciary, legal and M&E staff, ensure greater
accountability by OPD and create incentives that will encourage greater focus on results and
more collaboration in the work across the various departments. Going forward, ACBF will
review the current distribution of portfolio management responsibilities amongst program
officers in OPD, to better align portfolio management responsibilities with recognizable
skills set. This measure will help strengthen the design and technical quality of ACBF-
financed projects, thereby increasing the likelihood of achieving their development
objectives.
10. Operations Manual. ACBF has made progress in application of a new Operations manual
(including Grant Agreement Template) and new Procurement Guidelines adopted in April
2010. Since the Manual came into force in April 2010, three (3) projects approved previously
have been negotiated and grant agreements for them concluded following the new processes,
and using the new template. The first set of 3 projects was processed before the Operations
Manual was adopted, and no procurement or disbursements have taken place under these
operations. However, ACBF has started using (i) the Project Review Committee as required
by the Operations Manual to vet projects prior to their submission to the Executive Board for
approval; and (ii) the provisions of its Procurement Guidelines to assess existing operations
for its own portfolio review purposes.
11. The Bank review has revealed some knowledge gaps and deficiencies in practices in relation
to the new Operations Manual and Procurement Guidelines. ACBF Management intends to
intensify dissemination of the Operations Manual and related Guidelines to ACBF and
grantee staff. Some areas for improvement to these documents have been identified, and
ACBF intends to continuously review and update these living documents in order to improve
content and consistency. In particular, it will be required to update the Operations Manual
(including its Procurement Guidelines) as a condition of effectiveness so that its use of the
IDA Grant and RE-MDTF funds will be fully aligned with Bank operational policies.
12. Sub-grantees capacity: The ultimate implementing agencies for most of the Project activities
will be ACBF‘s Sub-grantees. It is not possible at this stage to assess the capacities of these
grantees because they are not known yet. However, ACBF will maintain a sound and
acceptable system of selecting and monitoring the grantees. To this end, ACBF will include
in its Operations Manual, procedures and guidelines for selecting and supervising grantees, to
be agreed with the Bank. The implementation of the Institutional Development component
will be carried out by ACBF staff at corporate level. The technical and financial management
capacities and systems in place do not point to any major issues following the MAP results
and completion.
13. Going forward, the Bank will require for Sub-grants to be financed under the Project and for
their Sub-grantees: (i) explicit eligibility criteria; and (b) prior review of seven sub-grants
36
identified from 2011 pipeline21
for ACBF to build its knowledge of Bank policies and
requirements.
B. MONITORING & EVALUATION
14. The Monitoring & Evaluation (M&E) of progress towards achieving the objectives of
the project will entail a process of continuous and systematic collection of data on the
inputs, outputs and intermediate outcome indicators of the Project, as indicated in the
arrangement for results monitoring (see Annex 1). This effort will be aimed at enabling
timely management decision making by providing regular and up-to-date information on the
performance of the Project and on actual/potential problems in implementation. The findings
of relevant M&E activities will be reflected in quarterly and annual progress reports that will
be submitted to IDA and the management of ACBF. The progress reports will cover the
implementation of activities under the various subprojects managed by ACBF grantees,
institutional activities, training and studies, performance indicators, and Financial Monitoring
Reports (FMR). They also will cover any other issues identified during Project supervision
and the effect of actions taken to resolve such issues. The fourth quarterly report of each
year will be an annual report, covering progress during the past year.
15. The Operational Program Department (OPD) currently collect financial data and other
information on activity implementation progress through the quarterly progress
reports submitted by grantees and reports from supervision missions to ACBF funded
projects. However, the quality and usefulness of these data could be enhanced by increasing
the focus on results, strengthening the arrangement for data collection and management, in a
way that encourages the retention and sharing of information amongst the various
departments of ACBF and the use of these data and information for management decision
making. The redefinition of the roles played by the various departments involved in the
process of data collection and management will be critical to the achievement of these
objectives.
16. The proposed Monitoring & Evaluation (M&E) functions will be carried out by the
M&E unit with the Knowledge, Evaluation and Learning department. ACBF
management will expand the current mandate (as articulated in the evaluation policy) of the
M&E unit to cover upstream reviews of operational products and regular monitoring of
project performance. These measures will also require the revision of the job description for
M&E unit staff. Overall, the personnel in place in the M&E unit are capable of supporting
Monitoring & Evaluation (M&E) functions under the proposed Project. However, the current
M&E system needs a couple of quick fixes to be able to capture data on results achieved
under Project, and this includes strengthening the linkage with the operational team.
17. Following the M&E assessment, ACBF has adopted the following action plan:
A draft Results Monitoring Framework (RMF) for the new RIDA operation and RE-
MDTF has been developed and found acceptable by the Bank. In addition, a draft
21
Criteria of selection of these projects for Bank prior review were based on (i) thematic area; (ii) amount;
(iii) geographical location; and language.
37
RMF for the third Strategic Medium Term Plan (SMTP3) of ACBF will be completed
when the strategy is finalized.
Under the Project, and no later than end of June 2011, ACBF will: (i) adjust the
responsibilities of its staff in a manner satisfactory to the Association, so as to ensure
that assessments of the monitoring and evaluation systems to be used under proposed
Sub-grants are conducted by the Recipient during the preparation of each Sub-project,
prior to its approval for financing; and (ii) prepare quarterly M&E reports on all of
ACBF‘s activities (including Sub-projects) in form and substance acceptable to the
Association.
ACBF will, as a condition of effectiveness, revise the Operations Manual to further
enhance its Sub-projects monitoring and evaluation.
C. FINANCIAL MANAGEMENT
18. A detailed assessment was made by Bank FM team following its visit to Harare in August
and November 2010.
3. Executive Summary
19. The objective of the assessment was to determine whether the Africa Capacity Building
Foundation (ACBF) has the capacity to carry out the financial management functions for
implementing and managing the proposed Project to be financed by IDA through a Regional
IDA allocation (RIDA of US$25 million) and Recipient Executed Multi Donor Trust Fund
(RE-MDTF) of up to US$51.6 million.
20. The financial management assessment was carried in accordance with the Financial
Management Manual issued by the Bank‘s Operations Policy and Country Services
(OPCFM) on March 1, 2010. This assessment has concluded that, subject to satisfactory
implementing FM action plan in section 7 below, ACBF has adequate FM arrangements
to satisfy the Bank’s minimum requirements under OP/BP 10.02 as shown below.
4. Risk Assessment And Mitigation
21. FM risk is assessed in order to ensure that appropriate risk mitigating measures are
incorporated into design of the operation, to enable the Bank to make decisions with regard
to the appropriate level of assessment and supervision intensity, and to enable FM resources
to be allocated in a manner consistent with assessed risks. The following is the detailed risk
assessment:
38
Financial Management Risk Assessment Risk Risk Rating Risk Mitigation measures
incorporated into Grant design
Risk after
Mitigation
Inherent Risk
Country Level
Zimbabwe is recovering from a serious
financial crisis that had paralyzed the
economy. The withdrawal of donors among
others led to low productivity and super
hyper inflation which culminated in
abandoning the country‘s currency and
adopting a multi currency economy led by
the US Dollar. In the process the country‘s
PFM system nearly collapsed.
High The Bank together with other
Development Partners are
working with Government
through ROSC (Reports on the
Observance of Standards and
Codes) and CIFA (Country
Integrated Fiduciary Assessment)
among other initiatives to improve
the FM environment.
Substantial
Entity Level
ACBF is emerging from an environment of
high mismanagement risk before 2009. The
Bank‘s review raised concerns regarding, in
particular, failure to follow ACBF‘s own
procedures and guidelines. Forensic audit
report released earlier on pointed at failure
to comply with existing internal control
procedures and guidelines.. In response to
the identified weaknesses, ACBF
Management has since July 2009 embarked
on the MAP implementation to improve the
Internal Control Environment and to
overhaul the organization.
Substantial During the last year, ACBF has
substantially implemented and
continues to implement the
Management Action Plan (MAP)
that addresses institutional and
Internal Control weaknesses
identified earlier on.
Moderate
Program Level
The ACBF Regional Capacity Building
Project (RCBP) will be implemented
through sub-grantees and in different parts
of Africa. This makes it a complex project
with several implementing agencies in
different geographical locations
High ACBF has come up in early 2010
with revised Operations Manual,
Procurement Guidelines, and
Disbursement Manual, that guide
the selection and supervision of
the sub-grantees (further work on
the procurement and disbursement
manuals to ensure its consistency
with Bank requirements is
ongoing and will be completed as
part of the Operations Manual
update required as a condition of
RIDA and the RE MDTF
effectiveness). Adherence to the
finally agreed manuals will
substantially mitigate this risk. In
addition, World Bank staff in the
respective country offices will
assist with the supervision and
monitoring of FM systems at sub-
grantees level.
Moderate
Overall Inherent Risk Substantial Moderate
Control Risk
Budgeting:
Budget preparation process not inclusive.
Weak adherence to budget.
Substantial Budgeting policies that address
this risk have been included in the
Financial Policies and Procedures
Moderate
39
Manual. Full implementation of
the manual is yet to be attained.
ACBF Management is in the
process of drafting detailed
guidelines to inform the budget
process.
Accounting
Staff vacancies in FM like Fiduciary Unit
would lead to a less effective FM system.
ACBF staff ‗s lack of knowledge of the
Bank‘s FM and Disbursement policies
Substantial FM staff recruitment process has
been completed (trigger of
Tranche 2 of DGF and MDTF
Disbursement Conditions)
Train ACBF staff in the Bank‘s
FM and Disbursement policies
and guidelines
Moderate
Internal Controls
Internal Controls are strong but there is the
risk that failure to comply with the controls
is not detected on time since IT systems
continues to allow substantial manual
intervention
Substantial Complete Management plan to
interface IT systems (included in
tranche 2 and 3 of the DGF and
MDTF Disbursement Conditions)
Systematic Implementation of
Management Compliance
Framework and internal audit unit
– review controls.
Moderate
Internal Audit
Internal Audit Unit and Framework are
established as part of the MAP. However,
Internal Audit remaining vacancies would
lead to ineffective monitoring
Substantial Recruitment process for internal
Audit was completed (trigger of
Tranche 2 of DGF and MDTF
Disbursement Conditions)
. Adherence to the set procedures
and training will reduce the risk in
this area.
Moderate
Financial Reporting
Annual FS are regularly produced and
audited without qualification by a reputed
international audit firm, including for 2009.
