National Solidarity Program Operational Manual (March 2004)

8/10/2019 National Solidarity Program Operational Manual (March 2004)

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NATIONAL SOLIDARITY PROGRAM

OPERATIONAL MANUAL

TABLE OF CONTENTS

PREFACE 5

I. INTRODUCTION 6A. Background 6B. Goal and Objectives of the NSP 6C. Core Elements and Approach 6D. Scope and Targeting 7E. Conditions for Eligibility and Project Menu 9

II. ORGANIZATIONAL STRUCTURE 13A. Community 13B. Community Development Council and Project Management Committees 13

C. Facilitating Partner 18D. Ministry of Rural Rehabilitation and Development 19E. NSP Steering Committee 20

III. CYCLE OF ACTIVITIES 21A. Preparation 21B. Appraisal 22C. Sub-Project Implementation 24D. Monitoring by the Community 25E. Physical and Financial Progress Monitoring 25F. Sub-Project Completion 26

IV. FINANCING AND FUND-FLOW SYSTEM 26A. Overall Fund-Flow Arrangements 26B. Fund Transfer Mechanism 28C. Tripartite Agreement 29D. Disbursement to Communities 30E. Fund Management at the Community level 32F. Financial Reporting by Facilitating Partners 33

V. COMMUNITY PROCUREMENT 33A. Procurement of Goods and Materials 34B. Procurement of Works 34

C. Procurement of Services 35D. Storage 35E. Transport 36F. Administrative Costs 36G. Savings 36H. Transparency 36

VI. COMPLAINTS PROCESSING AND RESOLUTION 38

VII. MONITORING AND EVALUATION 39

NSP-II OperationalManual-21March04 Page 1 of 43 Rev. Date: 20. March 2004


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Acronyms and abbreviations

CDC Community Development Council

DAB Da Afghanistan Bank

FP Facilitating Partners

IDA International Development Association

IDP Internally Displaced Persons

MoF Ministry of Finance

MRRD Ministry of Rural Rehabilitation and Development

NGO Non-governmental Organization

NSP National Solidarity Program

OC Oversight Consultant

RRD Provincial office of MRRD

UXO Unexploded ordnance

Annex 1

Disbursement Prequalification Forms:

Disbursement Form 1 Community Profile (Baseline Data) FormDisbursement Form 2 Election Monitoring & CertificationDisbursement Form 3 Community Development Council Registration Application

Disbursement Form 4 Signatory Authorization (for block grant withdrawals)Disbursement Form 4a Bank Account Application FormDisbursement Form 4b Bank Account Withdrawal Authorization (for block grant

withdrawals)Disbursement Form 5 Certificate of Registration of Community Development CouncilDisbursement Form 6 Community Development PlanDisbursement Form 7 Sub-Project Proposal FormDisbursement Form 7a Mine Risk Clearance (English)Disbursement Form 7b Sub Project Summary Sheet (English)Disbursement Form 7c Project Eligibility Appraisal (English)Disbursement Form 8 Tripartite Agreement

Disbursement Form 9 Block Grant Fund Request

Annex 2

NSP Accounting Forms

1 Accounting InstructionsAcc Form 1 Cash Receipt VoucherAcc Form 2 Vendors InvoiceAcc Form 3 CDC Cash BookAcc Form 4 DAB ChequeAcc Form 5 CDC Bank BookAcc Form 6 CDC Cash Advance Book



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Acc Form 7 CDC Petty Cash Count FormAcc Form 8 CDC Stock book

Annex 3

NSP Procurement Forms

1 NSP Procurement InstructionsProc Form 1-0 Page SeparatorProc Form 1-0 Shopping Guidelines Instruction SheetProc Form 1-1a Invitation to QuoteProc Form 1-1b Technical SpecificationsProc Form 1-2 CDC Quotations Evaluation FormProc Form 1-3-1a Purchase OrderProc Form 1-3-1b Technical SpecificationsProc Form 1-3-2 Consultant Contract

Proc Form 1-4 Goods Received FormProc Form 2-0 Page SeparatorProc Form 2-0 Tendering Guidelines Instruction SheetProc Form 2-1-0 Invitation to BidProc Form 2-1-1 Instruction for BiddersProc Form 2-1-2 Bid Data SheetProc Form 2-1-3 Technical Specifications FormProc Form 2-1-4-0 Tender FormProc Form 2-1-4-1 Price ScheduleProc Form 2-1-4-2 Delivery ScheduleProc Form 2-2 CDC Quotations Evaluation FormProc Form 2-3-5-1 Order & Contract for Supply of GoodsProc Form 2-3-5-2 Contract for Civil WorksProc Form 2-3-5-3 Order & Contract for Consulting ServicesProc Form 2-4 Goods Received FormProc Form 3-0 Page SeparatorProc Form 3-0 Procurement Rule Waiver GuidelinesProc Form 3-1 Approval to Use Competitive Shopping MethodProc Form 4-0 Page SeparatorProc Form 4-01 Impartiality Confidentiality Declaration

Annex 4

NSP Reporting Forms

Reporting Form 1 - Project Completion FormReporting Form 2 - Certificate of Completion of a Sub-projectReporting Form 3 Sample Audit of Facilitating Partner by NSPInstructions for Quarterly Progress ReportsReporting Form 4 - Community Quarterly ReportReporting Form 4a - Community Progress ReportReporting Form 5 - Spot Check Reporting Form

Reporting Form 6 - Format for Monthly Status ReportReporting Form 7 - Facilitating Partner Quarterly Report



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PREFACE

The National Solidarity Program (NSP) is executed by the Ministry of Rural Rehabilitation

and Development (MRRD) with funding from the International Development Association

(IDA). The NSP operational manual provides information on key aspects of the NSP

including the project mandate, objectives, institutional arrangements, sub-project processes,

transfer of funds and financial management, and monitoring and evaluation procedures

among others. The main audiences for the NSP operational manual are the national,

provincial and district level government officials, Facilitating Partners, the Oversight

Consultant, and other consultants. The NSP operational manual is intended to ensure

consistency, transparency and accountability in the application of project management

procedures at all levels. The NSP operational manual is considered to be part of the

Development Grant Agreement with IDA and is therefore a legally binding document. The

NSP operational manual will be reviewed and revised biannually based on lessons learned

from the field.



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INTRODUCTION

A. Background

The National Solidarity Program (NSP) was created by the Government of Afghanistan to

develop the ability of Afghan communities to identify, plan, manage, and monitor their own

development projects. NSP promotes a new development paradigm whereby communities

are empowered to make decisions and control resources during all stages of the project cycle.

In accordance with government policy, the program is expected to lay the foundations for a

long-term strengthening of local governance, to make it more inclusive (e.g. for women,

Internally Displaced Persons, returnees, ethnic minorities), and to provide assistance for

reconstruction and development of communities.

The NSP has an implementation framework that includes a methodology for providing direct

financing to communities through transparent eligibility procedures for selection of sub-

projects. This methodology focuses on the development and strengthening of inclusive

community institutions through participatory planning and resource management as a basis

for community development.

B. Goal and Objectives of the NSP

The goal of the NSP is to reduce poverty through empowering communities with regard to

improved governance, and social, human, and economic capital. The objectives of the

program are to: (1) lay the foundations for a strengthening of community level governance,and to (2) support community-managed sub-projects comprising reconstruction and

development that improve the access of rural communities to social and productive

infrastructure and services. The outcomes that the NSP aims to achieve are (i) the

establishment of a framework for village level consultative decision making and

representative local leadership as a basis for interaction within and between communities on

the one hand, and with the administration and aid agencies on the other, and (ii) local level

reconstruction, development, and capacity building which will lead to a decrease in poverty

levels.

