The World Bank...Document of The World Bank Report No: ICR00002697 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-38990 IDA-46690) ON A

Document of The World Bank

Report No: ICR00002697

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-38990 IDA-46690)

ON A

CREDIT

IN THE AMOUNT OF (SDR85.76 MILLION

(US$150 MILLION EQUIVALENT)

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FOR A

PUBLIC SECTOR CAPACITY BUILDING PROGRAM SUPPORT PROJECT

June 25, 2013

Poverty Reduction and Economic Management 2 Country Department AFCE3

Africa Region

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CURRENCY EQUIVALENTS

Exchange Rate Effective as at December 2012 Currency = Ethiopian Birr (ETB)

Unit: US$1.0 = ETB18.15

Fiscal Year = 8 July-7July

ABBREVIATIONS AND ACRONYMS

AF Additional Financing ASYCUDA Automated System for Customs Data BDA Budget Disbursement and Accounts BIS Budget Information System BPR Business Process Reengineering BSC Balanced Score Card B-G Benishangul-Gumuz CCMS Court Case Management System CIDA Canadian International Development Agency CRC Citizen Report Card CSO Civil Society Organizations CSRP Civil Service Reform Program DCA Development Credit Agreement DFID Department for International Development DLDP District Level Decentralization Program DSA Decentralized Support Activities ECSC Ethiopian Civil Service College ECSU Ethiopian Civil Service University ECuA Ethiopian Customs Authority EMCP Expenditure Management and Control Program EMI Ethiopian Management Institute ERCA Ethiopian Revenue and Customs Authority ETB Ethiopian Birr FIRA Federal Inland Revenue Authority GGP Good Governance Package HR Human Resources HRD Human Resource Development HRM Human Resource Management IBEX Integrated Budget and Expenditure Management System ICB International Competitive Bidding ICR Implementation Completion Report ICT Information and Communication Technology ICTDA Information and Communication Technology Development Agency IDA International Development Association IDAAF International Development Association Additional Financing IFMIS Integrated Financial Management Information System IFR Interim Financing Report ISR Implementation Status Report

JAC Judicial Administration Commission JSRP Justice System Reform Program LIG Local Investment Grant MAB Ministries, Agencies and Bureaus MCB Ministry of Capacity Building MIIP Municipal Infrastructure Investment Plan MIS Management Information System MoCS Ministry of Civil Service MDG Millennium Development Goals M&E Monitoring and Evaluation MoFA Ministry of Federal Affairs MoFED Ministry of Finance and Economic Development MoJ Ministry of Justice MoR Ministry of Revenue MOU Memorandum of Understanding MSE Micro and Small Enterprise MTR Mid-Term Review NOC No Objection Certificate PAD Program Appraisal Document PBS Protection of Basic Services PC Personal Computer PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PIP Program Implementation Plan PKI Public Key Infrastructure PPA Participation and Performance Agreement PPD Planning and Programming Directorate PSCAP Public Sector Capacity Building Program PSIP Performance and Service Improvement Program QAG Quality Assurance Group QER Quality Enhancement Review ROPA Results-Oriented Performance Appraisal SIDA Swedish International Development Agency SDPRP Sustainable Development and Poverty Reduction Program SIGTAS Standard Integrated Government Tax Administration System SNNPR South Nation, Nationalities and Peoples Region SOE Statement of Expenditure SWAp Sector Wide Approach TA Technical Assistance TIN Taxpayer Identification Number TOT Training of Trainers TSRP Tax Systems Reform Program UDCBO Urban Development Capacity Building Office ULGDP Urban Local Government Development Program UMCBP Urban Management Capacity Building Program USAID United States Agency for International Development VAT Value Added Tax VC Video Conferencing WCBS Woreda and City Benchmarking Survey

CONTENTS

A. Basic Information .................................................................................................................... i B. Key Dates ................................................................................................................................ i C. Ratings Summary .................................................................................................................... i D. Sector and Theme Codes ....................................................................................................... ii E. Bank Staff ............................................................................................................................... ii F. Results Framework Analysis ................................................................................................. iii G. Ratings of Project Performance in ISRs ............................................................................. xiii H. Restructuring (if any) .......................................................................................................... xiii I. Disbursement Profile ........................................................................................................... xiv

1. Project Context, Development Objectives and Design ........................................................... 1

1.1 Context at Appraisal ..................................................................................................... 1

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) .. 4

1.3 Revised PDOs (as approved by original approving authority) and Key Indicators, and Reasons/Justification..................................................................................................... 5

1.4 Main Beneficiaries ........................................................................................................ 5

1.5 Original Components (as approved) ............................................................................. 5

1.6 Revised Components .................................................................................................... 7

1.7 Other Significant Changes ............................................................................................ 7

2. Key Factors Affecting Implementation and Outcomes ........................................................... 7

2.1 Project Preparation, Design and Quality at Entry ......................................................... 7

2.2 Implementation ............................................................................................................. 8