Still, there is a risk of misstatement in the
event of failure to apply appropriate
financial reporting standards
Moderate Ensure IFRS are applied in the
preparation and presentation of
Financial Statements
Low
Funds Flow
The perceived risk in this area is that of
delayed disbursement largely due to delays
in accounting for funds by the Sub-grantees
High Train Sub-grantees in FM and
Disbursement Guidelines to
ensure smooth flow of
disbursement related
documentation
Substantial
External Audit
Failure to detect errors due to low audit
standards
Substantial Ensure the external audit
recruitment process complies with
Bank policies and review and
clearance of Audit TORs by the
Bank (trigger of Tranche 2 of
DGF and MDTF Disbursement
Conditions)
Moderate
Overall Control Risk Substantial Moderate
Overall Project Risk Rating Moderate
40
5. Strengths
22. ACBF has almost 20 years of Grant Managing experience. It has well qualified staff (a good
number of them recently recruited) with a lot of financial management experience. ACBF has
substantially implemented a Management Action Plan (MAP) which has and will greatly
improve FM systems in general and Internal Controls in particular. The Bank recently
conducted several reviews of ACBF, and these reviews did not substantiate allegations of
fraud and corruption at corporate or at sub-grant level. In addition, ACBF annual Financial
Statements are regularly audited by a reputable international audit firm and the 2009 FS were
unqualified. Furthermore, the Internal Audit function was strengthened with the creation of
an Internal Audit Unit directly reporting to the Internal Audit Sub-Committee of the
Executive Board.
23. The MAP implementation has led to ACBF revising or establishing Financial Policies and
Procedures Manual, Administrative Policies and Procedures Manual, Operations Manual,
Disbursement Guidelines, Procurement Manual, Financial Management Guidelines etc which
if consistently applied will greatly improve the systems. The Bank has tested compliance
with the revised manuals and to the extent that some of the processes and procedures have
been implemented, in general there is compliance.
6. Weaknesses
24. The initial reviews by the Bank in June 2009 revealed numerous weaknesses that led to 139
recommendations that were translated into the ACBF Management Action Plan. While most
of the MAP has been implemented it is recognized that implementation of the internal
controls is a continuous process. This aside, there are areas where ACBF needs to fast track
full implementation of the MAP. One such area is IT. ACBF has instituted strong internal
controls but these controls are not supported by a robust integrated IT system with the result
that there are a number of human interventions in the system which weakens the controls.
This is apparent in the controls surrounding Disbursements to grantees and Travel among
others. ACBF has plans to further integrate (or at least fully interface) its IT systems.
25. Another challenge is that the Internal Audit Unit has just been formed as part of the MAP
implementation. At the time of pre-appraisal there was only the Internal Audit Manager. The
recruitment process for the other staff member was completed in October 2010. The Internal
Audit Procedures have been developed but not yet implemented or tested. Full
implementation of the IA Procedures and a fully functioning IA Unit is critical to the ACBF
Internal Control Environment.
26. Another test for ACBF is that it has not been subject to full oversight by the Bank and has no
experience in applying Bank policies and guidelines. Also, ACBF operates in several
countries across Africa in varying environments straining its management in terms of
supervision, cost, time, skills and internal controls.
27. Lastly, ACBF has a cost base that is inflated by the recent actions taken to enhance internal
controls and has in the past not effectively controlled the costs.
41
7. FM Action Plan
28. As a result of the foregoing risks and weaknesses, an action plan has been developed, with
actions to be taken as indicated in the table below:
Actions Target date Conditionality Responsibility
a. Fully Integrate IT systems to
strengthen the Internal Controls
especially around travel management
and project information.
Effectiveness date
(included as one of
Tranche2 triggers)
Yes. Tranche 2
release includes this
trigger(which in turn
is a condition of
effectiveness of the
RIDA Grant)
ACBF CFO
b. Expose FM, Disbursement and
Internal Audit Staff to World Bank
FM and Disbursement Procedures
during project launch
At project launch
No
WB TTL
c. Improve management of operating
costs by introducing and maintaining
cost ratios. Introduce caps (ceilings)
on certain major cost drivers such as
travel
Continuous No ACBF CFO
d. Develop arrangements to allow for
FM implementation support to Sub
grantees by Bank country office staff
in respective countries or Bank
funded consultants
Effectiveness date No WB TTL/
ACBF ES
e. Review Accounting and Reporting
Standards and ensure conformity
with IFRS
Effectiveness date No, need to be
reconfirmed before
effectiveness
ACBF CFO
f. Agree IFRs format and timing with
the Bank
Done Yes, reconfirmed at
negotiations
ACBF CFO/
WB FM
8. Donor Harmonization
29. In view of the fact that the Bank will be providing the bulk of ACBF‘s resources through the
RIDA Grant and MDTF funds but acknowledging that there are other donors such as AfDB,
who are supporting ACBF, the donors have developed a harmonized approach to supporting
ACBF. The on-going cooperation between Bank and AfDB teams will facilitate
harmonization in the areas of central progress reporting, financial reporting, accounting
standards, one audit report and implementation support.
9. Budgeting
30. The operations of the Foundation will continue to be guided by a Strategic Plan. Annually,
ACBF will prepare a Business Plan detailing the planned activities for the coming year.
Based on the Business Plan, a Consolidated Budget will be prepared. A report showing the
status of the Business Plan and the Consolidated Budget Implementation will be prepared
quarterly and annually for cost control, performance monitoring and corrective action.
42
31. With guidance from ACBF‘s management on strategic priorities and allocation of funding
limits, all operating units will consider their financing requirements for the next financial
year. In allocation of budgetary resources to operating units, ACBF shall be guided by
(i) resource constraints; and (ii) infusion of performance measurement into the budgetary
decision-making process. The budgets will be zero based and all inclusive. Normally, the
budget process should commence in September and be finalized in November. It is important
that the budget is approved by the Executive Board by November 30 so that ACBF is ready
in good time for the coming year‘s operations. The foundation has drafted detailed Budgeting
guidelines to be applied from the 2011 budget process.
10. Accounting
32. Sun system accounting package is used as the financial management system. The system has
been used in ACBF since 2006. The staff has vast experience with the system. The system
has appropriate security controls. The chart of account is capable of recording and reporting
on specific project accounts. It is capable of producing required interim and annual financial
reports on timely basis in appropriate format. While the system was assessed to be adequate,
it will be important to determine the reporting details that ACBF should submit to the Bank
relating to operation costs funded using IDA or MTDF grants. In addition, the reporting
format will require to be agreed upon. ACBF will apply International Financial Reporting
Standards. Currently, ACBF is in the process of upgrading its IT system to integrate, among
others, Disbursement Processes and travel management system.
11. Staffing
33. ACBF‘s Finance department has an experienced staff complement. The staff are well versed
with financial control procedures and the accounting system used to processing transactions
in ACBF. To continue to enhance finance staff knowledge, especially on new internal
control procedures introduced from January 2010, regular internal training initiatives should
continue to be offered. However, the officials may not be familiar with Bank FM and
disbursement procedures e.g. processing withdrawals, preparing interim financial reports etc.
Training will be conducted during the project launch for all the FM and Disbursement staff in
ACBF on Bank procedures, in particular, on financial reporting and disbursements.
34. ACBF will require assessing and ensuring that each Sub-grantee has appropriately qualified
and experienced FM officials throughout the Sub-project life. The officials should have right
job profiles, experience and be well versed with financial management arrangements
requirements: aspects that should be well set in the Sub-grantee Project Implementation
Manuals. ACBF will need to continue conducting regular trainings for its staff.
12. Financial Reporting.
35. ACBF will submit Interim unaudited Financial Reports (IFR) in a format and quality
acceptable to the Bank covering each calendar quarter. The IFR will be submitted no later
than 45 days after the end of each quarter. The IFR format and content have been agreed with
43
the Bank. At the end of each calendar year (which is also ACBF‘s fiscal year), ACBF will
prepare annual Financial Statements which will be audited.
13. Internal Control And Internal Audit
36. ACBF‘s internal controls will be used. ACBF has just gone through a rigorous Management
Action Plan to improve Internal Controls and governance. Among the fruits of the MAP are
the manuals that guide the various operations of ACBF. The manuals are: Financial Policies
and Procedures Manual, Administrative Policies and Procedures Manual, Procurement
Guidelines, Operations Manual, Disbursements Manual and draft Financial Management
Guidelines. The manuals have been reviewed in the past by the Bank but with the preparation
of this Project, and as they are living documents ACBF is continuing to update them to
ensure, for this Project, consistency with Bank policies. The internal controls are sound. To a
great extent the success of the FM system will depend on ACBF‘s compliance with the
relevant manuals. Management has also instituted a compliance checking system. ACBF is
therefore able to do self assessment and take corrective action where necessary. This is an
enhancement to the Internal Control Environment.
37. The Internal Control Environment is further strengthened by the Internal Audit Department
which reports directly to the Executive Board. The Unit (which is now fully staffed) has
already developed the Internal Audit Guidelines and the Internal Audit Strategy and initiated
investigations missions. The World Bank will receive copies of all Internal Audit Reports.
The Internal Audit will cover ACBF itself and its Sub-Grantees.
14. Funds Flow and Disbursements Arrangements.
Flow of Funds
38. Two US$ designated accounts, one for each of the RIDA Grant and RE-MDTF Grant, will be
opened in London- based Standard Chartered Bank (see Graph below). Funds from the RIDA
Grant and MDTF Grant, based on consolidated withdrawal applications supported by Interim
Financial Reports (IFRs), will be deposited in the respective designated account. From these
accounts, funds will be transferred by ACBF‘s authorized signatories to (i) Sub-grantees
upon appropriate approval of withdrawal requests, and (ii) ACBF‘s operating account at
Standard Chartered Account in Zimbabwe also designated in US Dollars to pay for
expenditures under ACBF‘s institutional development component. The transfer for operating
expenditures will be based on ACBF approved budget/ work plan.
44
Graph: Flow of funds from RIDA and RE- MDTF Grants
RIDA RE- MDTF
Disbursement arrangements
39. The Bank will provide ACBF with advances under the RIDA Grant and RE MDTF to the
Designated Accounts, based on an approved work plan, forecast of expenditures supporting
this, and IFR. In addition, ACBF could use any of the following disbursement methods
(a) seek reimbursement for eligible expenditures that it has pre-financed and reported in the
IFR, on a quarterly basis, or (b) direct payment to a third party; and (c) special commitment
to pay amounts to a third party in respect of expenditure to be financed out of the grant
proceeds, upon ACBF request and under terms and conditions agreed between the Bank/ RE
MDTF and ACBF.
40. As noted above, funds by the Bank and RE MDTF into the DAs will be made against
withdrawal applications supported by appropriate IFRs and signed by authorized signatories.
ACBF will designate appropriate officials to sign withdrawal applications. Additional
instructions on withdrawal of funds from RIDA and RE-MDTF and periodicity of
submission of withdrawal applications are provided in the Bank disbursement letter which
will be signed at the same time as the RE MDTF Grant and RIDA Financing agreements.