The NSP grants to villages are intended to act as catalysts in this process and at the same time

provide much needed support for local reconstruction and development activities.

C. Core Elements and Approach

The design of NSP consists of four core elements:

Facilitationat the community level to assist communities establish inclusivecommunity institutions through elections, reach consensus on priorities andcorresponding sub-project activities, develop eligible sub-proposals that comply with

NSP appraisal criteria, and implement approved project sub-proposals;



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and optimal use of field staff.1 Funds will be allocated for projects that have been appraised

by the NSP as meeting the eligibility criteria of the NSP (See Section E below), and for

which financing agreements have been signed between the NSP and the community

organization and the FPs (Disbursement Form 8).

Communities will be defined on the basis of existing available information from government

records (e.g. the list of registered villages from the 1970s, or the list of villages prepared for

the nomination of the members of the 2002Loya Jirga). However, since the reliability of the

available official data on villages was inconsistent when the records were established, and

since it is by now outdated due to population increase and/or displacements, the identification

of communities for the purpose of the NSP would have to reflect the ground realities existing

today. Where Facilitating Partners find that the realities on the ground deviate significantly

from the existing official village lists, local authorities (e.g. woluswal, MRRD provincial

office) should be consulted where possible to arrive at a more operationally practical

definition of communities that corresponds to existing local settlement patterns. The

proposed plan for defining communities for the purpose of NSP would then have to be

approved by NSP, Kabul. The establishment of a Community Development Council would

not affect the village's legal standing with the Ministry of the Interior.

The definition of a community for the purposes of block grant allocation will be based on the

following principles:

A community is a village of more than 25 families;

One Community Development Council will be established for each community.Development Councils can not be established for sub-sets of an existing village (e.g. avillage can not be split into its constituent political or ethnic/qaumsub-divisions);

One block grant (budget) will be allocated to each community at a rate of US$200 perfamily with an upper limit of US$60,000 per community. This allocation requires thatthe community develops one or more eligible sub-project proposals within the budgetframe.

The community is willing to contribute at least 10 % of the value of the block grant todevelopment activities financed out of the block grant.

A family is defined as a nuclear family consisting of a man, his wife (or wives) and

unmarried children, or a widow(er) and her/his unmarried children. The number of families

in the targeted village communities will be assessed by the Facilitating Partner, and this

enumeration can be verified through such means as a community meeting, consultations with

the local mullah(s), and existing village lists for voluntary contributions towards ashar,

mosque repair etc. Once village selection is confirmed (the community will have to confirm

its interest to participate during a mass meeting) and the number of families is agreed, the

1 i.e. villages chosen for annual implementation coverage should to the extent possible be more or lessadjacent to facilitate optimal utilization of facilitation staff and transport resources.



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block grant amount would be adjusted to reflect the more accurate population size, and

communicated to the community.

As stated above, the minimum size of a community potentially eligible for a block grant

allocation would be 25 families. Smaller settlements should be encouraged to join with other

ones to pool their block grant allocations for larger scale joint activities (e.g. a clinic, a

school, or a multi-village pipe water supply system). Where this is not possible, isolated

settlements below 25 families can be exceptionally included.

The block grant of a community can be carried forward to the next year if it has not been

fully committed or disbursed for specific projects during Year 1. It can only be carried

forward from one year to the next. After that, the un-committed amounts would be cancelled.

An option to facilitate re-integration of IDPs and returning refugees is to communicate to

specific communities with a considerable IDP/refugee population, that the block grantallocation can be increased upon the return of IDPs/refugees and their participation in project

planning. This incentive could encourage communities with a high proportion of IDPs or

refugees to initiate consultation with them about their return during the project preparation

phase to obtain access to an increased block grant allocation. Where a return of

IDPs/refugees is planned, and IDPs/refugee families or family members return to their

communities during the project preparation phase, a reassessment of the population size

should be undertaken prior to final project development and costing to enable an adjustment

of the block grant allocation. Where such planning is undertaken, the Facilitating Partner

should assist the community in assessing whether the additional resources provided through

the enhanced block grant and the proposed project activities would enable a sustainable re-

integration of the returnees.

While no specific conditions have been established for targeting women during the first year

of the project, it is expected that all Facilitating Partners will attempt to engage female

facilitation staff, and develop arrangements in consultation with the community for the

involvement of women during the sub-project cycle mechanisms for consultation with

womens groups, getting their input when prioritizing needs, electing officials, etc., should be

described in the Facilitating Partner work plan.

E. Conditions for Eligibility and Project Menu

The Community Development Council will be registered (Disbursement Form 5) with

MRRD after it has been verified that the election was conducted in compliance with the

election rules (see Chapter II.B and Disbursement Form 2). Then the community will be

eligible for the block Grant.

(i) To make use of the block grant allocation, the community must develop aCommunity Development Plan and an eligible sub-project proposal (or proposals)



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that fulfils the following criteria: is proposed by a representative CommunityDevelopment Council(which has been elected through a community-wide

process),

(ii) is endorsed through a community-wide process,

(iii) provides equitable access to benefits,(iv) is technically and financially sound,

(v) includes an operation and maintenance plan,

(vi) has at least 10% community contributions towards capital costs ,

(vii) includes a commitment to and plans for ensuring transparency of the use of blockgrant funds.

The community contribution towards capital costs can comprise cash, labour, or in kind

contributions such as construction materials and/or transport.2 The requisite community

contributions in estimated monetary equivalent for each project milestone must be clearlyspecified (e.g. the amount of labor or materials to be provided at specific stages during

implementation). The Facilitating Partner will monitor, assess and report quarterly to the

NSP as to whether this condition is being adequately met.

Toprepare a Sub-project proposal the community should take note that NSP will accept an

open menu of sub-projects within four types of investments, subject to a short negative list.

The four types of investments are3:

Community infrastructure (the investments will comply with defined technical

standards, and will only comprise public goods);

Human capital development activities (e.g., time-bound literacy classes, hygieneeducation etc., that are not planned to incur recurrent costs from the state);

Self-help savings and credit schemes for women and disabled that would draw on bestpractice lessons from other projects and be based on a predefined methodologydeveloped by NSP (this practice can only comprise 10% of the total value of a blockgrant with an upper limit of US$5,000 equivalent).

Productive asset transfers for vulnerable women and disabled that would draw on bestpractice lessons from other projects and will be based on a predefined methodology

developed by NSP (i.e. sewing machines, looms etc. supported by training asrequired) (the value of the assets can only comprise 10% of the total value of a blockgrant with an upper limit of US$3,000 equivalent).

Public infrastructure projects would include, but not necessarily be restricted to: irrigation

works; roads including culverts and small bridges; erosion protection; structures promoting

2 The time spent by members of the Development Council will not be counted towards the communitycontribution, and can not be compensated out of the block grant. If the community decides that members of theDevelopment Council should be compensated for their time, this should be from a community contribution over

and above the 10% contributed towards the capital costs of projects.3 Investments in income generating assets if later included in the menu would draw on best practicelessons from other projects.



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watershed management; water supply facilities; public baths (hamam); and school buildings.

When school buildings are proposed by the community, endorsement would be required from

Ministry of Education that these are included in the development plans of the ministry, and

that funding of operational costs would be provided (fully or with committed contributions

from other agencies). Where clinics are proposed for block grants, endorsement is required

by the Ministry of Health that they are included in its development plans and that it will cover

the associated operational costs.