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization ............ 11

2.4 Safeguard and Fiduciary Compliance ......................................................................... 13

2.5 Post-completion Operation/Next Phase ...................................................................... 13

3. Assessment of Outcomes ....................................................................................................... 14

3.1 Relevance of Objectives, Design and Implementation ............................................... 14

3.2 Achievement of Project Development Objectives ...................................................... 15

3.3 Efficiency .................................................................................................................... 20

3.4 Justification of Overall Outcome Rating .................................................................... 21

3.5 Overarching Themes, Other Outcomes and Impacts .................................................. 22

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ........... 24

4. Assessment of Risk to Development Outcome ..................................................................... 24

5. Assessment of Bank and Borrower Performance .................................................................. 25

5.1 Bank Performance ....................................................................................................... 25

5.2 Borrower Performance ................................................................................................ 27

6. Lessons Learned .................................................................................................................... 30

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ....................... 31

Annex 1: Project Costs and Financing .......................................................................................32 Annex 2: PSCAP overall outputs and sub-programs ................................................................33 Annex 3: Economic and Financial Analysis ..............................................................................48 Annex 4: Bank Lending and Implementation Support/Supervision Processes .........................49 Annex 5: Beneficiary Survey Results ........................................................................................51 Annex 6: Stakeholder Workshop Report and Results ...............................................................53 Annex 7: Summary of Borrower's ICR and/or Comments on Draft ICR ..................................61 Annex 8: Comments of Co-financiers and Other Partners/Stakeholders ..................................61 Annex 9: List of Supporting Documents ...................................................................................64 Annex 10: ICR Assessment of the Risks ...................................................................................65

Vice President: Makhtar Diop Country Director: Guang Zhe Chen Sector Manager: Pablo Fajnzylber Project Team Leader: Elsa Araya ICR Team Leader: George Addo Larbi

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Data Sheet A. Basic Information

Country: Ethiopia Project Name: Public Sector Capacity Building Program Support Project

Project ID: P074020 L/C/TF Number(s): IDA-38990,IDA-46690 ICR Date: 06/25/2013 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVERNMENT OF ETHIOPIA

Original Total Commitment:

XDR 66.90M Disbursed Amount: XDR 85.35M

Revised Amount: XDR 85.67M Environmental Category: C Implementing Agencies: Ministry of Civil Service Cofinanciers and Other External Partners: Department for International Development, Addis Ababa Canada International Development Agency Development Cooperation Office for Italy European Union Ireland Development Cooperation B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 05/22/2002 Effectiveness: 11/22/2004 11/22/2004

Appraisal: 01/26/2004 Restructuring(s): 03/23/2010 02/28/2012

Approval: 05/11/2004 Mid-term Review: 03/19/2008 Closing: 07/07/2009 12/31/2012 C. Ratings Summary

C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory

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C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory

Overall Bank Performance: Satisfactory Overall Borrower

Performance: Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators Implementation

Performance Indicators QAG Assessments (if any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) Central government administration 30 30 Law and justice 10 10 Sub-national government administration 60 60

Theme Code (as % of total Bank financing) Administrative and civil service reform 20 20 Decentralization 20 20 Municipal governance and institution building 20 20 Public expenditure, financial management and procurement 20 20 Tax policy and administration 20 20 E. Bank Staff

Positions At ICR At Approval Vice President: Makhtar Diop Callisto E. Madavo Country Director: Guang Zhe Chen Ishac Diwan Sector Manager: Pablo Fajnzylber Guenter Heidenhof Project Team Leader: Elsa Araya Navin Girishankar ICR Team Leader: George Addo Larbi ICR Primary Author: Sati Achath

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F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The objective of the Public Sector Capacity Building Program (PSCAP) Support Project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional and local level; to empower citizens to participate more effectively in shaping their own development and to promote good governance and accountability. This overall objective will be achieved by scaling up Ethiopia's ongoing capacity building and institutional transformation efforts in six priority areas under PSCAP - (i) Civil Service Reform (ii) District-Level Decentralization (iii) Urban Management Capacity Building; (iv) Tax System Reform; (v) Justice System Reform; (vi) Information and Communications Technology. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at Completion or

Target Years

Indicator 1 : Reduced budget variance Value quantitative or Qualitative)

14% 10% 4%

Date achieved 11/23/2004 11/23/2004 12/31/2012 Comments (incl. % achievement)

Exceeded. The variation between budgeted & actual expenditure has narrowed to 4%. Budget & expenditure for 2004/5 were 28,142 & 24,771 million birr, respectively, whereas budget & expenditure for 2011/12 were 123,081 & 118,196 Million ETB respectively.

Indicator 2 : Reduced federal-regional and regional-local fiscal gaps

Value quantitative or Qualitative)

2 a) Federal- regional transfer is 6.4 billion. 2b) Regional own revenue is 3.6 billion birr in 2004/05

2a) 37.6 billion birr 2b) 20% annual average increment of own revenue by regions.