Sub-grantees
Account (US$)
RIDA
Designated Foreign Currency
Account (US$)
Sub-grantees
Account (US$)
Suppliers of goods and
Services (US$)
ACBF
Operating account at Standard Chartered (US$)
ZIMBABWE
MDTF (Grant)
MDTF
Designated Foreign Currency
Account (US$)
ACBF
Operating account at Standard
Chartered (US$) ZIMBABWE
Suppliers of goods and
Services (US$)
World Bank (RIDA Grant)
45
41. Disbursement tables for both Grants will be as follows:
Table 3: Project Disbursement by Category and Source of Financing
Category Amount of the IDA
Grant Allocated
(expressed in US$
million)
Amount of the Re
MDTF Grant
Allocated
(expressed in US$
million)
Percentage of
Expenditures to be
Financed
(inclusive of Taxes])
(1) Goods,
Training,
Operating Costs
and consultants‘
services for Sub-
projects under
Component 1 of
the Project
15. 0 27.0 100%
(2) Goods,
Training,
consultants‘
services and
Operating Costs:
for Component 2
of the Project
10.0 22.6 100%
TOTAL
AMOUNT 20.0 $49.6
22
42. Retroactive financing of up to US$5 million equivalent of the RIDA Grant and 20% of the
RE MDTF Grant will be permitted for eligible operating costs under Category (2) (the
Institutional Development Component) for which payment is made on or after July 1, 2010
and prior to signing of the relevant Financing Agreement or Grant Agreement (as the case
may be).
15. External Auditing
43. ACBF will prepare annual Financial Statements at the end of each fiscal year. The Financial
Statements will be audited by an independent external auditor acceptable to the Bank. The
audit Terms of Reference have been prepared by ACBF and cleared with the Bank for the
first audit and will be reviewed every year thereafter before the audit. The auditors will
produce an audit report with a single and clear audit opinion and complete with a
Management Letter highlighting areas issues which will require addressing. ACBF will be
required to submit the audit report (together with the Management Letter) to the Bank no
22
Note the total amount expected from the MDTF donors is US$51.6 million and US$2.0 million would finance
Bank supervision and TF management costs, on an actual cost basis.
46
later than six months after the end of the financial year. Individual Sub-grantees will also be
required to prepare annual financial statements and have them audited by acceptable external
auditors.
16. Governance And Anti Corruption
44. ACBF has developed Fraud and Corruption policy, with inputs form the World Bank, for
implementation by it and all grantees from August 2010. ACBF management is already
taking actions on projects where instances of corruption and fraud have been alleged or
reported, e.g. downgrading project, investigations. Internally, principles of integrity and anti-
corruption have been emphasized and observed. Code of conduct has been introduced and a
process for all staff to declare assets has been initiated and approved by Executive Board.
The revised manuals, (both internal and external) such as the Financial Policies and
Procedures Manual and the Operations Manual will further enhance measures to reduce fraud
and corruption risks at both ACBF and grantee level. Management compliance reviews,
internal audits and external audit will provide further assurance. ACBF will be requested to
regularly submit to the Bank internal audit reports. The Bank‘s Anti-corruption Guidelines
will apply to the Project, including at Sub-grant level.
17. FM Implementation Support Plan
45. The Project will be operating in moderate risk environment. FM Implementation Support (IS)
will be undertaken twice a year due to the size of the Project. During the IS missions, the FM
team will review the FM systems for continued adequacy, evaluating the quality of the
budgets and ACBF‘s adherence thereto, reviewing the IFRs and/or annual Financial
Statements, compliance with relevant manuals including Financial Policies and Operations
manuals and follow up on both internal and external audit reports. It is envisaged that the
Bank FM team will mostly interact with ACBF itself. However, the Bank will have the right
to review a Sub-Grantee directly using the Bank‘s FM staff in the relevant Country Offices
when and where required.
18. Conclusion
46. The residual fiduciary for the project risk is Moderate. ACBF is committed to improving its
fiduciary environment. When the MAP is fully implemented, the capacity of ACBF to
implement the FM function of the project will be enhanced.
D. PROCUREMENT
47. The proposed Project will be financed by both a regional IDA Grant and a co-financing RE
Multi Donor Trust Fund. The Project will finance goods, consulting and non consulting
services, training and operating costs both at corporate level and under Sub-grants to public,
private and civil society organizations in various countries in sub Saharan Africa.
48. Procurement under the Project would be carried out in accordance with the World Bank's
"Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised
47
October 2006 and May 2010; and "Guidelines: Selection and Employment of Consultants by
World Bank Borrowers' dated May 2004 revised October 2006 and May 2010, and the
provisions stipulated in the Grant Agreement. For each contract to be financed under the
Project at ACBF Corporate level the various procurement or consultant selection methods,
estimated costs, prior review requirements, and time frame will be agreed between ACBF
and the Bank in the Procurement Plan. Similarly for each contract to be financed under the
Sub-grants, the various procurement or consultant selection methods, estimated costs, prior
review requirements, and time frame will be agreed between Sub-grant recipient and ACBF
in the Sub-grant procurement plan at negotiations of the Sub-grant agreement. Procurement
Plans will be updated at least annually or as required to reflect the actual project
implementation needs and improvements in institutional capacity.
19. Procurement Arrangements And Procedures
a) Methods of Procurement
Procurement at ACBF level
49. International Competitive Bidding (ICB). All procurement for goods and non –consulting
services estimated to cost US$500,000 equivalent or more per contract shall be conducted
using ICB as set forth in Section II of the Guidelines for Procurement under IBRD Loans and
IDA Credits (the Guidelines) of May 2004, revised October 2006 and May 2010.
50. Limited International Bidding (LIB): Limited International Bidding (LIB) is essentially
ICB by direct invitation without open advertisement. Under the proposed Project, the
Recipient may use LIB on agreement with the Bank under circumstances where (a) there is
only a limited number of suppliers, or (b) other exceptional reasons may justify departure
from full ICB procedures. Under LIB, ACBF shall seek bids from a list of potential suppliers
broad enough to assure competitive prices, such list to include all suppliers when there are
only a limited number.
51. National Competitive Bidding (NCB). NCB procedures will apply to contracts estimated to
cost US$50,000 equivalent or more but less than US$500,000 equivalent each. Bank standard
bidding documents will be used under NCB. For procurement of routine items like stationery
and office supplies, a supplier may also be selected following National Competitive Bidding
(NCB) for supply of the routine items over a certain period. The procurement documents
should stipulate the estimated quantity requirement for each item over a certain period of
time, the delivery time, the terms and conditions of contract, the payment schedule. The
evaluation and selection of Supplier should be for each item separately based on minimum
lowest unit rate and agreement of the Supplier to abide by the provisions and conditions of
the procurement documents. An agreement will be signed with the Supplier confirming
validity of the unit rate for the given period. The Purchaser will issue a Purchase Order each
time it requires a specific quantity.
52. Shopping: Shopping is a procurement method based on comparing price quotations obtained
from several suppliers. A minimum of three suppliers shall be considered to assure
48
competitive prices, and is an appropriate method for procuring non-routine readily available
off-the-shelf goods or standard specification commodities or non-consulting services.
Requests for quotations shall indicate the description and quantity of the goods or
specifications of non-consulting services, deadline for submission of quotations, as well as
desired delivery (or completion) time and place. Quotations should be submitted in sealed
envelopes within the deadline and be opened by the Recipient at the same time. The
evaluation of quotations shall follow the same principles as NCB. The terms of the accepted
offer shall be incorporated in a purchase order or brief contract. Shopping will apply to
contracts estimated to cost less than US$50,000 equivalent each.
53. Direct contracting for goods: Direct contracting is contracting without competition (single
source) and may be an appropriate method under the following circumstances subject to prior
agreement with the Bank:
a) An existing contract for goods awarded in accordance with procedures acceptable to the
Bank, may be extended for additional goods of a similar nature. The Bank shall be
satisfied in such cases that no advantage could be obtained by further competition and
that the prices on the extended contract are reasonable. Provisions for such an extension,
if considered likely in advance, shall be included in the original contract;
b) Standardization of equipment or spare parts, to be compatible with existing equipment,
may justify additional purchases from the original Supplier. For such purchases to be
justified, the original equipment shall be suitable, the number of new items shall
generally be less than the existing number, the price shall be reasonable, and the
advantages of another make or source of equipment shall have been considered and
rejected on grounds acceptable to the Bank;
c) The required equipment is proprietary and obtainable only from one source.
d) The Contractor responsible for a process design requires the purchase of critical items
from a particular Supplier as a condition of a performance guarantee.
e) In exceptional cases, such as in response to natural disaster.
54. Selection of Consultants: Consulting services under the Project will include Sub-grant
midterm evaluation, end of Project evaluation and implementation support consultants.
Except as detailed below, consulting services will be selected through competition among
qualified short-listed firms based on Quality and Cost-Based Selection (QCBS). Consultants
for financial audits and other repetitive services estimated to cost less than US$100,000
equivalent per contract may be selected through Least Cost Selection (LCS) method.
Consulting services by firms estimated to cost less than US$200,000 equivalent (other than
those referred to in the previous sentence) may be selected on the basis of Selection Based on
Consultant Selection (CQS). As appropriate, other selection methods such as Fixed-Budget
Selection (FBS), Quality Based Selection (QBS) may be used for selection of consulting
firms. Individual consultants shall be selected on the basis of Individual Consultant Selection
method (IC) as per Section V of the Consultant Guidelines.
49
55. Single Source of consultants: Single-source selection may be appropriate only if it presents
a clear advantage over competition and is agreed to with the Bank: (i) for tasks that represent
a natural continuation of previous work carried out by the firm, (ii) in emergency cases, such
as in response to disasters and for consulting services required during the period of time
immediately following the emergency, (iii) for very small assignments, or (iv) when only one
firm is qualified or has experience of exceptional worth for the assignment.
56. Training. ACBF will formulate an annual training plan and budget which will be submitted
to the Bank for its prior review and approval. The annual training plan will, inter alia,
identify: (i) the training envisaged; (ii) the justification for the training, how it will lead to
effective performance and implementation of the operation and or sector; (iii) the personnel
to be trained; (iv) the selection methods of institutions or individuals conducting such
training; (v) the institutions which will conduct training, if already selected; (vi) the duration
of proposed training; and (vii) the cost estimate of the training. Report by the trainee upon
completion of training would be mandatory.
57. Short lists of consultants. Short-list of consultants for services estimated to cost less than
US$200,000 equivalent per contract, may be comprised entirely of national consultants in
accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
58. ACBF staff recruitment: Staff of ACBF will be recruited in accordance with ACBF
Recruitment Procedures. Project staff under Sub-grants will be recruited as individual
consultants.
59. Operating Costs. Operating costs will be procured using administrative procedures as
contained in the ACBF Administrative Manual which were reviewed and found acceptable to
the Bank.
60. Publication of awards and Bidder complaint resolutions: ACBF will publish awards for
contracts made through ICB in UN Development Business and local press. The publication
will include winning bidder and their final price, scope of contract and its duration, names of
bidders who submitted bids and reasons for their rejection. For contracts under NCB and
shopping procedures, these will be published quarterly or annually as the case may be. ACBF
will attend to bidders complaints and requests for debriefing after award of contract and
inform the Bank of any complaint it receives from bidders including resolutions made
Procurement at sub-grant level
61. Procurement under sub-grants will be undertaken in accordance with the World Bank
Procurement and Consultant Guidelines dated May 2004 revised October 2006 and May
2010. The specific procedures for procurement under Sub-projects will be elaborated in
Procurement Guidelines for ACBF Grant Recipients. As part of Sub-project appraisal process
ACBF will assess the institutional capacity of the Sub-grantee and agree on mitigation
measures for risks identified. Process and procedures for assessing Sub-grantees have been
elaborated in the Operational Manual which will be revised prior to effectiveness and subject
to acceptance by the Bank.