The project will notfund:

equipment or materials that are included in the annual implementation plans by otheragencies (e.g. by other government or NGO projects that are operating in the area);

political campaign materials or donations in any form;

weapons including (but not limited to), mines, guns and ammunition; chainsaws;

pesticides, herbicides and other chemicals;4

investments detrimental to the environment;

land (purchase or lease), under any conditions;

construction, rehabilitation, or maintenance of any government office buildings;

payments of salaries to government servants or the salaries of the staff of governmentsubsidized organizations;

any activity on land that is considered dangerous due to security hazards or thepresence of unexploded mines or bombs, UXOs,

any activity on land that has disputed ownership or tenure rights .

any activity that will support drug crop production or processing of such crops.

The table on the next page defines the eligibility for block grant funding of different types of

subprojects that are not clearly public goods infrastructure. This list may not be exhaustive

and future sub-project proposals that fall in the grey area between public and private goods

will be reviewed by the NSP/MRRD/OC on a case by case basis.

As part of promoting technical soundness, each activity must take into account environmental

and social impacts as defined in the governments Environmental and Social Safeguards

Framework. Since most of the works are expected to be small community-based projects,

environmental risks are generally considered to be minimal. To ensure compliance with the

safeguards framework, all proposals must include completed simple environmental and social

4

Exceptions may be considered based on an assessment by the NSP (with specialized consultantassistance, if required, and after no objection from IDA) in special situations such as eradication of infestationsof locusts or sen pest.



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checklists developed by NSP, which describe impacts and mitigations measures, if any (see

Disbursement Form 7c).

Involuntary land acquisition and forced (involuntary) resettlement caused by acquisition of

land or houses are not allowed under any condition. If any minor areas of land would be

needed for a project (e.g. realignment of an irrigation canal, or land for a school), such land

can only be obtained through either private voluntary donations, compensation paid by the

community (i.e. transaction between willing buyer-willing seller), or from available

government land. Private voluntary donations and community purchases would be

documented as required by the Environment & Social Safeguards Framework agreed between

the government and IDA, and for government land, documentation would be needed that the

land is free of encroachments, squatters or other encumbrances, and has been transferred to

the project by the authorities. Any activity that in any way involves voluntary resettlement

requires an early special approval from the NSP. The negative list will be reviewed and if

necessary revised by NSP every year.

Sub-Project Proposal

Generally

Eligible for

Block Grant

funding

Eligible under the

Women/Disabled

category

Eligible under

the Asset

Transfer

category

Comment

Diesel Water Pump (irrigation) No No No On negative list

Micro Hydropower Yes - - Equity & O&M plan

Generator for electricity Yes - - Realistic O&M plan

Public Bath (Hamam) Yes - - Realistic O&M plan

Bakery No Yes Yes Business plan & O&M

Mill (diesel) Yes - - O&M plan

Mill (water) Yes - - O&M plan

Carpet/gelim weaving No Yes Yes Equity & Business plan

Tailoring No Yes Yes Equity & Business plan

Farm animals (goats, cow, etc) No Yes Yes Equity & Business plan

Farm inputs (fertilizer, seed) No Yes Yes Equity & Business plan

Grocery store No No Yes Business plan

Tractor No No No

Thresher No No No

Truck, Bus No No No

Religious buildings No No No

Cash donation for disabled No No No

Land leveling for agriculture No No No

Vocational training Yes Yes - Equity in access to benefit

Literacy training Yes Yes - Equity in access to benefit

Other training (computer, tractoretc)

Yes Yes Yes Equity in access to benefit

Once it is determined through an appraisal of the project proposal (Disbursement Form 7 andSection III.B) by NSP that the eligibility criteria listed above have been complied with, the



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funds will be paid directly from the NSP to a community, according to defined payment

schedule based on the Tripartite Agreement (see Chapter IV.C and Disbursement Form 8).

The result of the appraisal of the community project proposal will be confirmed on the first

page of Disbursement Form 7.

I. ORGANIZATIONAL STRUCTURE

A. Community

For the purposes of the NSP, a community is defined as a village consisting of at least 25

families that is able to identify a need and come together to access NSP funds. Communities

will be identified on the basis of existing local settlement and social patterns. However, this

would not prevent different distinct villages from joining together to develop assets (e.g. a

school, or a pipe water system) that serves more than one village. In such a situation, people

from all areas that make direct use of the asset should be included as part of the community

for the purposes of the planning, implementation, and maintenance of the joint asset. The

block grant for such joint projects will be equal to the aggregate amount for the collaborating

communities or a portion thereof as required and agreed by the communities.

While a community will be assisted by NSP financially, a key characteristic of this approach

is that it promotes a high level of community participation and ownership during all phases of

the project cycle. As such, functions of the community will include:

Identifying and prioritising needs; Electing the Community Development Council and relevant Project Management

Committees;

Preparation of a community development plan and sub-project proposals;

Providing community contributions;

Participating in field appraisal, project launch ceremony, and all other communitymeetings related to the project;

Management of project implementation by the community through its CommunityDevelopment Council or Project Management Committee(s);

Providing oversight of project implementation with regard to quality and use of funds;

Maintaining the asset after completion with community cost contributions.

B. Community Development Council and Project Management Committees

The Community Development Council (CDC) will be a community-based decision making

body which is elected by the community through elections based on a secret ballot. As the

representative body of the community with regard to the NSP, the Development Council will

be responsible for overseeing the preparation of the Community Development Plan (defining

community needs and priorities, and the project or sub-projects to address some or all of



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these priorities), and the preparation and implementation of individual sub-projects. The

Development Council should at least comprise a Chairperson, Treasurer and Secretary. The

Development Council should obtain the endorsement through community meetings

regarding:

decisions on rehabilitation or development priorities, and the final selection of projectproposals developed on the basis of agreed priorities,

the size and composition of community contributions, and the use of project funds,

transparency arrangements,

arrangements for maintenance of completed projects.

The Community Development Council will sign an overall Tripartite Agreement

(Disbursement Form 8) with NSP and the Facilitating Partner on behalf of the community.

Depending on the number of sub-projects to be managed, smaller Community Project

Management Committees may be established to prepare and manage individual sub-projects,

but they will report to the Community Development Council and the community-wide

meetings. On the other hand, if a community chooses to implement only one or two sub-

projects, the Development Council may manage implementation of those projects. These

representative Development Councils must be registered with NSP as a condition for

receiving assistance and overseeing the management of communally owned property

(Disbursement Form 5). A Community Project Management Committee (which can be

identical with the Development Council and should comprise at least a Chairperson,

Secretary, Treasurer, and Storekeeper) nominated by a community wide assembly will be

able to withdraw funds and procure goods and services for implementation of the project after

being registered with the NSP (Disbursement Form 4).

Specifically, the Community Development Council will be responsible for:

Overseeing preparation of the community development plan;

Convening community wide meetings;

Overseeing planning and preparation of individual sub-projects through the

community project management committees; Mobilizing community contributions;

Ensuring community participation during all phases;

Presenting the sub-project plans at appraisal;

Managing and supervising sub-project implementation;

Overseeing (or directly handling) procurement and financial management at thecommunity level;

Reporting to the community and to NSP on project progress and use of funds.



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The Community Development Council will be established through an election which will be

conducted according to the following rules:

Everybody in the community who is entitled to vote in government elections isentitled to be registered as a voter;

Each person has one vote ;

The voting will be conducted through a secret ballot;

Both men and women are eligible to be members of the Community DevelopmentCouncil;

Predefined candidate lists and electioneering are prohibited; and

At least 40% of eligible voters to have voted for an election to be valid.

Development councils elected under an election that does not comply with these rules will

not be eligible for funding under the NSP.

Regarding the first point above, registering as a voter is an entitlement, not an obligation.

However, in declaring whether the election for the Council is valid, an estimate of all eligible

voters, not all registered voters should be used. Whether the community wishes to extend

voting entitlements to people who are not eligible to vote in government elections is a matter

for the community to decide.