2a) 56.6 billion birr 2b) Regional own revenue has shown an annual average increment of 26%.

Date achieved 11/23/2004 11/23/2004 12/31/2012

Comments (incl. % achievement)

2a) Target exceeded - 150% achieved. 56.6 billion birr of which 20 billion is for MDG. Also, the regional transfer from federal domestic revenue increased from 51.6% in 2004/05 to 79.9% in 2012/13. 2b) Target Exceeded-120% achieved.

Indicator 3 : Participatory budgeting and public reporting on budgets Value quantitative or Qualitative)

No formal participatory budgeting and reporting in place in 2004/05.

Participation of citizens is to be an established practice

Participation has become an established practice.


Achieved. Voluntary bi-annual public meeting on preparation and execution of plan and budget has become an established practice at Kebele/village level & production of annual public performance/audit report to the federal, regional & woreda council.

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Indicator 4 : Involvement of civil society in planning and review processes


No formal involvement of civil society in planning and review process

Participation of civil society organizations is now an established practice

Local level civil society involvement in plan preparation and monitoring has become an established practice


Achieved. Civil society involvement in plan preparation and monitoring has become an established practice through their membership in Kebele/Village Inspection Team and consultation with CSOs and private sector at federal level.

Indicator 5 : Increased own revenues and unconditional transfers as a share of total expenditures Value quantitative or Qualitative)

Baseline Problematic 100% 100%


Cannot be determined; baseline data absent. But, the absorption capacity of regions has improved. In 2005, regions were able to absorb 91% (9,079 M ETB) of the total revenue (9,935 M ETB) & in 2011 99.6% (36,773 M ETB) of the total revenue (36,910 M ETB).

Indicator 6 : Increased tax effort in billion birr Value quantitative or Qualitative)

12.4 81.0 90.8


Exceeded. Nationwide tax collection target for 2011/12 was achieved by 112%. Nominally it has increased 5 times & doubled in real terms. Tax to GDP ratio has improved from 11.6% in 2004/05 to 12.4% in 2012. Agriculture (44% of the GDP) is lightly taxed.

Indicator 7 : Average civil service salary


Weighted average civil service salary is 94% of the living wage in 2004/05

Reduced gap between living wage and average civil service salary.

Weighted average civil service salary is 82% of the living wage in 2011/12


Not achieved. The project had no activity that is directly related to improving incentives to civil servants.

Indicator 8 : Private-public wage comparison


The public average private wage comparison, for instance, for an Executive Secretary is 1:1.81 in 2004/5

Reduced the gap between public and private wages

The ratio of public- average private wage comparison, for instance, for an Executive Secretary is 1:1.82 in 2011/12


Not achieved. The project has no activity that is directly related to improving incentives to civil servants.

Indicator 9 : Wage decompression ratios Value Using the civil service base Improved salary Wage decompression

v

quantitative or Qualitative

salary, wage decompression ratio is 1:9.8 in 2004/5.

scale for skilled professionals

ratio in 2011/12 is 1: 32.6


Achieved. Using the civil service base salary, wage decompression ratio is 1:32.6 in 2011/12, which shows that salary for skilled staff has improved relative to the non-skilled. The project has no activity that is directly related to improving incentives.

Indicator 10 : Improved access, responsiveness and cost efficiency in priority sectors Value quantitative or Qualitative

25% 85% 88%


Achieved. 88% of the local jurisdictions surveyed in 2011 WCBS are providing basic services (health, education, agri., water supply) as a result of devolution of power, thus improving access to services & responsiveness through participatory planning.

Indicator 11 : Reduced unit costs in priority sectors


The real unit recurrent cost in ETB i) p/p for p. health is 2.8; ii) p/ student for p. education is 62.6; iii) to service 1 ha. land is 289; iv) p/m2 solid waste disposed of is 273; v)resolved court case is 726; & vi)collect tax 100.80;

Reduced unit cost

The real unit recurrent cost in birr: i) p/p for p. health is 7.9; ii) p/ student for p. education is 111.6; iii) to service 1 ha. land is 233; iv) p/m2 solid waste disposed of is 271; v) for resolved court case is 534; & vi)to collect 100.61.


Substantially achieved. The reduction in unit cost for 3 sectors has been achieved. Although reduction has not been achieved for primary health & education, there has been significant improvement in the No. of health workers, teachers & text books.

Indicator 12 : Reduced processing time in priority sectors


The average processing time to pay taxes is 4 hours and 35 minutes, to open files in courts is one day and clearance rate for courts nationwide is 60%.

The average processing time for tax collection will require 50 minutes, opening file in courts 40 minutes average and clearance rate for courts will be 80%.

Average processing time for tax collection is reduced to 15 minutes, opening files in courts is 24 minutes and the average clearance rate for courts nationwide is increased to 98%


Exceeded. The target for reducing processing time has been exceeded.