50
62. Procurement of goods: Goods to be procured under Sub-grants will include motor vehicles
and office equipment. The specific applicable methods will include International Competitive
Bidding (for all contracts estimated at US$500,000 or more each), National Competitive
Bidding, Shopping and Direct Contracting. Methods applicable to each contract and their use
will be agreed in the Procurement Plan between ACBF and Sub-grantee at negotiations of the
Sub-grant agreement.
63. Selection of consultants: Procedures for selection of consultants will include Quality and
Cost Based Selection (QCBS) (for all contracts estimated at US$200,000 or more each),
Fixed Budget Selection, Selection of Individual Consultants and singe source selection.
Project staff will be selected as individual consultants.
64. Use of national country Laws and associated documents: For procurement under National
Competitive Bidding (NCB) and shopping and selection of consultants estimated to cost less
than US$200,000, Sub-grantees may use provisions of national laws and associated bidding
documents subject to modifications acceptable to the Bank. Such modifications will include
inter alia,
(a) Eligibility. No bidder, foreign or domestic, shall be precluded from participating
in the bidding process for reasons unrelated to their eligibility or capability to
perform the contract. Examples of reasons that may not be used to preclude a
bidder from so participating include the following: proof that the bidder is not
under bankruptcy proceedings; appointment by the bidder of a local
representative; prior registration by the bidder; or license or agreement allowing
the bidder to operate.
(b) Qualification. Bidders shall be post-qualified unless the related procurement plan
explicitly provides otherwise. Irrespective of whether post qualification or
prequalification is used, both national and foreign bidders who meet the
qualification requirements stated in the bidding documents shall be allowed to
participate in the bidding process.
(c) Bidding Documents. Bidders shall use standard bidding documents for the
procurement of goods and services, consistent with the provisions of the
Procurement Guidelines.
(d) Preferences. No preference for domestically manufactured goods shall be
allowed.
(e) Bid evaluation. The qualification criteria shall be clearly specified in the bidding
documents, and all criteria so specified, and only such criteria so specified shall
be used to determine whether a bidder is qualified; the evaluation of the bidder‘s
qualifications should be conducted separately from the technical and commercial
evaluation of the bid. Evaluation of bids shall be made in strict adherence to the
criteria set forth in the bidding documents; criteria other than price should be
quantified in monetary terms. A contract shall be awarded to the qualified bidder
offering the lowest technically responsive evaluated bid. Bidders shall not be
51
eliminated from detailed evaluation on the basis of minor, non-substantial
deviations.
(f) Rejection of All Bids and Re-bidding. ACBF‘s prior approval shall be obtained
before rejecting all bids, soliciting new bids, or entering into negotiations with the
lowest evaluated bidder.
(g) Right to Inspect/Audit. Each bidding document and contract financed out of the
proceeds of the Financing shall provide that the bidder or supplier, and any
subcontractor, shall permit the Association and ACBF, at either of its request, to
inspect their accounts and records relating to the bid submission and performance
of the contract, and to have these accounts and records audited by auditors
appointed by the Association. An act by the bidder, supplier or subcontractor
intended to materially impede the Association‘s exercise of its inspection and
audit right constitutes an Obstructive Practice.
65. Bidding Documents: ACBF does not have its own standard bidding documents. ACBF
will therefore review, not later than by Sub-grant negotiations, the bidding documents that
the Sub-grantees intend to use to ensure that they are consistent with the Bank‘s Procurement
Guidelines. Specifically for public Sub-grantees, use may be made of national bidding
documents subject to modifications acceptable to the Bank. For private sector, civil society
Sub-grantees, use will be made of their existing bidding documents which will be reviewed
and modified to conform to Bank requirements. ACBF will prepare a standard bidding
document acceptable to the Bank for use. In the interim, ACBF will require Sub-grantees to
adopt other internationally accepted bidding documents with modifications acceptable to the
Bank.
b) Prior Review
66. The Bank will review and provide required procurement clearances for contracts under the
Project above the prior review threshold agreed in the Procurement Plan. For the purposes of
the initial procurement plan and initial assessed capacity of the ACBF, contracts that
require prior review include: (i) all contracts for goods estimated to cost the equivalent of
US$500,000 or more each; (ii) consulting service contracts provided by a firm estimated to
cost the equivalent of US$200,000 or more each; (iii) each contract for the employment of
individual consultants estimated to cost the equivalent of US$100,000 or more; (iv) all cases of
direct contracting or single-source selection of contractors, firms or individual consultants of
US$1,000 equivalent per contract or more; Prior review threshold for ICB (i.e., US$500,000
for goods) and QCBS (US$200,000) will also apply to Sub-projects.
20. Capacity of ACBF and Grant Recipients
67. Procurement of goods and non -consulting services at ACBF Corporate level is the
responsibility of Corporate Services Department (CSD) whilst the procurement of consultant
services is the responsibility of Operations Department. The Bank assessed the institutional
arrangements and capacity of ACBF and concluded that the overall organizational setup to
support procurement was adequate. ACBF has a procurement unit headed by a qualified staff
52
with first degree in Business Accounting and certificate in procurement goods from Eastern
and Southern African Management Institute (ESAMI). The head is assisted by two clerks
with separate responsibility over purchasing and stores. The head of the unit reports to the
Head of Administration who reports to the Manager Corporate services. ACBF has created
additional position of Procurement Specialist and hired an international procurement
specialist to provide overall oversight over procurement function to include updating of
policies and manuals, advisory services to corporate procurement and implementation
support to Operations Department and Grant Recipient procurement. The international
procurement specialist hired is familiar with World Bank Procurement Policies and
Procedures. Procurement at Corporate level will involve consultants, office services and
equipment of low to medium values (mostly below US$250,000). Overall the capacity of
ACBF to undertake procurement under the proposed Project is ADEQUATE and the risk is
Low.
68. ACBF Sub-grantees may include government agencies, private sector organizations, civil
society organizations and regional organizations. Historically, a majority of ACBF‘s grant
recipients have been government and quasi government agencies who have procurement
knowledge based on national procurement laws. Most regional organizations also have
working knowledge in Bank procurement policies and procedures. The size of contracts
envisaged though many and scattered are expected to be small. ACBF will assess as part of
its Sub-grant project appraisal process, the institutional capacity of each Sub-grantee and
agree on measures to mitigate identified risks. The process and procedures for assessing the
institutional capacity is detailed in the ACBF Operational Manual. ACBF has also prepared
detailed procedures contained in Procurement Guidelines for its Grant Recipients which will
form part of the Sub-grant agreement which will also mitigate the risks identified. The risk
associated with sub-grants is therefore Medium driven by Likelihood.
69. The overall risk rating for procurement under the proposed project is Medium driven by
likelihood. The risk rating was based on the recognition that capacity at ACBF level is
adequate, several operational guidelines have been developed by ACBF and the consultancy
services to be procured was generally of small value. The capacity of Sub-grantees would
only be known after specific application but ACBF have put in place processes and
procedures to assess capacity and mitigate against risks.
21. Procurement Action Plan.
70. At appraisal the following action plan was developed:
a) Preparation of Procurement Plan by ACBF for goods, consultant and non-consulting
services required at corporate level for at least 12 months. The procurement plan is
important to indicate readiness for implementation and also mitigate against non
adherence to agreed provisions. (The Plan has been subsequently prepared and approved
by the Bank).
b) Revision by ACBF of Operational Manual and Procurement Guidelines for its Grant
Recipients satisfactory to the Bank to remove inconsistency with other manuals and to
ensure consistency with Bank procurement guidelines. The Operational Manual has to be
53
consistent with Administrative Manual and Sub-Grant Procurement Guidelines. This will
be completed as a condition of effectiveness.
c) Train Project Officers in Grant Procurement Guidelines and financial management.
ACBF has already conducted trainings on use of ACBF Grant Procurement Guidelines
and training on Bank Procurement procedures is planned after signature of the RIDA
Financing Agreement.
22. Procurement Supervision
71. The Bank will undertake supervision through a combination of prior and post reviews and
implementation support missions. For corporate level procurement, prior reviews will be
undertaken for contracts as defined in the procurement plan and post reviews will be
conducted once a year covering 20% of the contracts. For procurement under Sub-grants,
ACBF will supervise procurement through multidisciplinary missions that would include its
procurement and Fiduciary and Risk Control Officers. On annual basis, ACBF will conduct
independent procurement audits and share findings with the Bank. At any time, the Bank will
reserve the right to audit and inspect procurement documents at Sub-grant level and such
provision will be included in the Sub-grant agreement. The Bank will provide procurement
support principally from Zimbabwe Country Office but specific assistance will also be
provided by Country Procurement Specialists in countries where the Sub-projects are located.
E. ENVIRONMENTAL AND SOCIAL
72. The EA category of this project is ―C‖, since all the activities will be for technical assistance
and will not involve any environmental impacts. Subprojects that might involve design work
leading to investments, such as feasibility studies and engineering designs, would not be
eligible for financing under the IDA Grant or the RE MDTF Grant.
F. ROLE OF PARTNERS
23. Background.
73. The original ACBF Trust Fund consists of resources contributed by donors (African and non-
African) for the implementation of the Strategic Plans of the African Capacity Building
Foundation (see Annex 7 for more details). The Trust Fund is administered by the World
Bank at the request of ACBF and the donors, and the funds are disbursed on a first-in first-
out basis. Until 2006, the Bank‘s own contributions to ACBF programs (from its annual
income and then from the DGF Facility) were deposited with the Trust Fund. However, DGF
grant allocations for FY07, FY08 and FY09 were disbursed directly to ACBF because a new
trust fund linked to ACBF‘s SMTP2 program was under preparation.
74. The Bank decided in June 2010 to provide future financing to ACBF for SMTP2 under a
Regional IDA (RIDA) grant rather than the DGF Facility. This means the Bank support to
ACBF will be governed by standard World Bank operational policies including closer
54
fiduciary and technical supervision. At the same time, and given the desirability of having
similar fiduciary rules applicable to donor funds, the Bank has established a recipient-
executed Multi-donors Trust Fund (RE- MDTF) instead of the pass through arrangement that
characterized the MDTF for SMTP1 and former programs.
24. The New MDTF-SMTP2 objectives and characteristics.
75. The RE-MDTF for SMTP2 would co-finance the RIDA Grant so as to intensify synergies
between the two sources of funds supporting SMTP2. In essence, this means the RE-MDTF
would support the same objectives, fund the same activities (ACBF‘s operating costs and
Sub-grants for capacity building Sub-projects)23
and be governed by the same fiduciary rules
and standards as the RIDA Grant. The RIDA Grant would provide ACBF with
US$25 million equivalent to support the completion of SMTP2 and would bring the Bank
financing over the SMTP 2 period (2007-2011) to a total of US$108 million24
.