In the case of the secret ballot, it is essential to remove, or at least minimise, the opportunity

for undue influence to be exerted when people are voting. The exact mechanism to ensure

this will need to be determined on a case-by-case basis, but the underlying principle is that

each individual should cast his or her vote in private.5

Prohibition of candidature and electioneering is critical to reduce the likelihood of elite

capture and intimidation, recognising that it will not remove it. To avoid the problem of

selecting unwilling candidates, community members will prior to the election have an

opportunity to declare, that they are not prepared to accept the position if elected. All

members of the community are candidates until they take the positive step to declare

themselves ineligible.

The combination of high levels of illiteracy and the prohibition of predefined candidate lists

and electioneering will present a range of challenges to the Facilitating Partners. However,

both aspects are so central to the program that innovative and creative solutions will need to

be developed. Since the elections will take place in small clusters of households many of

5 This could involve separate ballot boxes for men and women, decisions on whether the ballot paperwill have a list of all interested eligible cluster members, or whether the name of the candidate for which a voteis cast is written on the ballot paper. If either of these solutions is agreed, assistance would have to be providedto illiterate voters by the Facilitating Partner, and a process to verify votes cast on a sample basis would also

need to be agreed. Another issue that may require different local solutions is whether the names of women canbe listed on ballot papers, and where this is not possible, how the number of eligible women voters isestablished, and how votes are cast for female candidates.



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whom know each other, such solutions are possible. An obvious solution is for the

Facilitating Partner to assist the illiterate members of the community. An alternative is to

prepare ballot papers in the forms of maps of the village, with people marking the address of

the person that they wish to vote for and a symbol for the person within that address (e.g.

distinct symbol for oldest male, oldest female, etc).

To have functioning Development Councils, the number of representatives should be between

5 and 15 persons depending on the size of the community. The Development Councils

should select a Chairperson, Secretary and Treasurer. For the Development Council to have

the authority to make decisions over resources it must also have a quorum of the community

involved in the election. For the first round of NSP, a quorum is defined as 40% of all

eligible voters. It is government policy to increase this percentage over the life of the

program

Where local norms regardingPurdahdo not allow women to participate directly in

community wide meetings or in the Development Council, the Facilitating Partner must

promote the establishment of a separate forum where women can define their priorities. The

Facilitating Partner should also ensure that the priorities defined by women are discussed

with the men, and that those defined by the men are discussed with the women, so that the

Community Development Plan takes account of both.

To ensure inclusiveness in terms of different socio-economic, factional, and ethnic/tribal

(qaum) sub-divisions within the community, the election process should be based on division

of the community into groups of families (clusters), which will each elect one representative

for the Development Council. Since neighbours are usually also relatives, the division into

clusters will also reducepurdah restrictions on women and thereby facilitate their active

involvement in discussions of the qualities required for representatives and in the election

itself. The size of such clusters will vary depending on the size of the community, but should

not exceed about 20 families. The clusters would in turn serve as the framework for

community wide consultations on proposals from the Development Council, through a

process where the elected councillors consult with and seek feed-back from their electorate

before decisions on priorities, sub-projects, and community contributions are finalized.

Since communities will only have one Development Council, local solutions should be

agreed for large communities (>300 families) with assistance from the Facilitating Partner.

One such solution could be a two-tier voting process, where candidates elected by clusters of

20 families elect a smaller Development Council (see diagram on following page)



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C. Facilitating Partner

The primary role of the Facilitating Partner is to provide support and guidance to the

community in meeting the requirements of NSP as described in this manual.

The Facilitating Partner will report to the NSP. An agreement will be signed with thecommunity on the community development plan regarding the exact inputs to be provided

and services to be performed by the Facilitating Partner (Disbursement Form 8).

In each province one or more Facilitating Partners will deploy community facilitators and

technical specialists for three districts at a time to cover a target of up to 216 communities per

year.6 Depending on capacity, individual Facilitating Partners will undertake these activities

in one or more districts, or in one or more provinces.

The roles of the Facilitating Partners are to:

Facilitate elections of inclusive CDCs;

Facilitate consultative community project planning comprising CommunityDevelopment Plans and sub-project proposals;

Provide technical assistance to develop sub-project proposals through either:

o facilitating community access to technical assistance available in the market orfrom other agencies; or,

o technical assistance provided by the Facilitating Partner,7

Provide technical assistance to communities during implementation;

Provide training to communities (e.g. book-keeping, procurement, contracting);

Conduct monitoring and reporting.

The expected outputs of the Facilitating Partners are:

Eligible project proposals (measured by the number of projects appraised andapproved by the NSP);

Implementation of funded projects (measured by the number of projects completed inaccordance with design standards and in a sustainable manner);

Depending on the number of districts and number of communities defined in the Facilitating

Partners contract, performance will be assessed against the following annual target outputs

for year 1. Achieving or exceeding the targets as defined in the table below will be a key

determinant for extension/expansion of the contracts of the Facilitating Partners.

6 Where feasible, the Facilitating Partner is expected to recruit and deploy female field staff to enableinvolvement of women in the targeted communities in the prioritisation, decision-making, and implementationof projects.7

While the preferred approach under NSP is for communities to avail themselves of technical assistancefor project design through the market, it is recognized that this may not be feasible in many rural areas, and thatin such situations, technical assistance will have to be provided by the Facilitating Partner.



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District 1 # ofcommunities

# offamilies

Appraised andapproved project

proposals

Completedprojects

(% of fundedprojects

completed)

% ofsub-projectsfunctioning 3months aftercompletion

1

st

cycle 80% 80% 80%2ndcycle 80% 80%

3rd

cycle 80% 0%

Total 80% 53% 80%

The table above assumes that the Facilitating Partners staff is deployed so that facilitation of

project preparation and implementation in a district is undertaken in three successive batches,

each with a four month period for community planning, project preparation and appraisal,

followed by an implementation period depending on the type of project that is undertaken.

The table reflects that some of the target communities in the 3rdbatch would still be in the

process of project preparation and appraisal by the end of year 1, and that implementation, if

started, would not be completed. Likewise, for some of the target communities in the 2nd

batch, ongoing implementation would not be completed by the end of year 1. Since not all

Facilitating Partners may choose to deploy their field staff for coverage of their annual target

as outlined above, an aggregate target is provided for expected outputs in a district in year 1.

The NSP will hold Facilitating Partners accountable for performance against outputs, but the

NSP will provide flexibility to its partners in the choice of specific facilitation methods and

work planning. The Facilitating Partners may use facilitation methods that they deem

appropriate while respecting the eligibility criteria to achieve the outputs against which the

eligibility of community project proposals will be appraised (see Section I.E above), and may

also plan the deployment of their staff and sequencing of activities in ways they consider

optimal for achieving their overall output targets.

D. Ministry of Rural Rehabilitation and Development

MRRD will be responsible for overall management and supervision of the National Solidarity

Program (NSP). Within the ministry, the NSP will be managed by an Oversight Consultant

working with MRRD counterparts in the Community Led Development Department to

strengthen capacity for community development and program management. The Oversight

Consultant will support the Community-Led Development Department regarding:

Management of the NSP block grants for community projects (including effectingfund transfers, tranche payments, financial management, and accounting);

Supervision of the performance of Facilitating Partners (including contractmanagement, contracting of Facilitating Partners beyond those recruited by MRRD

prior to the Oversight Consultant being recruited in order to secure services ofFacilitating Partners to cover all 32 provinces at the scale required);

Appraisal of community project proposals;



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Planning and conducting training for the field staff of Facilitating Partners (eitherdirectly or through sub-contracting);

Undertaking technical and financial monitoring, and producing consolidated progressreports, and

Managing an information and communication campaign.