Indicator 13 : Reduced corruption and arbitrariness in rule enforcement

Value quantitative or Qualitative

4.3% of respondents in the Woreda and City Benchmarking Survey reported paying extra

Reduction in incidence of corruption

6.5% of respondents in the Woreda and City Benchmarking Survey reported paying extra

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money to access public services

money to access public services


Not achieved. An independent assessment of the civil service reform noted that given the very low civil service salaries & declining public sector real wages, in the absence of the reform, it is probable that petty corruption would have been much higher.

Indicator 14 : Increased access to justice

Value quantitative or Qualitative

Number of courts are 850, kebele social courts/shengos are weakened to extinction, mobile benches existed for Federal Supreme Court and there was no video conferencing (VC) -assisted court proceedings.

Increased access to justice.

The increases in the number of formal, social, and mobile courts as well as the introduction of e-litigation have improved access to justice.


Achieved. No. of courts increased from 850 to 942, additional 15,452 social courts reestablished to handle small claims, & mobile benches were introduced in 4 regions. Over 36K cases were e-litigated through VC in 7 regions & federal level.

Indicator 15 : Independence of courts


Independence of judiciary is adequately recognized in the Ethiopian Constitution and the various laws. In practice, the understanding of, and respect for, the principles of judicial independence both by all judges and by executives needed improvement.

Enhanced independence of the judiciary

The Judicial Admi. Commission is now independently organized, Judge nomination has become fully merit-based & the legal education was reformed to include exit exams,on the job training before joining the workforce & curriculum revised on 16 courses.


Substantially achieved. The target is substantially met but respect for the principles of judicial independence should continuously improve.

Indicator 16 : Freedom of information


There is no proclamation on right to information and no institutional focal point for information.

Information act to be issued and institutional focal points for information to be established.

Right to information is enacted and the Office of the Ombudsman is designated as the implementer of the Act. In addition, Information Officers are in place in all offices including Kebele Managers who provide info. and address complaints.

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Substantially achieved. The Right to Information Act is issued and information focal points are in place.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Law reform and revision undertaken and adopted at federal level

Value (quantitative or Qualitative)

Studies that will lead to new laws are being conducted by Civil Service Reform, District Level Decentralization, Urban Management Capacity Building, Justice System Reform, Tax System Reform, and Information and Communication Technologies.

Laws to be enacted and strategies to be adopted at federal level.

Several laws and strategies were issued and became operational.


Achieved. See Annex 2 for details.

Indicator 2 : Number of regions adopting enabling legislation for local authorities Value (quantitative or Qualitative)

4 11 11


Achieved. Municipal and District enabling legislation had been adopted in all regions compared to a baseline of 4

Indicator 3 : Number of regions adopting various tax proclamations (income, excise, TOT) Value (quantitative or Qualitative)

4 11 11


Achieved. Additionally, a large No. of tax laws were issued by regional governments, such as agricultural income and land use fee, customs duty, stamp duty, chat tax, livestock, presumptive tax regulation, municipality tax laws and service charge laws.

Indicator 4 : Percentage of ministries, bureaus and agencies (MBAs) (at federal and in each region) initiating restructuring and performance improvement


3% 75% 100%

Date achieved 11/23/2004 11/23/2004 12/31/2012 Comments Exceeded. The business process re-engineering (BPR) has been implemented in 145

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(incl. % achievement)

federal and 404 regional MABs compared to 11 MABs.

Indicator 5 : Percentage of woredas and municipalities undergoing restructuring. Value (quantitative or Qualitative)

0% 75% 98%


Exceeded. BPR has been implemented in 19, 635 out of 19,836 offices in all 855 woredas in the country.

Indicator 6 : Percentage of courts at each level initiating performance improvement Value (quantitative or Qualitative)

1% 100% 100%


Achieved. The court reform program is rolled to all federal, regional and woreda courts from a baseline of its adoption at Federal Supreme Court, a few federal courts and two regional supreme courts.

Indicator 7 : Number of regions adopting sector-specific automated IT solutions.


Data centers existed in 560 locations at all levels for document exchange and messaging.

Data centers to be expanded to all levels of government.

Data centers have been expanded to 735 locations.

Date achieved 11/23/2004 11/23/2004 12/31/2012


Achieved. i) Data center hosts portals & applications including IBEX, VC-assisted court hearings; ii) CCMS scaled up from 25 to 466 courts; iii) SIGTAS- from 0 to 7 regions; iv) Biometric TIN - 0-all regions; v) ASYCUDA-all sites; vi) Applications -0-130.

Indicator 8 : Percentage of budgetary institutions at each level implementing medium term and strategic planning


23% 100% 100%


Achieved. At the beginning of the project, medium term and strategic plans were used only at federal level budgetary institutions. By the end of the project, medium term and strategic plans are used at all levels of government.