76. Financial Situation and confirmation of the donors’ pledge: The table in Annexure 1 shows
the SMTP2 initial pledges. While the Bank has been by far the largest donor to ACBF, other
donors have confirmed their contributions25
for SMTP2 at or following the end of September
2010 Board of Governors meeting in Paris. The challenge is to ensure that as much of the
US$54 million initially pledged by donors to SMTP2 in 2007 as possible is committed and
disbursed to the new RE MDTF to finance SMTP2 operations.
77. Disbursements. The RIDA Grant and RE MDTF funds would be disbursed against eligible
expenditures committed under SMTP2 from July 2010 to December 2011, normally based on
interim unaudited financial reports indicating sources and uses of funds. ACBF‘s financial
statements would be audited annually by independent auditors acceptable to the Bank. All of
the Bank‘s operational policies would apply to expenditures financed under the RIDA and
RE MDTF grants. The Bank would disburse the RIDA and RE-MDTF Grant proceeds on
the basis of consolidated withdrawal requests sent by ACBF every quarter, accompanied by
Interim unaudited Financial Reports (IFRs), to finance eligible expenditures. While the
operating costs and Sub-grants to Sub-grantees would be committed during FY2011, the
RIDA Grant as well as the MDTF –SMTP 2 disbursements would cover a 4 to 5 year period,
reflecting the normal disbursement period of ACBF‘s grants.
78. Roles and Responsibilities of ACBF and the World Bank. Under the RETF, ACBF would
continue to be responsible for managing operational risks affecting the development
effectiveness of the SMTP2 and its funding (RIDA and MDTF). ACBF would implement the
activities supported by the RIDA Grant and RE MDTF Grant, monitor progress during
implementation, and evaluate results on completion. Bank staff would regularly assess and
monitor the adequacy of the arrangements by which ACBF carries out these responsibilities.
In addition, Bank staff would review implementation progress during supervision to verify
fulfillment of SMTP2 conditions and compliance with legal covenants in the RIDA
23
IDA funds would, however, only finance grants made to/in IDA eligible countries; the RE MDTF would finance
grants made to/in both these countries and IBRD only countries, as well as to countries in arrears. 24
27 million for DGF FY07, 30 million for DGF FY08, 26 million for DGF FY09 and 25 million from the future
RIDA project. 25
Only UK was not able to confirm its initial pledge to SMTP2 due to the ongoing review of the country aid
programs. Some African countries which were not present at the meeting did not confirm their contribution either,
55
Financing Agreement and MDTF Grant Agreement, both between IDA and ACBF, and to
validate monitoring and evaluation findings.
79. Cost Recovery scheme: The RE-MDTF would entail supervision and management costs that
need to be recovered by the World Bank. Assuming a RE MDTF volume of US$51.6 million
equivalent, the cost estimates throughout the period 2011-2015 for preparation and
supervision of the RIDA project and RE MDTF during the 5 year period will include (i) a flat
fee of 1% and (ii) an additional fee for Trust Fund program management, as well as project
supervision fees that will be cost-based.
56
ANNEXURE 1: Situation of SMTP2 pledges at end of DECEMBER 2010
Amount pledged
National Curr. Amount Pledged Amount Pledged
Country/Organisation (million)
USD equiv. (per
ACBF)
USD equiv. (per
TFP)
Benin 500,000 500,000
Botswana 700,000 700,000
Burkina Faso 250,000 250,000
Burundi 250,000 250,000
Cameroon 750,000 750,000
Canada CAD 18.00 17,726,000 17,257,083
Central African Rep. 250,000 250,000
Chad 300,000 300,000
Congo (Brazzaville) (RoC) 500,000 500,000
Côte d'Ivoire 300,000 300,000
Denmark DKK 30.00 5,432,000 4,951,353
Djibouti 250,000 250,000
Finland EUR 1.8 2,426,000 2,211,210
Gabon 750,000 750,000
Ghana 200,000 200,000
Guinea-Bissau 250,000 250,000
Kenya Ksh. 50 500,000 500,000
Madagascar 250,000 250,000
Malawi 250,000 250,000
Mali 500,000 500,000
Mauritania * 250,000 250,000
Niger 250,000 250,000
Nigeria 1,000,000 1,000,000
Norway NOK 40.00 6,728,000 6,139,960
Rwanda 300,000 300,000
Sao Tome & Principe 250,000 250,000
Senegal 300,000 300,000
Sierra Leone 250,000 250,000
Swaziland 250,000 250,000
Sweden SEK 30.0 4,163,000 3,851,264
Tanzania 550,000 550,000
Uganda 250,000 250,000
United Kingdom GBP 4.00 6,061,000 5,962,400
Zambia 250,000 250,000
Zimbabwe 750,000 750,000
Total MDTF 53,936,000 51,773,270.000
Donors with bilateral agreements with ACBF and who are not pledging into MDTF
AfDB 12,000,000
Greece 1,000,000
UNDP 1,000,000
Totals (inc'l bilaterals) 67,936,000
* Mauritania - Amount paid in is in excess of amount pledged.
ACBF-PACT SMTP II - Pledges and Contributions
57
Annex 4: Operational Risk Assessment Framework (ORAF)
AFRICA: ACBF REGIONAL CAPACITY BUILDING PROJECT AND MD-RETF
Project Development Objective(s)
The Regional IDA operation and its associated RETF’s objectives are to contribute to:
1. Enhanced capacity for effective policy formulation and management in ACBF sub-grant recipients‘ countries
2. Improved and sustained management of ACBF operations
PDO Level Results Indicators: 1. Number of recommendations, submitted by ACBF grantees, and used by government in policy formulation.
This indicator will track the increased use of ACBF grantees output toward improved economic formulation in
beneficiary countries
2. Ratio of Total Budget to Total Active Portfolio Value (in %). This indicator will show how much ACBF is
spending to deliver and manage $1 of grant. It will track the evolution in operational efficiency which is critical
to a sustainable program as well as the Foundation‘s effectiveness.
Risk Category
Risk Rating Risk Description Proposed Mitigation Measures
Project Stakeholder Risks
Medium-I There are potential risks of donors backing-off if new allegations of
corruption and misuse of funds reemerge in ACBF despite positive
results from independent evaluation of ACBF programs. Yet, the
likelihood of this occurrence is limited given (i) the changes in
ACBF management, (ii) the strengthening of internal controls,
resulting from application of the Management action Plan (MAP) in
2009 and (iii) the decision to apply Bank fiduciary policies and
introduce extended Bank supervision of the Sub-projects financed.
Introduction of standard Bank fiduciary
policies and supervision in ACBF
operations may help in increasing donors
trust in ACBF reliability.
Implementing Agency Risks
Medium-I The forensic and human resource audits conducted of ACBF
activities revealed a number of lapses in internal control processes
and in general compliance with ACBF‘s policies. At the operational
level, the implementation of the MAP at end of September 2010
has yielded remarkable results in a very short period of time that
has helped restore ACBF‘s internal controls, staff motivation and
morale; and the donors‘ trust.
The proposed Project will build upon the
MAP achievements at all levels and
ensure they are continuously maintained
and enhanced during the remaining
SMTP2 period and into SMTP3.
58
Project Risks
Design
High Following the recent governance issues and to help mitigate the
risks encountered in ACBF management the Bank instruments
supporting ACBF will require application of the Bank‘s fiduciary
policies as well as enhanced monitoring of ACBF operations
through closer supervision.
To that end, a SIL operation is proposed primarily geared toward
supporting the completion of SMTP2 program involving standard
supervision of ACBF corporate and sub-grantees activities.
Introduce the Bank fiduciary policies,
including FM, procurement, anti-
corruption and disbursement policies
and standard Bank supervision while
ensuring this does not hamper ACBF
capacity to execute its program.
Social and Environmental
Low
There are no social & environmental risks,
All Sub-grants will be for capacity building TA (no engineering designs or feasibility studies are involved), and ACBF’s operational budget does not include any civil works.
Program and Donor
Medium-I Delays in receipt of MDTF funds may jeopardize achievement of
SMTP2 program objectives. While many donors have confirmed
their pledges, delays could ensue due to time needed to conclude (i)
interactions with donors and (ii) coordination of internal processes
required before RE MDTF activation.
The RE MDTF was established in
December 2010 and is now available for
receipt of donors‘ funds. To that end,
draft Administrative Agreements were
sent to key donors for review in
November 2010, as promised in Paris.
The first contribution from SIDA
(SEK30 million), deposited into the
account. Continued action is ongoing to
ensure donors‘ pledges are collected on
time to fund SMTP2 program
Delivery Quality
Medium-I ACBF existing M&E system is weak and does not allow for proper
monitoring of the Foundation activities and programs. Efforts
should be made to introduce a meaningful monitoring of operations
and activities.
The proposed Project would finance an
M&E capacity building program based
on the M&E action plan agreed upon
during appraisal.
Other Risks (Sub-grantees risks)
High The recent overhaul of ACBF management, operations, fiduciary
and monitoring framework has improved the risk management
function at ACBF level. There still is a need to ensure that the
system is working properly and Sub-grantees‘ activities are
adequately monitored in all aspects (fiduciary and technical)
Sub-grantees will be required to follow
standard Bank fiduciary policies (FM,
procurement, Anti-corruption).
Introduce a suitable level of Bank
supervision of Sub-grantees (especially
in fiduciary issues and M&E) without
compromising the existing ACBF
systems.
59
Other Risks (Risk of Non-Payment)
Low A risk related to ACBF‘s financial condition is the possibility that
should any of the proceeds of the IDA Grant or RE MDTF Grant be
misused, ACBF may not be in a position to refund them to the
Bank. This risk is always inherent in making regional IDA grants
to non-revenue generating organizations such as ACBF, which have
no guarantees by its members of financial coverage.
This risk is mitigated by virtue of (a) the
development under the MAP of a strong
team of professionals and sound
fiduciary systems, (b) training provided
by the Bank to ACBF staff on Bank
policy requirements, which will continue
throughout Project implementation; and
(c) ACBF‘s contractual right to a refund
of amounts misspent by Sub-grantees,
which is included in its Sub-grant
agreements.
Overall Risk Rating at
Preparation Overall Risk Rating
During Implementation Comments
Medium-I Medium-I
The Bank appraisal mission in November 2010 and the BoG meeting in Paris in September
2010 provided comfort that perceived risks during PCN are significantly mitigated. Donors‘
contributions to the newly established MDTF have started. Actions taken by ACBF
governing bodies and new ACBF management with support from Bank and AfDB have
strengthened ACBF‘s internal controls and restored trust with staff and donors. However,
the new ACBF framework needs to be tested over time. The Bank management decision to
require application of the Bank‘s operational policies including Bank supervision of ACBF
operations through the proposed RIDA Grant and RE MDTF will help in monitoring the
situation and mitigating outstanding fiduciary risks. Most of the remaining risks identified
in FM and procurement are going to be mitigated through defined action plans and could be
managed during the implementation phase.