E. NSP Steering Committee

A Steering Committee acts in an advisory capacity to MRRD on overall program policy

formulation and direction, and oversees program implementation. At present, the Steering

Committee is composed of representatives from MRRD and Ministry of Finance (MoF). An

External Review Committee consisting of donors, UN agencies, the Independent Commission

for Human Rights, MoF and MRRD meets on a regular basis to review and endorse all policy

and contractual issues.

Discussions are underway to broaden the membership of the Steering Committee by merging

the two bodies. An inter-ministerial committee has been established for policy advice and

coordination. The committee is chaired by MRRD and comprises the ministries of Finance,

Agriculture, Public Health, Education, Irrigation, Labor & Social Affairs, Womens Affairs,

Public Works, Reconstruction, Foreign Affairs, and Refugees.



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ORGANIZATIONAL CHART

MRRD NSPCommunity-Led Development

Department and NSP OversightConsultant

NSP Steering

Committee

National Level

MRRD NSPCommunity-Led DevelopmentDepartment and NSP Oversight

Consultant

ProvincialLevel

District andCommunityLevel

FacilitatingPartner

FacilitatingPartner

FacilitatingPartner

Communities

II. CYCLE OF ACTIVITIES

This section covers the activities to be undertaken during preparation, appraisal,

implementation and completion of the sub-project cycle. The goal is to facilitate an inclusive

participatory process within the community which results in an equitable community

development plan including a series of sub-projects that are eligible for funding under the

NSP and/or eligible for funding from other existing programs. The long-term goal is the

creation of community institutions that are to strengthen the communitys ability to mobilize,

consult, plan, finance, implement and evaluate their own development.

A. Preparation

During this phase of the cycle, Facilitating Partners will help:

mobilize the community including facilitating the establishment through elections of aCommunity Development Council and related project implementation committees asagreed with the community;

facilitate a participatory planning process that includes women and the weakersections of the community;

strengthen community capacity to identify and prioritise needs;



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assist the community to prepare a Community Profile with baseline data(Disbursement Form 1);

facilitate the preparation of a Community Development Plan (Disbursement Form 6)and proposals for specific project(s) with budget(s);

provide technical assistance to develop sub-project proposals (Disbursement Form 7)for appraisal through either:

o facilitating community access to technical assistance available in the market orfrom other agencies; or,

o technical assistance provided by the Facilitating Partner,

sign off on the Community Development Plan and sub-project proposal(s) withrespect to technical quality, financial feasibility and inclusive communityinvolvement in planning and decision making before they are submitted to NSP.

The community will:

elect an inclusive Community Development Council and establish ProjectManagement Committees as needed for sub-projects;

develop a Community Development Plan (including priority sub-project proposalswith budgets and community cost contributions and O&M arrangements as well as

projects which can be financed and implemented by the community itself);

obtain inputs and endorsement from the community (if necessary through separatemeetings with men and women) regarding the Community Development Plan;

mobilize the required technical expertise to help develop designs within given

technical standards;

8

agree on rules for dissemination of budget and expenditure information;

submit the community development plan and proposal(s) to NSP.

The training manual provides more in-depth guidance on the processes which can be

followed during each phase, however, the Facilitating Partner will have flexibility in the

choice of the facilitation methodology for undertaking the activities listed above.

B. Appraisal

The community (with the assistance of the Facilitating Partner) will complete and submit aCommunity Development Plan and standard sub-project proposal(s) (including technical

designs and cost schedules) to the provincial representative of the NSP. (See Disbursement

Form 6 and 7 for standard format for the community development plan and sub-project

application form). The Community Development Plan constitutes a medium term investment

plan for a particular community, which would provide the basis for additional future

development activities whether funded by NSP or other sources, and also represent for the

8 This may involve getting the required technical assistance from the market (payment can be made

directly as part of the community contribution, or retroactively if and when a project is appraised and foundeligible for funding), or getting this assistance from the Facilitating Partner, where it is unavailable in themarket.



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first time ever a bottom-up input to higher level planning at the district, provincial, and

national level.

Appraisal of the community proposal and budget are conducted by the NSP. The Facilitating

Partner will help communities prepare and implement sub-project proposals and be

positioned as allies of the community, while the NSP staff will formally appraise proposals

and make funding decisions.

The NSP will be responsible for appraisal of all community project proposals to determine

whether they meet the eligibility criteria. This will be done using a standard appraisal tool

(Disbursement Form 7c) by the NSP technical staff from the provincial office (and involving

relevant government agencies, e.g. for education). The appraisal will be done using a

transparent procedure. Eligibility criteria, indicators and means of verification are listed in

the table below. The criteria will be made known to the community in order to limit the

discretionary power of the NSP. A proposal is evaluated based on these criteria and assessed

during a field visit to the community. During this appraisal visit the appropriate levels of

installments will be discussed and agreed upon. In the absence of special agreements the

installments will be 50: 40: 10 %.

The community is then informed by the NSP regarding the result of the appraisal, which may

be a) approval of funding for the proposed plan, b) rejection for non-compliance with NSP

rules (e.g. project is on the negative list), c) requiring the community to revise its proposal

with regard to either the election of the Community Development Council, the planning

process, the budget, or the technical standards.

The provincial NSP office will undertake field verification on a sample basis of whether

elections of Community Development Councils conform with the basic principles defined in

this manual. In addition, the national level NSP office will undertake periodic field

supervision audits on a sample basis of the appraisal process to ensure that eligibility criteria

are complied with.

Upon completion of appraisal and approval by NSP of a community sub-project proposal, a

Tripartite Agreement will be signed between the Community Development Council, NSP,and the Facilitating Partner regarding the financing of the sub-project, disbursement schedule

and benchmarks triggering installments and the general obligations of each of the parties to

the agreement (see Section IV, C)



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Sub-Project Eligibility and Appraisal Criteria

CorePrinciples Eligibility Criteria Indicator Means of Verification

Does ProposalMeet Eligibility

Criteria?

1.

Representativecommunityinstitution

Establishment of a

community widedecision makingprocess and election ofa representative CDC

CDC elected with representation

from different geographical andoccupational sections

40% of eligible votersparticipated in the election

CDC Registration Form;

CDC registration certificate; Form 2;

Proposal submitted by CDC

(YES) (NO)

2.BeneficiaryParticipation

CommunityDevelopment Planendorsed through acommunity-wideprocess

Community-wide meetings held;

60% of families participated indecision meeting.

Decisions/priorities of womentaken into account

Random interviews withcommunities;

Interviews with womens groupmembers;

Minutes of decision makingcommunity meetings

3.Equity

Sub-project providesbeneficiaries equitableaccess to benefits

Persons from differentgeographical and occupationalsections of the community canaccess benefits

Confirmation of sub-project mapof beneficiaries through randominterviews with communitys

Check proposal on beneficiariesand equity

4.TechnicalSoundness

Sub-project istechnically sound

Sub-project complies withappraisal criteria for technicalquality standards, and the projectnegative list.

Check proposal for technical quality(problem statement, goals &objectives, engineering designs ,implementation arrangements, risksand constraints)

5.FinancialSoundness

Sub-project is financiallysound

Sub-project complies withappraisal criteria for financialsoundness and is correspondingto the technical layout.

Check proposal for financial quality(project budget, procurement plan,disbursement schedule)

6.Compatibilitywith social andenvironmentalsafeguards

Sub-project is sociallyand environmentalsound

Sub-project complies withappraisal criteria, environmentaland social safeguards issues, andthe project negative list.

Check proposal for environmentaland social quality

7.