Indicator 9 : Number of regions adopting new budget structure at all levels. Value (quantitative or Qualitative)

8 11 11


Achieved. Additionally, program budgeting has been introduced. PSCAP deepened the reform particularly in the developing regions and strengthen the regions that adopted the reform using USAID project by providing training.

Indicator 10 : Number of regions adopting of double entry, modified cash systems at all levels Value (quantitative 5 11 11

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or Qualitative) Date achieved 11/23/2004 11/23/2004 12/31/2012 Comments (incl. % achievement)

Achieved. PSCAP deepened the reform in the developing regions (particularly Somali) and strengthen the regions that adopted the reform using USAID project by providing training.

Indicator 11 : Percentage of budgetary institutions each level adopting cash management directives Value (quantitative or Qualitative)

23% 100% 100%


Achieved. The directive closed inactive bank accounts, introduced zero balance system based on cash flow & drawing limits, introduced key cash flow sheets, disbursement, & approval forms. PSCAP expanded the adoption from a baseline of 1 to all regions.

Indicator 12 : Percentage of budgetary institutions at each level rolling out automated financial systems


56% 100% 100%


Achieved. All regions adopted Budget Information System (BIS) and Budget Disbursement and Accounts (BDA). The adoption of the automated financial systems has evolved and the country is now using IBEX and piloting IFMIS.

Indicator 13 : Procurement legislation adopted and directives issued


Outdated Procurement Act and directive.

Procurement legislation and directive to be enacted.

The revised procurement legislation and directive are enacted and adopted at all levels.


Exceeded. In addition to the procurement act, the Property Management Directive, Stock Management and Fixed Asset Manuals are also introduced.

Indicator 14 : Accounts and audits backlog reduced at federal, regional levels


2 years accounts backlog at national level; 4 years audit backlog at federal level, and more than 4 years backlog at regional level.

No accounts and audit backlog

No accounts backlog at federal and regional level except for the Regional State of Gambella (which has reduced the backlog from 5 to 2 years & the audit backlog from 8 to 4 years.


Substantially achieved. The target has been met except for one of the developing regions (Gambella region).

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Indicator 15 : Percentage of budgetary institutions preparing standardized internal audit reports Value (quantitative or Qualitative)

23% 100% 100%


Substantially achieved. All regions & federal institutions have established internal audit units and producing standardized internal audit reports. The quality of audit reports requires improvement to meet international standards which have also evolved.

Indicator 16 : Personnel management systems reformed and rolled out


No medium-term policy developed.

Medium-term remuneration policy to be developed.

The medium-term remuneration policy is not yet developed. Additional Note: New job evaluation is designed and being tested.


Not achieved. The project has no activity that is directly related to producing the medium term remuneration policy.

Indicator 17 : Results-Oriented Performance Appraisal (ROPA) rolled out at all levels


ROPA study completed and piloted in selected offices.

ROPA to be implemented in 20 Ministries.

The upgraded performance management system, namely, the Balanced Score Card, which integrates organizational and individual performance has been introduced in 145 federal (including all the Ministries) and 270 regional offices.


Exceeded. The system is introduced in 145 federal (including all the Ministries) and 270 regional offices. Individual performance agreements system has also been pilot tested and was rolled out in July 2012.

Indicator 18 : Percentage of budgetary institutions at each level implementing IT based HRM systems Value (quantitative or Qualitative)

0% 100% 55%


Partially achieved. Six regions developed IT-based personnel management systems (Addis Ababa, SNNPR, Amhara, Somali, Tigray, Benshangul and Afar). Moreover, the nationwide integrated civil service management information system is being developed.

Indicator 19 : HR guidelines in woredas and municipalities developed, adopted

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Federal and most regional Civil Service Proclamations developed

HR guidelines are developed at all level.

The federal civil service proclamation was revised in 2007 and six regional governments revised their laws in response. Following to this, subsidiary HRM guidelines were developed and are in use at all levels.


Achieved.

Indicator 20 : Number of regions adopting fiscal decentralization strategy including capital funding mechanisms


4 11 11


Achieved. The federal government and all regions have fiscal transfer formulae to provide predictable and transparent fiscal transfers to lower level governments.

Indicator 21 : Number of regions implementing taxpayer identification number (TIN) Value (quantitative or Qualitative)

11 11 11


Achieved. The computerized TIN is implemented in all regions. PSCAP supported the issuance of the TIN certificate and incorporating biometric system in TIN. Over 2 million taxpayers are registered compared to 15,555 taxpayers in 2005.

Indicator 22 : Guidelines developed and implemented for implementing withholding taxes, assessing presumptive tax bases


Presumptive taxation guideline developed and is operational at federal level.

Presumptive taxation guideline to be adopted by all regions

The Presumptive taxation guidelines for implementing withholding taxes and assessing presumptive tax bases have been adopted by all regions.


Achieved.