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Annex 5: Implementation Support Plan
AFRICA: ACBF REGIONAL CAPACITY BUILDING PROJECT AND RE-MDTF
Strategy and approach for Implementation Support
A. The strategy for implementation support (IS) has been developed based on the nature of
the project and its risk profile. It will aim at making implementation support to the client more
flexible and efficient, and will focus on implementation of the risk mitigation measures defined
in the ORAF.
M&E. Monitoring of ACBF results and performance will be critical to meeting the
development objective of this project. To that end, during implementation support
missions, the Bank team will carry out regular assessment of SMTP2 key performance
indicators against targets agreed upon at appraisal. In addition, ACBF will be required to
initiate an independent evaluation of SMTP2 program and results in early 2011 so as to
be able to draw lessons for the overall M&E system and Results Monitoring Framework
of the upcoming SMTP3.
Procurement. The Bank will undertake supervision through a combination of prior and
post reviews and implementation support missions that will be geared towards:
(a) providing training to relevant staff of ACBF; (b) reviewing procurement documents;
(c) providing detailed guidance on the Bank‘s Procurement Guidelines; and
(d) monitoring procurement progress against the detailed Procurement Plan. At ACBF
corporate level post procurement review will be undertaken once a year. For Sub-
grantees, ACBF will hire a consultant to conduct post procurement reviews under a
sample of Sub-grants once a year and ACBF will share the consultant report with the
Bank. The Bank will review the report and at its discretion would undertake further
reviews on areas highlighted by the report.
Financial management. The Bank team will undertake an FM Implementation Support
(IS) mission twice a year due to the size of the Project. During the IS missions, the FM
team will review the FM systems for continued adequacy, evaluating the quality of the
budgets and ACBF‘s adherence thereto, reviewing the IFRs and/or annual Financial
Statements, compliance with relevant manuals including Financial Policies and
Operations manuals and follow up on both internal and external audit reports. It is
envisaged that the Bank FM team will mostly interact with ACBF itself. However, the
Bank reserves the right to review a Sub-Grantee directly using the Bank‘s FM staff in the
relevant Country Offices when and where required. The procedures for this will be
agreed with ACBF.
Environmental and Social Safeguards. The project has no environmental or social
safeguards issues and will not require specific implementation support activities.
Anti-Corruption. The Bank team will supervise the implementation of ACBF‘s
Governance Action Plan as well as its Fraud and Corruption Policy, and provide guidance
in resolving any issues identified. The Bank‘s Anti-corruption Guidelines will apply to
61
this operation, and Bank team will supervise proper implementation of these guidelines
as well.
Other Issues. The Bank will carry out intensive missions especially during the first year
of implementation to ensure that the system is working properly; Sub-grants are
compliant with Bank requirements at entry and Sub-projects are adequately monitored in
all aspects (fiduciary and technical) during implementation. Bank supervision of Sub-
projects will also be undertaken without compromising the existing ACBF systems while
taking into account the transactions costs for the Bank and ACBF.
Implementation Support Plan
B. Bank team members (financial management and procurement) will be based in the region
and country office respectively to ensure timely, efficient and effective implementation support
to the client. Formal supervision and field visits will be carried out twice a year during the
implementation period. Detailed inputs from the Bank team are outlined below:
Technical inputs. Technical procurement support will be provided to ACBF during the
first year to assist in: (i) adapting Operation, Disbursement, and Procurement manuals for
sub-grantees to ensure that Bank requirements are properly reflected; (ii) reviewing seven
grants selected in the 2011 pipeline so as to train ACBF staff in, and ensure compliance
with, Bank policies and fiduciary requirements and (ii) in reviewing bid documents to
ensure fair competition through proper technical specifications and fair assessment of the
technical aspects of bids. Technical procurement support and site visits will also be
conducted at the sub-grantees level on a semi-annual basis throughout project
implementation.
Fiduciary requirements and inputs. Training will be provided by the Bank‘s financial
management specialist and procurement specialist before the commencement of project
implementation. The team will also help ACBF identify capacity building needs to
strengthen its financial management capacity and to improve procurement management
efficiency. Both the financial management and the procurement specialist will be based
in the country office to provide timely support. Formal supervision of financial
management will be carried out semi-annually, while procurement supervision will be
carried out on a timely basis as required by the client.
Safeguards. Environment specialist and a social specialist inputs are not required, since
this is a C category project.
Financial review of ACBF corporate finance. Input is required from a financial
specialist for regular review of ACBF‘s financial status to verify compliance with
financial covenants. This exercise will be combined with the supervision of other World
Bank financed projects being implemented in Zimbabwe through semi-annual review.
62
Operation. An operations officer will assist in reviewing the Sub-grants‘ quality and
compliance before entry, and in regular implementation support of all operational
aspects, as well as coordination with the client and among Bank team members. The main focus of implementation support is summarized below.
Skills Needed Staff Weeks (SWs)
FY11 FY12 FY13 FY14 FY15 Total
Task Team Leader 10 8 8 8 8 42
AFTPR Manager 1 1 1 1 1 5
AFTPR Administrative Support 5 5 5 5 5 25
Financial Management Specialist 8 8 8 8 8 40
Procurement Specialist 8 8 8 8 8 40
Monitoring and Evaluation 4 1 - - 1 6
Consultant 10 5 5 5 5 30
TOTAL 46 36 35 35 36 188
Travel Number of trips planned
FY11 FY12 FY13 FY14 FY15 Total
Task Team Leader 2 2 2 2 2 10
Financial Management Specialist 2 2 2 2 2 10
Procurement Specialist1/ - - - - - -
Consultant 1 1 1 1 1 5
TOTAL 5 5 5 5 5 25
1/ Procurement Specialist is based in CO, Harare.
63
Annex 6: World Bank/IDA staff and consultants who worked on the project
Name Title Unit
Yusupha Crookes Director AFCRI
Jan Walliser Acting Sector Director AFTPM
Anand Rajaram Sector Manager AFTPR
Mamadou Deme Senior Public Sector Specialist/Team Leader AFTPR
Macmillan Anyanwu Operations Officer AFTPR
Said Al Habsy Operations Adviser AFTDE
Diego Garrido Martin ET Consultant AFTDE
Isabel Mignone Del-Carril Operation Officer-Trust Fund AFTDE
Edward Olowo-Okere Director AFTOS
Francis Kanyerere Mkandawire Financial Management Specialist AFTFM
Daniel Yaw Domelevo Sr Financial Management Specialist AFTFM
Patrick Kabuya Financial Management Specialist AFTFM
V.S. Krishnakumar Manager AFTPC
S.M. Quamrul Hasan Senior Procurement Specialist AFTPC
Simon Chenjerani Chirwa Procurement Specialist AFTPC
Tijan Sallah Manager AFTCP
Nicolette DeWitt Lead Counsel LEGAF
Agata Pawlowska Sr Operations Officer CFPIR
Ivonna Kratynski Lead Finance Officer CTRLP
Magdalena Manzo Senior Operations Officer CFPTP
Frode Davanger Operations Officer AFCRI
Reynaldo P. Castro Consultant AFTPR
Douglas I. Graham Consultant OPCFM
Madeleine Chungkong Senior Program Assistant AFTPR
64
Annex 7: ACBF Recent Developments
1. ACBF creation and evolution
1. The establishment of the African Capacity Building Foundation dates back to 1988 when the
World Bank convened a brainstorming session in Kenya for its staff and African
policymakers, economic managers and academics to exchange views on Africa‘s
development problems. Sub-Saharan Africa‘s limited capacity for policy analysis and
economic management was identified as a primary contributing factor to the region‘s
inability to adjust to the economic dislocations of the 1970‘s. It was emphasized that Africa
needed to build the necessary capacity in order to develop.
2. The African Capacity Building Foundation (ACBF) was established in 1991 as a
collaborative effort of the World Bank, the African Development Bank, UNDP, bilateral
donors and African governments to provide financial and technical support toward the
building of capacity in the areas of economic policy analysis and development management.
A Brief on major events related to ACBF is presented in Box 3 below. Since its
establishment, ACBF has evolved through three distinct phases: an initial phase (1992 –
1995); an institutionalization phase (1996 – 1999); and the phase involving the integration
and implementation of the Partnership for Capacity Building in Africa (PACT) (2000 –
present).
3. To date (June 2010), ACBF has committed over US$558 million in grants covering some 40
countries in Africa with 111 active projects. Major areas of interventions cover six core
competencies in: (i) Economic policy analysis and management; (ii) Financial management
and accountability; (iii) Public administration and management; (iv) National statistics and
statistical systems; (v) National parliaments and parliamentary institutions; and
(vi) Professionalization of the voices of the private sector and civil society.
4. Throughout the past 2 decades, ACBF-supported projects and programs have contributed to
enhancing the effectiveness of the state; supported the development of a culture of
accountability and transparency in some countries; supported the interface among national
stakeholders in the development process and assisted in moving forward the regional
integration agenda through strengthening of regional economic communities (see Annexure 1
for more details).
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Box 3: Historical Timeline of ACBF Partnerships’ Evolution and Major Events
(Extract From The 2009 ACBF Annual Report) February 1991 Establishment of ACBF
Resource envelope target : US$100million
Pledges: US$94.1 Million.
November 1991 Official launching of ACBF in Harare
23 countries were founding members of the Foundation: Austria, Canada, Denmark,
Finland, France, Japan, The Netherlands, Norway, USA, UK, Sweden, Botswana,
Cameroon, Congo (DRC), Cote d‘Ivoire, Kenya, Malawi, Mali, Mauritius, Nigeria,
Senegal, Tanzania and Zimbabwe
3 Sponsoring agencies: World Bank, African Development Bank and United Nations
Development Program.
1992-1995 Strategic Indicative Work Program (SIWP I) launched in April 1992
SIWP I –Resource envelope: US$98.45 million.
1996-1997 &
1998-2002
Transition to SIWP II
SIWP II- Resource Envelope: US$103.67 million
Pledges to SIWP II: US$56.36 million.
1999-2001 PACT transition, with US$30 million financing from the World Bank
SIWP II absorbed into ACBF-PACT
The First Pan African Capacity Building Forum that was organized by the Foundation in
October 2001
Significant enhancements were made in the institutional context of ACBF in 2001
including the take-off of the Research, Training and Information Systems Department;
Finance and Accounts Department and the Administration and Human Resources
Department.
2002-2006 SMTP I as a means to operationalize ACBF-PACT
Resource envelope SMTP I: US$340 million
IMF joined ACBF in 2002
Total pledges to SMTP I: US$266.877 million
2007-2010 SMTP II launched, with an estimated resource envelope of US$350 million
US$201.701 million pledged
A Management Action Plan to re-invigorate the Foundation was launched in July 2009
New functional organogram approved by ACBF Board in September 2009.