CommunityCommitment

Sub-project has

community contributiontowards capital costs

Minimum of 10% of capital costs

committed (cash, kind or labor)

Check proposal

Random interviews with communities

8.Sustainability

Proposed project hascommunityarrangements foroperation &maintenance (O & M)

O & M plan with budget committedand training plan prepared

Check proposalRandom interviews with communities

9.Transparency

Accept principles oftransparency regardingbudgeting andexpenditures

Budget (and later accounts)posted in public places andthrough meetings (e.g. in themosque and womens meetings)

Check proposalRandom interviews with villagers(both men and women)

10. Mine Risk Mine Risk Safety hasbeen assessed

Questionnaire on Mine RiskSafety/Clearance has been filledout

Check proposalForm 7a

C. Sub-Project Implementation

The primary responsibility for sub-project implementation will rest with the community (the

Community Development Council, Project Management Committee, and the greater

community). Clear divisions of responsibility between the Development Council members

and Project Management Committee members will increase accountability. Three or more

persons at the community level should be identified as responsible for most implementation

activities such as procurement, bookkeeping, supervision, storage and accounting. This willnot only promote transparency and continuity at the community level but it will also ensure



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that more than one person in the community has the necessary skills/training to perform the

task.

Depending on the type of sub-project, the community may either be capable of undertaking

implementation itself, or may require external assistance regarding specialized technical

skills or services (e.g. masons for school construction, or lining and hand pump installation

for dug wells for drinking water). The procurement of such services will follow established

procedures (see Annex 3 Procurement Forms).

If a community is using its block grant for more than one sub-project, parallel

implementation is an option, if sufficient capacity is present, since this will speed up overall

implementation, and enable completion of projects within the constraints defined by local

climate and altitude.

The Facilitating Partner will support the community during this process with regard to:

technical assistance on an as needed basis (e.g. procedures for procurement of goodsor contractors);

implementation (e.g. advice on implementation organization, and supervision ofworks and construction quality)

training on matters such as book-keeping, contracting, maintenance tasks etc.

D. Monitoring by the Community

The community wide assembly will agree on the methods and schedule of reporting to the

community (on financial and physical progress) by the Community Development Council

and the relevant Project Management Committees. The methods for information

dissemination should ensure that women are informed about project activities. The

community will also agree on key indicators to monitor joint decision making, project

progress, and transparency. Monitoring against these indicators will be reported in the

Community Progress Reporting Form used by the Facilitating Partners (Reporting Form 4a).

In the community, all records and accounts must be available for inspection by the members

of the community, the Facilitating Partner, and NSP. The arrangements to ensure

transparency shall include regular community wide information meetings, display of all

relevant information on implementation progress and expenditures on notice boards

accessible to the public, and/or announcements of project-related information atJumma

prayers.

E. Physical and Financial Progress Monitoring

The Facilitating Partner will be responsible for physical and financial progress monitoring on

a monthly basis (Reporting Form 6) with summary progress reports and on a quarterly basis

with more comprehensive status reporting (Reporting Forms 7 and 7a). These reports



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constitute an input to the overall quarterly progress reporting by NSP (Reporting Form 8).

The Facilitating Partner will report to NSP on process, achievement of implementation

benchmarks, and quality of works as defined in the Tripartite Agreement. Achievement of

implementation benchmarks will be tied to the release of funding to the community.

The NSP staff will perform sample audits of the support for the community carried out by the

Facilitating Partner regarding elections of Community Development Councils, preparation of

sub-project proposals that comply with NSP eligibility criteria, recommendations for release

of block grant instalments based on achievement of agreed milestones, and the adequacy and

realism of progress reporting (Reporting Form 5).

F. Sub-project Completion

A completion report will be prepared by the community and the Facilitating Partner

(Reporting Form 1). The completed project will be inspected by the NSP, and a Certificate of

Completion (Reporting Form 2) will be issued to the community provided the sub-project is

technically sound and that all funds received from NSP have been reconciled. NSP may

approve that any savings that are remaining may be allocated to be used by the community to

increase the scope of the community development plan during the current or following year.

III. FINANCING AND FUND-FLOW SYSTEM

A. Overall Fund-Flow Arrangements

The overall flow of funds to communities will be managed by the NSP based on the process

outlined below, which summarizes the previous chapters in this manual:

1. The Facilitating Partner provides a Community Profile (Disbursement Form 1) including

a preliminary assessment of the block grant entitlement of the community to the

provincial office of NSP/RRD/OC.

2. Elections for the Community Development Council are held, and the Facilitating Partnercertifies that the elections were held in accordance with NSP rules (Disbursement Form

2). The provincial NSP office (Oversight Consultant and MRRD staff) undertakes

sample verification checks.

3. After completion of Community Development Council elections and certification of

these, representatives of the council go to the provincial NSP office to undertake two

tasks:

a. Submit an application to the provincial NSP/RRD/OC office (Disbursement Form 3)

for registration of the Community Development Council (Disbursement Form 5).



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b. Submit a form authorizing four community representatives to withdraw block grantfunds on behalf of the Community Development Council (Disbursement Form 4).Where functioning bank branches exist in the provincial center, an application toopen a bank account is submitted (Disbursement Form 4a) together with anauthorization from the Community Development Council for nominated persons to

make withdrawals from the account (Disbursement Form 4b).

4. With support from the Facilitating Partner, the Community Development Council in

consultation with the community at large agrees on a Community Development Plan,

which constitutes a medium term development and investment plan for the community in

question (Disbursement Form 6). The Community Development Plan is submitted to the

provincial NSP/RRD/OC office. Each community development plan will include a list of

priority investment needs (i.e. one or more sub-projects) within the budget envelope

defined by the block grant, the contribution that the community is mobilizing, and funds

that can be accessed from other programs.

5. If required, NSP at the provincial and central level coordinates with relevant line

ministries, so that it is ensured that sub-project proposals for schools or clinics fit with

the sector plans of the concerned ministry, and that operating costs are budgeted by the

ministry in question. NSP assists the community to obtain verification regarding these

issues from the concerned line ministries, and communicates this information in writing

to the community in question.

6. With support from the Facilitating Partner, the Community Development Council in

consultation with the community at large develops one or more sub-project proposals

within the available funding envelope (block grant allocation, community contribution,

funding from other sources). The sub-project proposal(s) is submitted to the provincial

NSP office (Disbursement Form 7).

7. Each sub-project proposal will be appraised individually, but implementation and

funding of sub-projects can take place simultaneously, if the community has the capacity

to manage this. While an overall Tripartite Agreement (Disbursement Form 8) for the

community development plan (or the elements of this plan for which funding is

available) will be signed between the community, NSP, and the Facilitating Partner,

copies of the first page of Disbursement Form 7 (Sub-project approval request) will be

attached to the Tripartite Agreement. This will cover the specific plans and budgets for

each approved sub-project.

8. After the Tripartite Agreement has been signed the CDC requests the release of the first

installment by the NSP/RRD/OC. (Disbursement Form 9)

9. Funds for approved sub-project proposals will be channeled directly from the NSP to the

community based on an agreed installment system of financing. The nominated

community representatives will be accompanied by the Facilitating Partner to the



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provincial NSP office for (at least) the first block grant disbursement. The NSP office

will keep a copy of the community letter of authorization and the photos of the

nominated representatives for future verification. A minimum of three signatories are

required for withdrawal of funds.

10.The first block grant installment (maximum 50% of the block grant funding for a

particular sub-project) will be released. The installment will be released from the NSP at

central level to the community (CDC) using either the banking system, where this is

functioning, or a government registeredHawala. Where theHawalasystem operates at

the community level, the fund transfer may take place there to reduce security risks and

expedite disbursements to communities.