Indicator 23 : Strengthening and performance improvement of FIRA and Customs

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Tax system reform action plan prepared.

Tax system reform to be implemented in all regions.

The tax system reform program implemented in all regions and at all levels of government.

Date achieved 11/23/2004 11/23/2004 12/31/2012


Achieved. The revenue reform has: overhauled tax laws and manuals; introduced VAT (4.7-28-3 m birr); restructured tax bodies; strengthened the IT-assisted systems (SIGTAS (0-7 regions), Biometric TIN (0-2 Million, ASYCUDA, Cash register (0-39 K users)

Indicator 24 : Vertical accountability mechanisms (service standards) established


No service standards developed

Service standards to be established at all levels

Service standards were developed in service outlets and offices at federal, regional, woreda and kebele levels as part of the business process reengineering (BPR), which was implemented in over 20,000 offices.


Substantially achieved. The standards developed under the BPR are being formalized or made contractual in nature through the introduction of the Citizens Charter, which is now published in federal and regional offices.

Indicator 25 : Number of regions implementing guidelines for citizen participation at the woreda and municipal levels


0 11 11


Achieved. All regions have implemented the good governance package.

Indicator 26 : Percentage of courts at each level undergoing performance improvement Value (quantitative or Qualitative)

1% 75% 100%


Achieved. In 2005, 7/850 courts (1%) had initiated the reforms and now it has been scaled up at all levels of courts in all regions.

Indicator 27 : Judges and lawyers trained


Judges in Federal courts and 2 Regional Supreme Courts trained as part of Canadian supported court reform

All judges are to be trained. All judges are trained

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program. Date achieved 11/23/2004 11/23/2004 12/31/2012 Comments (incl. % achievement)

Achieved. A total of 30,700 judges and court supporting personnel were trained of which over 4,800 are judges.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP Actual Disbursements

(USD millions) 1 01/05/2005 Satisfactory Satisfactory 8.00 2 06/08/2005 Satisfactory Satisfactory 8.18 3 06/30/2006 Satisfactory Satisfactory 16.67 4 06/29/2007 Satisfactory Satisfactory 46.06 5 12/27/2007 Satisfactory Satisfactory 51.20 6 06/27/2008 Highly Satisfactory Satisfactory 59.06 7 01/28/2009 Satisfactory Satisfactory 65.88 8 08/06/2009 Satisfactory Satisfactory 73.31 9 05/13/2010 Satisfactory Satisfactory 81.44

10 02/04/2011 Satisfactory Satisfactory 96.60 11 09/24/2011 Satisfactory Satisfactory 106.99 12 02/14/2012 Satisfactory Satisfactory 113.41 13 04/23/2012 Satisfactory Satisfactory 117.06 14 08/21/2012 Satisfactory Moderately Satisfactory 123.26 15 12/29/2012 Satisfactory Satisfactory 127.72

H. Restructuring (if any)

Restructuring Date(s)

Board Approved PDO

Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made DO IP

03/23/2010 S S 80.80

IDA Additional Financing (AF) of US$50 million became effective in July 2010. The AF contributed to a pool of resources aimed at closing the financing gap which occurred due to the withdrawal of some expected bi-lateral donors’ funds following the 2005 election and the redeployment of US$20million IDA fund from the project to respond to the acute food crisis in Ethiopia (2009) which required immediate support. The closing date was extended

xiv

from July 7, 2009 to December 31, 2012, FMR is replaced with IFR and the provision in the project design for in-year reallocations between sub-programs and regions based on performance was removed in order to establish a level of certainty and predictability in PSCAP finances and avoid penalizing the lagging regions that the program was meant to assist.

02/28/2012 S S 113.41

Restructuring to reallocate equivalent to US$10 million from regional component to federal component to manage procurements of capital intensive systems on behalf of the national government (federal and regions) that are implemented country-wide.

I. Disbursement Profile

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1. Project Context, Development Objectives and Design Summary 1. The Public Sector Capacity Building Program Support Project (PSCAP) is a mutli-donor and multi-sector operation implemented at all levels of government from 2004/05 to 2012/13. It was a comprehensive public sector reform program aimed at building an effective state that provide improved service delivery and enhance good governance. PSCAP was closely aligned to the Government’s own capacity building strategy to deliver improvements in rural and urban decentralization, civil service and administrative reforms, public financial management and tax systems reforms, as well as justice system reforms and ICT applications in public services. While PSCAP supported reforms and capacity building in these areas, this report also acknowledges instances where attribution is not restricted to PSCAP alone (e.g. public financial management), but baselines selected allowed the monitoring of PSCAP funded activities.