Full Members (48), comprising:
4 international development institutions (the African Development Bank, United Nations
Development Program, The World Bank and International Monetary Fund)
44 countries (Benin, Botswana, Burkina Faso, Burundi, Cameroon, Canada, Central
African Republic, Chad, Congo (Brazzaville), Congo (DRC), Côte d'Ivoire, Denmark,
Djibouti, Finland, France, Gabon, Ghana, Greece, India, Ireland, Kenya, Liberia,
Madagascar, Malawi, Mali, Mauritania, Mauritius, The Netherlands, Niger, Nigeria,
Norway, Rwanda, Sao Tomé & Principe, Senegal, Sierra Leone, Sudan, Swaziland,
Sweden, Tanzania, Uganda, the United Kingdom, the United States of America, Zambia
and Zimbabwe); and
One honorary member, the African Union.
66
2. Recent Developments at ACBF: The Management Action Plan (MAP)
implementation and results.
5. ACBF has been undergoing intensive reforms during the last 18 months, and has put in place
and completed implementation of a Management Action Plan (MAP). Allegations were
made to the Executive Board on impropriety at the ACBF in September 2008 in the Human
Resources domain, and also in areas concerning fraud and corruption. The Executive Board
of ACBF commissioned two external audits: a Human Resources Audit which was
completed in May 2009 and a Forensic Audit also completed in May 2009 (see Box 4).
These audits did not find evidence of fraud, corruption, or embezzlement, but uncovered
weaknesses in the HR processes and systems of ACBF and found management weaknesses
and lack of compliance in ACBF procedures.
6. The Executive Board appointed a new Executive Secretary who assumed duty on July 1,
2009. Under her leadership, the ACBF put in place a Management Action Plan (MAP),
aimed at addressing the weaknesses uncovered in the two External Audits commissioned by
the Executive Board. The MAP also benefitted from inputs from fiduciary reviews by
several World Bank missions from July 2009-July 2010 and from several AfDB reviews
based on visits to Tunis by ACBF missions and missions by AfDB staff to ACBF, including
one by its Auditor General during the period under review. Other information used to inform
the MAP are findings from Internal Audits undertaken by ACBF during the years 2008-2009,
which highlighted key lessons learned from past audits, and feedback from extensive and
comprehensive staff interviews conducted by the Executive Secretary from July 4-31, 2009.
In addition, the MAP was adjusted following findings from an investigation of ACBF
grantees conducted by the World Bank (see Box 5).
Box 4. Forensic and HR reviews by the Executive Board
1. In September 2008, the ACB Foundation‘s Executive Board became aware of allegations
of financial and human resources mismanagement at the ACB Foundation, and therefore
commissioned an independent review to determine the veracity of these allegations.
2. No instances of fraud or embezzlement by ACB Foundation staff or management were
identified as a result of this independent review, which concluded in May 2009. The
results of this review revealed management issues at the ACB Foundation, including a
culture of noncompliance with policies and procedures.
3. In addition, instances of mismanagement of ACB Foundation‘s operations were identified,
including indications of inappropriate activity in the administration of the ACB
Foundation, and instances in which the ACB Foundation‘s policies were either not
followed and/or controls were overridden, resulting in an increased risk of waste, abuse,
embezzlement and corruption.
4. These recommendations have been incorporated into the Management Action Plan
and the 3 tranches conditions for disbursement of the DGF FY09 and MDTF-SMTP1.
5. At end of June 2010, ACBF completed the conditions for disbursement of tranche 1
that led to the release of withheld funds from DGF FY09 (US$6.5 million) and from
MDTF-SMTP1 (US$10.5 million)
67
7. Content and Implementation of the MAP. The MAP was aimed at improving and reforming
the structures, functions, procedures, products, and performance of ACBF with a specific
focus on strengthening the approach to risk assessment and management, as well as putting
in place a solid framework for controls in the following 9 priorities areas: (i) Controls:
secure the internal environment and controls; (ii) Human Resources: stabilize ACBF, create a
platform for reform, and maintain business continuity; (iii) Finance: assess the financial
position of ACBF, identify priorities for action, and support natural areas for improvement;
(iv) Risks: identify and neutralize short-term risks, finalize forensic review, strengthen audit
functions; (v) ICT: develop an ICT policy and put in place a decision chain to secure ICT-
related activities; (vi) Communication: develop a strategy to secure ACBF‘s image,
disseminate proven areas of achievement, uncover opportunities, smooth transition to new
ways of doing business, and create preparedness for reform and change; (vii) Strategy:
review the ACBF Medium Term Strategy and Plan 2007-2011 and uncover a niche for
ACBF; (viii) Operations: assess the internal structure, products, workflow, reporting lines,
and interactivity; undertake a comprehensive portfolio review, identifying and implementing
critical management actions needed to rationalize and secure the portfolio (cancellations,
restructuring, suspending disbursement, or intense supervision); and (ix) Governance: review
the organization & structure of the Executive Board; review Board-Management interface,
and appraise the functioning of the Executive Board.
8. The MAP was made up of 125 separate activities and was executed by eight internal teams,
organized around the nine key areas of attention mentioned above (activities related to the
risks and control areas were bundled under one internal team focusing on ―risks and
controls‖). External consultants-- who mentor and advise them as they go about the work of
reforming the way in which ACBF works-- supported these teams. A budget of $5.4 million
was allocated by the Executive Board to implement the MAP during the period July 2009-
June 2010 with only $3.9 million spent.
9. Progress registered so far. As of end September 2010, the implementation progress
indicates that most of 124 of the planned activities have been completed. The one activity
that is yet to be completed was dependent on a complete remapping of workflows and
computerization of work processes. . The outcome of the MAP implementation is as follows:
a. Risks and Controls: As of now, all activities related to risks and controls are
completed. Deeper reforms included developing a database of qualified auditors, to
be used by ACBF Grantees so as to improve the overall quality of external audits of
ACBF grants and enhance the follow up of external audit recommendations. Other
reforms related to tracking of expenditures to get a better handle on how resources are
spent. This involved linking budget allocation, expenditure flows, and program
delivery with real time tracking systems. ICT support systems were upgraded and
new software and systems support installed following the approval of the ICT
strategy by the Executive Board of ACBF. Along with the work done to enhance
fiduciary capability within ACBF, and the investment to assess supply chain risks and
put in place the needed measures, ACBF now has stronger risk and control
environments.
68
b. Budget and Finance: Work has also been done on assessing the finances of ACBF
and stabilizing it in order to enable it to undertake its new strategy. Eight separate
reform projects were undertaken, including adjusting the structure of the Finance
Department to include risk management and financial management skills. Reforms to
the processes and systems were also undertaken to speed up and allow speedier
tracking of all disbursement functions. There was also a need to implement a policy
guidance note for VAT and special taxes, to obtain uniform treatment of grantees and
specified steps to handle special cases. All of these changes have been embedded in a
revised model ACBF grant agreement and revised Disbursement Manual.
c. Internal Audit: An independent Internal Audit Department was created with direct
reporting lines to the Executive Board of ACBF. This Department has the skills it
needs to perform effective audits as well as carry out investigations. The Executive
Board approved a new Audit Charter and the annual work plans for the department.
The Internal Auditor presents for approval by the Risk and Audit Committee of the
Executive Board all the reports and findings of audits as well as terms of reference for
the key audits including those for engaging the External Auditor.
d. Control Environment: All in all ACBF Management oversaw the completion of 49
separate reform projects to strengthen the controls and render ACBF a modern risk-
aware organization with appropriate controls.
e. Human Resources: A competitive process was put in place to recruit new talent to
ACBF. At present there is 80 staff on board, representing a 72% retention rate. The
staff is diverse, with almost parity on terms of gender and 29 different nationalities.
Attention was paid in the early months of implementation to stabilizing ACBF and
creating a platform for reform and business continuity. Revision of existing policies
was tackled next. Policies that were given immediate attention are those related to
code of conduct, sexual harassment, grievance procedures, and putting in place a
system for ―whistle-blowing‖ and Asset Declaration. Reforms in the area of HR
generally focused on three levels of intervention: (a) values--including developing
sessions on working with respect and using management by example to embed a
culture and set of values appropriate to ACBF; (b) results—with signed results
agreements with all managers and staff; and (c) incentives—to reward excellence and
distinguish performance, while supporting staff development. Other work in the area
of HR systems and processes relates to reforming the Pension System and
benchmarking the benefits of the organization with those of other organizations.
f. ICT: Eight projects were implemented in the area of Information and
Communication Technologies (ICT), including putting in place a new ICT Strategy
and developing a Business Recovery Disaster Plan and implementing an ICT-focused
Business Continuity Plan. The environment for using technology for effective
management and control has improved. Future effort is focused on putting in place
the technology systems that can be used to enhance communications with the grantees
and enhance opportunities for cross-learning.
g. Strategy: All the activities related to evolving a strategy and relevant business plans
for ACBF are complete. A new strategy and implementation plan were presented to
69
the Board of Governors in October 2010 and final approval is expected in 2011. The
new strategy is based on an assessment of what ACBF has been successful at
achieving in the past, the positioning of ACBF relative to other players in the field of
capacity building in Africa, and the demands by African member states for the
services of ACBF.
h. Governance: The approved Governance Action Plan includes actions to enhance the
performance of the Executive Board and the Board of Governors, reforms to handle
conflicts of interest, fiduciary processes and the role of the Boards in risk
management and control, including the creation of a Risk and Audit Committee,
reform of board processes to make the boards more effective and efficient, as well as
actions to render a more engaged board using best practices in the area of engaged
governance. Along with a system for performance assessment of Executive Board
members and of the Executive Secretary, these reforms have strengthened the
governance environment of ACBF. The outcome is a more engaged three-tier system
of governance (Executive Management, Executive Board, Board of Governors) and a
more fluid and effective system of management and controls that is better at sensing
and handling emerging risks.
Box 5: Forensic review by the Bank
10. Next steps. There has been considerable progress on organizational changes, recruitment, and
controls with the MAP completion. This allowed the Bank to resume its support to ACBF
with the release of the first tranche of DGF and MDTF-SMTP1 funds withheld since July
1. In May 2010, Bank concluded a forensic assessment of ACBF to confirm legitimacy of specific
grants and grantees. It covered 37 grants worth $83 million in funding commitments.
2. Bank forensic review did not assess grant impact, or review bank records of ACBF management or
staff to determine if they financially benefitted.
3. Bank review did conclude that there was no evidence in support of allegations that grant funds were
systematically diverted or grossly misuses by grantees. In particular, there was no evidence that:
a. Grantees and grants were bogus or that grantees had not engaged in implementing
program activities.
b. Receipts of ACBF disbursements could not be traced or confirmed.
c. Grantees were expending grant funds on unplanned activities not supported in the grant
agreement.
d. Grant funds has been blatantly or surreptitiously commingled with non-program funds,
transferred to non-program or personal bank accounts, or otherwise misused
e. Grantees ignored or insufficiently addressed ACBF oversight concerns and related
recommendations.