11.The second block grant installment will be released when the CDC certifies through the

FP that:

the agreed milestone as described in the sub-project proposal has been achieved;

the required community cost contribution has been provided;

the community at large has been regularly updated by the CommunityDevelopment Council about project progress and expenditures (e.g. meetings,notice board);

community procurement has been undertaken in compliance with NSP rules;

The installment has been requested of the NSP/RRD/OC through DisbursementForm 9.

12.The provincial NSP office (Oversight Consultant and RRD staff) undertakes sample

verification checks of achievement of milestones and implementation quality.

13.Upon completion of the sub-project, the same five requirements as outlined as condition

for the second installment will have to be fulfilled, and a sub-project completion report

(Reporting Form 1) including a simple financial statement will have to be submitted

before the third installment is released. Then the completion of the Sub-project will be

certified from the NSP/RRD/OC to the community (Reporting Form 2)

14.The provincial NSP office (Oversight Consultant and RRD staff) undertakes sampleverification checks of achievement of milestones and implementation quality.

B. Fund Transfer Mechanism

The Tripartite Agreement defines the schedule of disbursement installments on the basis of

an agreed plan of physical progress of a particular sub-project. Funds will be transferred

using a fixed price or lump-sum method of financing based on several installment (at least

three) per sub-project. The size of individual payments under each tranche (amounts) must

be determined based not only on the technical requirements of the sub-project, but also on



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security concerns at the community level. However, the first installment can not exceed 50%

of the sub-project costs.

Where local banks function at the provincial level, communities can maintain a checking

account and make withdrawals and payments as required. Where a banking system is not

functioning, and funds are transferred throughHawalaagents, the community can arrange

with the NSP that specific payments are made directly at the NSP provincial office to

suppliers and contractors in the presence of the community representatives. This would limit

the amount of cash that communities will have to transport, store, and handle. Likewise,

whereHawalaagents do not agree to operate under this arrangement, the transfer of block

grant funds may take place in the community provided theHawalasystem operates at this

level. This would also serve to avoid that provincial NSP/RRD/OC offices would have to

keep cash, would reduce security risks associated with transport of cash by community

representatives, and would expedite disbursements to communities, Where practiced, the

transaction would have to be witnessed and certified by the Facilitating Partner.

Unless there are exceptional circumstances, payment for implementation will be made in

three installments/tranches agreed between MRRD and the CDC on the basis of the funding

requirements of the sub-project in question (the first installment should not exceed 50% of

total sub-project costs). The first installment will be paid following signing of the Tripartite

Agreement, the second installment after achievement of agreed implementation outputs

(milestones), and the third installment by or after sub-project completion supported by a

financial statement. Examples of financial reporting forms at the community, provincial and

national levels, accompanied by explanatory text, are set out in Annex 2: NSP Accounting

Forms.

If a community is using its block grant for more than one sub-project, an assessment will be

made by NSP whether the projects can be funded and implemented in parallel or sequentially

(i.e. the first sub-project must be completed before funding for the next sub-project is

released). The criterion for parallel funding and implementation is that one of the sub-

projects must be identified by women and address their defined needs. In all other cases

where block grants are used for more than one sub-project, these will be financed

sequentially.

C. Tripartite Agreement

The Tripartite Agreement represents the contract between the NSP and the community and is

a complete statement of the obligations and responsibilities of the parties to the contract. (See

Disbursement Form 8). It includes the estimated amount that NSP has agreed to contribute

and the community contribution, and provides a detailed description of the key activities to

be undertaken by the different parties, as well as a time line of when activities are to becompleted. The financing agreement is signed by the community representatives and a



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representative of the NSP and the Facilitating Partner. Before the financing agreement is

signed, it must be explained to and understood by the community members. The Tripartite

Agreement forms the contract and the basis of payments to the community.

The agreement including Disbursement Form 7 which is part of the Tripartite Agreement

covers the following:

Scope of activities to be covered/time frame (Disbursement Form 7);

Amount of funding to be provided by NSP and terms and conditions forpayments (for lump-sum payments a set amount will be paid to the communityin tranches based on outputs);

Roles and responsibilities of all parties (the community, the Facilitating Partner,and NSP);

Estimated amount and timeline for community contributions;

NSPs (or representatives of MRRDs) right to inspect the site, work, materials,relevant records, accounts, and documents;

Simple procurement and disbursement plan; (Disbursement Form 7)

Operation and maintenance plan;

Clear specification of who owns the infrastructure after completion;

NSPs right to suspend or terminate the use of funds allocated to the sub-projectin case of negligence and/or mismanagement;

NSPs right to review whether possible environmental impacts have beenassessed and, where necessary, to assess the adequacy of mitigation measures

proposed;

Reporting requirements (financial/physical);

Attachments including technical designs and cost schedules.

D. Disbursement to Communities

The first instalment of funding will be paid to the community as soon as the Tripartite

Agreement based on the approved project work plan and budget is signed and funds are

requested (Disbursement Form 9). Subsequent instalments will be released when thecommunity and the Facilitating Partner confirms that the physical progress milestones have

been reached and community financial reports are in order (Disbursement Form 9).

The national level NSP office will undertake periodic field supervision audits on a sample

basis of the release of tranches to ensure that recommendations regarding new releases are

based on the required outputs and are made on a timely basis (Reporting Form 3).

The Da Afghanistan Bank is in the process of opening branches in all provinces in

Afghanistan and its branches will be used by NSP for Block Grants transfers to the extent

possible. Communities, represented by the CDC, are required to use the banking facilities for



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the Block Grant disbursements. The registration certificate issued by NSP/RRD/OC

(Disbursement Form 5) is accepted by the Bank for the opening of a bank account. NSO/OC

will transfer requested funds to the bank account of the CDC and enabling the CDC to use the

banking facilities.

Where banking facilities are not available NSP will use theHawalasystem.

To be acceptable, a money-exchange dealer orHawalathat is selected to transfer funds into

and around Afghanistan must be financially sound and meet the following criteria: The

Hawalaused to transfer funds to the provincial level must be:

Registered with the Central Bank (Da Afghanistan Bank);

Recognized by the Exchange Dealers Association;

Maintain a physical presence at the Sari Shahzada in Kabul;

Authorized to deal in foreign currencies;

Able to issue promptly a detailed monthly statement of funds transfer transactionsrelated to NSP;

Work with other reputable organizations in Kabul (references), having established asatisfactory domestic and international correspondent funds transfer network; and

Charge reasonable fees for its services.

For eachHawalatransaction, good practice requires the following procedural guidelines to

be observed:

Obtain a written document confirming the amount to be transferred, currency,expected payment date, funds transfer destination and transaction fee;

Establish transaction monetary limits based on capacity of theHawala, securitysituation at origin and destination of funds, and community capacity to maintain cashholdings on their premises;

Pay theHawalaafter payment and acknowledgement of funds receipt verbally and inwriting (fax or e-mail) by the intended recipient;

Conduct all financial transactions, apart from predetermined small transactions in asecure location, preferably on the FPs or community development councils

premises; and

Restrict transfer of funds to a specific community to only oneHawalafor purposes ofbetter control and audit trail, although aHawalamay be permitted to service morethan one community.

Funds will be transferred from the NSP national office through aHawalafor distribution to

the nominated community representatives at the NSP provincial level office. The fund

transfer to the nominated community representatives will take place in the presence of the

NSP provincial staff. To minimize the security risk of community members transporting,

storing and managing large amount of cash, arrangements can be made, if the community sowishes, where installments are disbursed in smaller amounts related to specific expenditures.



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Moreover, some payments such as those for suppliers or contractors can be made at the NSP

office in the presence of the nominated community representatives authorized to handle

procurement and funds.