2. The project contributed to considerable improvement in government capabilities to provide services and empower citizens. The legal and policy frameworks were strengthened across sectors through enactment of proclamations in civil service, tax, finance, civil and criminal laws as well as laws that determine the powers and responsibilities of the three arms of government. Business Process Reengineering (BPR) was widely used to restructure and improve the performance of public services. Minimum service standards and charters have been developed for improved service delivery. Skills were developed through short and long-term training, on-the job training and study tours. The investment in rolling out systems for budget and account, tax identification number, integrated government tax administration system, automated system for customs data, case flow management for the judiciary are all improving the performance of the state institutions in providing services. Revenue from tax has doubled in real terms - increasing the predictability and adequacy of financial resources for service delivery. Focal points for citizens and civil society participation were established. To improve access to information, institutional information officers have been out in place at district and regional levels, websites have been developed by sectors and regions, and over 385 multi-purpose community centers and toll-free call centers were established as pilots.

3. This report is structured into seven sections. Section one presents the project context during preparation and development objectives. Section two provides the key factors affecting implementation and outcomes. Sections three and four focus on assessment of outcomes in terms of relevance, efficacy and efficiency, as well as assessment of risk to development outcomes. Section five presents the assessment of Bank and borrower performance during design and supervision. Section six presents the lessons learned and the last section summarizes comments from borrower and other partners. The annexes provide additional information and statistics.

1.1 Context at Appraisal

4. Country and Sector Background: The Federal Democratic Republic of Ethiopia was created by the Constitution of Ethiopia in 1995 following a period of transition after the downfall of the Derg administration in 1991. The new constitution formalized the division of the country into nine (9) Federated National Regional States (Kilils), ‘delimited on the basis of

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settlement patterns, identity, language and the consent of the people concerned’ (Articles 46 and 47).

5. Once in power, the government of the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF) embarked on a long term strategy of “state transformation” characterized by bold attempts to implement multiple reforms in parallel; the massive scale-up of institutional development efforts across tiers of government; and the deliberate expansion of the scope of public sector capacity building initiatives.

6. Between the mid-1990s and 2001, the government undertook a range of in-depth diagnostics and reviews to systematically identify the factors that hindered public sector efficiency, grassroots empowerment, and accountability. The reviews identified the following factors, which spanned all branches and tiers of government, and helped shape the scope and scale of the second phase of state transformation:

• Unpredictable resource flows had undermined the allocative and operational efficiency of the public sector at the federal, regional, and local levels in Ethiopia. The public service was characterized by weaknesses in the administrative and working systems, and lacked effectiveness, efficiency and ethical behavior in performance and service delivery.

• Despite the success of regionalization in the mid-1990s, Woredas or districts enjoyed little fiscal or administrative autonomy to respond to the local needs of their constituencies.

• Significant institutional weaknesses and capacity deficits were acknowledged across Ethiopia’s justice system, including in areas such as lawmaking, law execution and enforcement, the functioning of courts, and the development of the legal professional.

• Weaknesses in the vertical and horizontal independence of the judiciary resulted from lack of transparency in the selection of judges, unclear organizational structures in the courts, outdated systems and procedures, shortage of trained judges and support staff, and lack of basic infrastructure and facilities.

• Inability of the revenue collecting institutions to fulfill their expected roles because they were entangled in a web of complex and outdated practices, characterized by inadequate numbers of skilled staff, and opportunities and incidences of corruption.

• High urban population growth and unemployment, inadequate houses and shelter, poor sanitation, congested roads and poor social services, coupled with absence of an appropriate policy framework and urban governance.

• Dependence of almost all the population on the conventional and traditional information delivery systems; low coverage of the national telecommunication network; limited capacity, accessibility and high cost of Internet services; shortage of human resources in ICT both in number and qualification at operational and regulatory level; and a limited amount of data that is organized systematically for accessibility to support economic and social development.

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7. In 2001 the ruling party underwent a crisis, and narrowly avoided disintegration, but created the basis for change. There was recognition that the demarcation between party and state structures was blurred and hampering the democratization process. Discontent about the demarcation of roles (where the party was seen as shadowing government and the state at every level) was a major driver of the 2001 division. What emerged was a political leadership dedicated to modernization of the state and the party. The drive to professionalize the state gave a new priority to capacity building, and creating capable state structures at decentralized levels. Meanwhile the notion of an independently operating party structure was given much less prominence – in effect resulting in a lot of party activities being subsumed into state structures, particularly at decentralized level.

8. The period between 2002 and 2004 represented an important transition leading to increase focus on capacity building; one in which radically new parameters of state development were discussed in Ethiopia. Not only did government focus on practical steps to enhance the institutionalisation of state structures and activity including the separation of party and state, the restriction of the role of the party, and the separation of powers between branches of government. It also gave a new focus to decentralization, characterized by local municipality and wereda-centred development, backed by fiscal transfers to the sub-national level. While fiscal decentralization to wereda level administrations (with planning, budgeting and reporting all devolved) had been a stated ambition since 1996, it was in fact introduced very abruptly in 2002. Government thinking during this period also seemed to have placed increased emphasis on the transformation of state-society relations. Against this background the Ministry of Capacity Building was created in 2001/2. Informally known as a ‘super ministry’, its mandate was to be a focal point for and drive reforms. It was seen as the custodian of the formal public sector reform process which replaced the party’s role as the ‘motor of development’. It enjoyed massive political support (under a strong leadership) at the time of project appraisal and continued to have this support beyond the 2005 elections. Capacity building was thus at the core of the government’s program at appraisal, presenting clear incentives for the Bank to align PSCAP to the Government’s strategy.