4. Bank review did note that wide dispersion of grants across unrelated grantees with established
professional organizational structures and independent directors mitigated risks of misuse of funds.
5. Bank review did recommend some follow up actions by ACBF to strengthen procedures and
control over use of funds by sub-grantees – i.e. to retrieve unretired advances on closed or inactive
grants, to extend ACBF oversight and policies to sub-grantees, to undertake an internal audit of
administrative and operational expenses and to redesign internal controls as appropriate. These
recommendations have been incorporated into the ongoing Management Action Plan and
conditions for release of the 2nd
and 3 rd tranches of DGF and MDTF withheld funds.
70
2009. It is expected that the 2nd
tranche will be released in the upcoming month following
completion of assessment of conditions.
11. In the coming months, ACBF will continue to implement the changes and reforms
highlighted in the MAP with a special focus on refining the approach to improving portfolio
management; embedding lessons learned in the design of new projects and programs;
especially with respect to financial management assessment of the capabilities of its grantees,
and strengthening the linkages between budget, planning, and monitoring. ACBF will also
revise the controls on the basis of lessons learned from the Bank forensic review and from
the revised Governance Action Plan. A compliance system has been put in place that is used
by ACBF Management to ensure that the reforms in place result in increased attention to risk
and ensure a proper control environment over and above the actions in the MAP.
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Annexure 1: ACBF Recent Achievements
Extract from ACBF 2009 Annual Report
A. Overview of Project Achievements
1. Over the period of SMTP1 and SMTP2, ACBF-supported projects and programs have
contributed to enhancing the effectiveness of African states; supported the development of a
culture of accountability and transparency in some countries; supported the interface among
national stakeholders in the development process and assisted in moving forward the regional
integration agenda through strengthening of regional economic communities.
2. ACBF currently intervenes in 44 sub-Saharan countries of which 26 are classified among
fragile or post conflicts countries.
B. Economic Policy Analysis & Development Management
3. Constituting 45 percent of the portfolio, Economic Policy Analysis and Management
(EPAM) projects have made positive impact in several countries through:
- Enhancing the capacity of governments and non-state actors in the country to engage
in research and policy analysis targeted at benefiting the public, private and civil
society sectors. This has contributed to the overall goal of improving public policy for
growth, equity and poverty reduction through macroeconomic policy analysis and
research, capacity building and networking.
- Enhancing the capacity of Government officers to formulate and implement policy
and to absorb policy advice for development.
C. Strengthening Policy Units and Think Tanks
4. There are 27 ACBF-supported policy units and think tanks autonomous or semi-autonomous
that have been set up and nurtured since the early 1990s across the continent and many are
now in the fourth phase of ACBF financing. Well-known examples are: (i) the Economic
Policy Research Institute (EPRC), established in 1993, in Uganda; (ii) the Botswana Institute
for Development Policy Analysis (BIDPA); (iii) the Kenya Institute for Public Policy
Research and Analysis (KIPPRA), established in 1998 as a semi-autonomous public institute,
in Kenya amongst others. Examples of autonomous ones are: (i) Institute of Policy Analysis
and Research (IPAR) in Kenya; (ii) the Economic and Social Research Foundation (ESRF) in
Tanzania, and (iii) the Centre for Policy Analysis (CEPA), incorporated on the 4th
of January
1993, in Ghana. In Burkina Faso, the Government established the Centre d’Analyse des
Politiques Economiques et Sociales (CAPES) in 2002 as a specialized policy advisory unit in
the President‘s Office; it has become highly visible as most of its policy findings and
recommendations have found their way into the policy-making stream, especially in the area
of poverty reduction and regional integration. In Senegal, the Centre d’Etudes pour les
Politiques de Developpement (CEPOD) was included in the Ministry of Finance structure
from 2001 and played a prominent role in designing economic and structural development
policies.
72
5. Major successes of these units were the following: (i) Bringing discipline in economic policy
management resulting into limited policy reversal on the continent. Many of them took the
lead in the design and implementation of national strategies – especially the Poverty
Reduction Strategies; (ii) Equipping government with the relevant yet limited skills for
effective economic policy analysis and management by training middle-level managers in the
public sector – in this process many of the policy units and think tanks have been active in
providing back up to government in national policy and evaluation processes; and
(iii) Enhancing policy planning as well as monitoring and evaluation by putting emphasis on
evidence-based decision making.
D. Financial Management & Accountability (FMA)
6. FMA constitutes 14% of the Foundation‘s portfolio. Projects such as Macroeconomic and
Financial Management Institute (MEFMI), a regional project based in Harare, Zimbabwe,
which fall under FMA, have made great strides in enhancing the macroeconomic and
financial management of public resources in several countries by providing hands-on training
in key macroeconomic and financial management functions as well as technical advisory
services in debt management and central bank operations in Eastern and Southern Africa. On
the other hand, projects such as the ―Projet de Renforcement des Capacités de la Chambre
des Comptes et de Discipline Budgétaire de la République de Djibouti” CCDB (Djibouti)
have played a significant role as a deterrent of mismanagement of public resources, by
generating awareness in their countries of the importance of improved governance in general,
and of management of public resources in particular. FMA projects, such as ―Pole Dette‖,
have also contributed to financial management of public resources by assisting governments
to reform the legal and institutional framework for public debt management, thereby
strengthening the coordination between management of public debt and budgetary and
monetary policies, and to strategically manage their public debt and monitor and evaluate
public debt management, along with improvement of debt governance.
7. Leadership development has been an area of attention through facilitation of peer learning at
the senior governance level as well as technical levels.
E. Support to the Voice of Non-State Actors
8. The Foundation coordinates 21 interventions in the area of Professionalization of the Voices
of the Private Sector and the Civil Society. This is in recognition that non-State actors, such
as the private sector and civil society have an important role to play in the overall
development agenda of any country. Once such stakeholders understand the policy process,
they become meaningful participants in the policy process through effective lobbying and
advocacy in the formulation and implementation of policies. Capacity building of such
entities is therefore crucial. Programs such as Ethiopian Development and Research Institute
(EDRI), EPRC and CEPA have assisted in building the capacity of non-state actors to
become meaningful participants in development. The Foundations support to issues
addressing women‘s low participation has been channeled through the non-state actors. For
instance, Institute for Democratic Governance (IDEG)-Ghana introduced a ‗gender equality‘
73
component through targeted programming, capacity development and gender sensitive
research and in the design of its training course modules.
F. Strengthening of Policy Analysis Capacity of National Parliaments
9. About 9% of the Foundation‘s portfolio has been dedicated to coordination of projects aimed
at strengthening the policy analysis capacity of oversight institutions such as national
parliaments. There are indications that such interventions have played a role in improving
the performance of national parliaments. Projects such as the Projet de Renforcement des
Capacites de l’Assemblée Nationale (CAPAN) – Benin, and the Policy Analysis and
Research Project, National Assembly (PARP) – Nigeria, have mounted intensive training of
national parliaments which has built and strengthened the institutional and human capacities
of national parliaments.
G. Strengthening & Monitoring of National Statistics (SNS)
10. The Foundation supports 5 (five) projects under the SNS theme. The establishment of these
projects has brought about a significant improvement in the quality of data collection and
processing leading to the production of various statistical publications in the different
countries. The statistics produced have also assisted in improving planning capacity at
national level. One of such projects is the ―Projet de Renforcement des Capacités en
Statistique- République Centrafricaine‖ (PRCS-RCA) project in the Central African
Republic which aims to address the lack of statistical capacity. Such lack of capacity had
resulted in weak data availability including national accounts, social indicators, prices,
balance of payments, and government finance statistics. Since the launching of the project,
more than 560 junior and senior officers in public service including the Bureau of Statistics
have benefited from short-term training mainly in the areas of survey methods, national
accounts and statistics. Long-term training activities involve more than twenty candidates in
Bachelor and Masters programs in Statistics and Demography.
H. Regional Integration
11. In addition to country focus, many ACBF interventions are also regionally oriented. Over the
period of SMTP I and SMTP II, ACBF has assisted in moving forward the regional
integration agenda through strengthening capacities of regional economic communities
which provide a platform for policy harmonization and enhanced trade among members‘
countries. This includes support to the African Union and the Regional Economic
Communities, such as the Economic Community of Central African States (ECCAS), the
Economic Community of West African States (ECOWAS), the Community of East and
Southern African States (COMESA), the East African Community (EAC) and the Southern
African development Community (SADC).
I. Successes in Skills Development and Training
12. ACBF has been instrumental in leveraging several institutions for regional higher education
and skills development, in the fields of economics, public policy, public sector management,
74
financial management and accountability, as well as the banking sector and capital market
regulation. Since 1992, ACBF has, through its partnerships, committed over US$91 million
as financial support to 73 higher education institutions and another US$44 million to non-
degree training programs – making a total of well over US$135 million. The projects and
programs are largely focused on increasing the pool of skilled professionals in the fields of
economics, public policy, public sector management, and financial management and
accountability.
13. The Master‘s Degree in Banking and Finance at the Centre Africain d’Études Supéreures en
Gestion (CESAG) - Sénégal is a well established and known regional program26 with
institutional and pedagogical innovations and partnership between the two central banks of
CFA monetary zone, Banque de France, INSEAD, New York University Stern School of
Business and the Université Libre de Bruxelles. There are also regional success stories in
this area such as the Macroeconomic and Financial Management Institute of Eastern and
Southern Africa (MEFMI) that has emerged as a premier institution providing hands-on
training in key macroeconomic and financial management functions as well as technical
advisory services in debt management and central bank operations in Eastern and Southern
Africa. Almost all the programs are regional in scope/reach with a variety of collaborative
frameworks of participating training institutions such as the African Economic Research
Consortium (AERC) and Programme de Troisième Cycle Inter universitaire (PTCI)27. ACBF
support is provided to regional agencies such as the Association of African Universities and
the Council for the Development of Social Science Research in Africa (CODESRIA)28 that
cut across competencies.
14. Finally, ACBF is also developing cross-fertilization in its core competencies among African
communities of capacity building practitioners and experts sharing knowledge through
organization of (i) Knowledge Networks. Six Technical Advisory Panels and Networks
(TAP-NETs) and four Country Level Knowledge Networks (CLK-NETs) aiming to foster
emergence of communities of practice (CoPs) among development stakeholders in the
Foundation‘s core competence areas with a view to facilitate peer learning and knowledge
sharing; and (ii) African Policy Institutes Forum (APIF) launched in 2004. This forum offers
African nations a platform on which policymakers and development managers can seek/share
knowledge on specific development policy issues.
26
This program was ranked no. 1 as the leading program in banking and finance in Africa by Jeune Afrique for 2008
and 2009 years. By end of 2006, the program has produced 167 graduates in banking and finance and about 400
graduates will be trained during the second phase of ACBF support. 27
The PTCI is supporting graduate studies in development and economics across several public universities in
Francophone Africa. 28
A well-known African Research institution in the field of Social Studies.