E. Fund Management at the Community Level

The community project management committee will be responsible for procurement of all

goods and services during the course of sub-project implementation. Communities will

determine the best method of payment for suppliers and contractors. Communities will be

trained in simplified procurement and disbursement procedures by the Facilitating Partner

based on guidelines developed by NSP. A Project Management Committee must call regular

community meetings to present its financial and physical progress reports to the community,

and communicate this information by other means as well (e.g. an information board, or

announcements in the mosque).

The community must keep accurate financial accounts and report monthly to the Facilitating

Partner. The financial report provides details of funds received by the community from NSP,

expenditures incurred by category and the balance of funds. All supporting documents must

be kept at the community level, and be available to the Facilitating Partner, NSP, and other

parties (e.g. other NSP donors or external review and evaluation consultants). Cash funds

should be kept in a secure location with restricted access by a person nominated as

responsible by the Community Development Council.

During implementation, the community project management committee will undertake the

following activities:

Maintain a sub-project cash book to account for all expenditures by type.

Maintain receipts, labor registers and other documentation such that all expenses havecorresponding documentary evidence.

Maintain a cash box and a petty cash book for cash expenditures.

Submit periodic reports to the community on the current financial and physical statusof the sub-project through community meetings, notice boards or other agreed means.

Maintain a stock register to record materials kept by the community (for more thanone or two days) before use.

Maintain a community contribution register to record any contribution (cash, labor,materials, etc.) from the community in the course of sub-project implementation.

Open and work with a checking account, check book, and bank statements, if andwhere the branch banking system is functioning.

The project management committee should have a written record of all expenditures to back

up the cash book and petty cash book. These may be in the form of receipts, labor registers,

cash receipts, or others.



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F. Financial Reporting by Facilitating Partners

For presentation purposes, the roles, responsibilities, expected outputs and performance

against outputs are discussed in Chapter II, Section C. The key financial reporting

formats/forms submitted by the Facilitating Partners to the NSP are contained in Reporting

Forms 7 and 7a.

Both Facilitating Partners and the Oversight Consultant (i) shall keep accurate and systematic

accounts and records in respect of their use of funds provided under their contract, (ii) shall

maintain records pertaining to the approved sub-project documents and contracts, and to

approval of subsequent installments to the communities based on assessment of satisfactory

output delivery, (iii) shall permit MRRD or its designated representative periodically, and up

to one year from the expiration or termination of their contracts, to inspect these and make

copies thereof as well as to have them audited by auditors appointed by MRRD; and (iv) shall

permit the IDA to inspect the accounts and records relating to the performance of the

facilitating partners, and to have them audited by auditors appointed by the IDA, if so

required by IDA.

IV. COMMUNITY PROCUREMENT

Because funds for implementation of the community sub-projects are disbursed directly to the

community, the project management committee is primarily responsible for procuring

materials, transport, and labor. Communities may set up rotational procurement scheduleswithin the project management committee to ensure that no cliques form and that the

committee adheres to procurement procedures. Communities should also be encouraged to

pay contractors and suppliers in the provincial centers as soon as they receive the funds.

Communities may also useHawalasto pay contractors and suppliers. This would minimize

security issues arising from communities carrying large amounts of money.

A simple procurement plan for the overall sub-project should be developed by the

community. The plan must take into account who will purchase goods, what will be

purchased, and how. The plan should be shared with community representatives who willoversee purchases made by the project management committee as well as the community at

large.

To assist communities with procurement as well as to monitor the economy of goods

procured at the local level, the NSP will develop and maintain a unit cost database. The

database will include costs of most types of items purchased at the community level. The

database will be developed over time (using prices proposed in community budgets as well as

independent research) and updated regularly. .



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A. Procurement of Goods/Materials

All materials required for the sub-project are detailed in the bill of quantities attached to the

community proposal. During sub-project implementation, the community financial records

must clearly indicate the exact materials purchased. The following methods should be used

by communities for purchasing materials:

Single Direct Source / Direct purchase (costs which are within a standard price list and/or

less than US$100 equivalent): Procurement can be made directly by calling for a quotation

from only one supplier if the purchase value is less than US $ 100, and the accepted price is

below the price mentioned in the standard price list effective at the time of purchase.

Competitive Shopping / Local shopping(when the amount to be paid is higher than the

amount included in the standard price list and for amounts equivalent or higher than US$100

and below US$5,000 equivalent): At least three quotations will be obtained from suppliersand the best buy is selected. Factors such as quality, availability, local taxes, and

transportation costs must be taken into account. All quotations received as a response must

be maintained in the community files. This method will also be used for purchasing materials

that communities cannot find within the standard price list. Whether prices are reasonable

will be ascertained by comparing prices with the standard price list effective at the time of

purchase.

Local Competitive Bidding: Goods or materials estimated to cost $5,000 equivalent or

more must be procured through competitive bidding, advertised locally or nationally. Simplebidding documents shall be prepared incorporating the technical description/specifications

and quantity of the goods, as well as desired delivery time and place. A bid validity period of

30 days from the date of submission of bids shall be required in the bidding documents. The

invitation for bids shall be advertised through local methods [e.g., fliers, community

meetings, duringJummaprayers, local newspapers or radio, advertisements hung in public

places etc.]. A responsive bid would be the one that would offer goods/materials in

compliance with the technical descriptions/specifications, with required quantity and within

the desired delivery period. The bid price of only the responsive bids would be compared

and the bidder offering the best value shall be awarded the contract. The contract must be

awarded within thirty (30) days from the receipt of the bids. All bids and their comparison

report must be maintained in the community files. (Proc Form 1-2)

B. Procurement of Works

Labor: the community contribution will in most cases comprise voluntary labor.

However, where the unskilled labor requirement for a particular project exceeds the amount

of labor that the community is able or willing to contribute free of cost, arrangements are

required so that the project pays for some of the required labor at or below the market rate



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(around US$-- per day). The needs for skilled labor such as foremen, carpenters, bricklayers,

painters, electricians, and plumbers will be estimated before the start of sub-project

implementation and included in the sub-project financing agreement. The NSP will provide

standard pay rates for labor and these scales should not be exceeded. Communities may

decide whether to hire skilled labor for their sub-project directly or to hire a contractor who in

turn will hire the skilled labor. Regardless of who is hiring the skilled labor, preference must

be given first to residents of the sub-project community.

Contractors: In some sub-projects, the community will hire construction foremen and

skilled laborers themselves. If part or all of a sub-project is beyond the capacity of the

community to manage, a contractor may be hired to manage the work. For a works contract

below US$5,000, the contractor may be selected upon inviting quotations from at least three

local contractors.

Contracts equivalent to US$5,000 or more will be procured through competitive bidding,

advertised locally (tendering). A simple bidding document (Proc Forms 2-0) shall be

prepared incorporating the description of the works, simple technical specifications/drawings,

Bill of Quantity, desired delivery time, and the minimum experience of the contractor. The

participation of the community should be clearly defined and not be part of the contract. A

bid validity period of 30 days from the date of submission of bids shall be required in the

bidding documents. The invitation for bids shall be advertised through local methods [e.g.,

fliers, community meetings, duringJummaprayers, local newspapers or radio,

advertisements hung in public places etc.].

A responsive bid would be the one that would offer to complete the works as per the

descriptions/specifications, within the desired delivery period and having the required

minimum experience as contractor. Prior to awarding the contract, interviews may be

conducted by the project management committee together with community representatives

and, if necessary, a representative of the Facilitating Partner. Contract would be awarded to

the contractor, offering a responsive bid with the best value, and who has been found

technically qualified upon the interview by the project management committee. The contract

must be awarded wi

Documents

National Solidarity Program Operational Manual (March 2004)