9. Rationale for Bank assistance: The substantial and complex requirements of Ethiopia’s state transformation agenda necessitated International Development Association’s (IDA) intensive involvement for three reasons: (i) managing the demands of rapid nation-wide scale up; (ii) leveraging the comparative advantage of IDA and other interested partners; and (iii) mitigating risk factors associated with serial direct budget support.

10. Managing the demands of rapid, nation-wide scale up: The scale and scope of the government’s public sector capacity building program were the most ambitious in Africa. This was underpinned by solid political commitment to overcoming the fiscal and operational challenges to successfully implement state transformation. IDA financing in the context of Sector-Wide Approach (SWAp) to public sector capacity building was to enable the government to “smooth” out fluctuations in the provision of bilateral aid resources across regional states within the federal system, across sub-programs of PSCAP, and spanning a long duration.

11. Leveraging the Bank’s comparative advantage and that of other partners around a “single design solution” to PSCAP: IDA had leveraged its experience as a lead or strategic partner in supporting large scale capacity building programs in Africa (e.g. IDA’s programmatic

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support to Uganda’s reforms in the 1990s) and had brought to bear considerable international experience in several of the reform areas under implementation as part of PSCAP. These included urban management, district-level decentralization, civil service reform, and ICT. Overall, in Ethiopia, the Bank had also played a catalytic role in encouraging donors—particularly those with intensive experience at the sub-national level and in areas such as justice systems and tax reform—to pool their support and harmonize around the government’s “single design solution” for PSCAP.

12. Mitigating risk factors associated with serial direct budget support: A final rationale for the Bank involvement related to mitigating the fiduciary and implementation risks associated with IDA’s, as well as bilateral direct budget support programs designed to help the government achieve poverty reduction objectives in the Sustainable Development and Poverty Reduction Program (SDPRP). Specifically, assistance to be provided under PSCAP—for example, for the modernization of expenditure management systems, or restructuring and skills development in Woredas and municipalities—were expected to significantly strengthen the confidence of Ethiopia’s aid consortia that budgetary resources were effectively utilized to deliver essential services within a decentralized framework.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)

13. The objectives of the PSCAP project were to: (i) improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, and local level; (ii) empower citizens to participate more effectively in shaping their own development; and (iii) promote good governance and accountability.

14. Key indicators were:

Increased predictability and adequacy of financial resources flows (in-year and across years) • Reduced budget variance. • Reduced federal-regional and regional-local fiscal gaps.

Greater inclusiveness and transparency of planning and prioritization processes

• Established practice of participatory budgeting and public reporting on budgets and performance at all levels.

• Regular involvement of civil society in planning and policymaking, budgeting, and review processes.

Enhanced revenue performance and fiscal autonomy

• Increased own revenues and unconditional transfers as a share of total expenditures at sub-national levels.

• Increased tax effort at all levels. Enhanced incentive environment for public servants (gender disaggregated)

• Increased average civil service salary as percentage of living wage. • Private-public wage comparison. • Wage decompression ratios.

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Improved quality and efficiency of operations • Improved service levels in terms of access, responsiveness and cost efficiency in

priority sectors. • Reduced unit costs and processing time for essential rural, urban, social, and legal

services in priority sectors. Improved transparency and accountability

• Reduced incidence of corruption and arbitrariness in rule enforcement (as judged by economic agents).

• Increased access to justice, recourse and redress. • Enhanced independence of the judiciary. • Increased access to government information.

1.3 Revised PDOs (as approved by original approving authority) and Key Indicators, and Reasons/Justification

15. The objectives were not revised.

1.4 Main Beneficiaries

16. The project’s expected beneficiaries were citizens and their communities (particularly the poor), including farmers and urban private sector through improved service delivery, empowerment, and greater transparency and accountability of government institutions. Expected intermediate beneficiaries included civil servants at the federal, regional, and local levels; Woreda and municipal officials; the judiciary and their staff; staff involved in basic legislative processes; revenue and tax authorities; public, private, and non-profit training institutions; and service providers.

1.5 Original Components (as approved)

17. The project consisted of two components as follows:

18. Component 1: Federal PSCAP: This component supported federal level activities across each of the six sub-programs described below, including those capacity building activities for which there were scale and network economies, and those activities that required national level prototyping.

19. Component 2: Regional PSCAP: This component constituted the bulk of the Program and was designed to empower regions to adapt and implement national reform and capacity building priorities envisaged under PSCAP’s six (6) sub-programs described below in a manner that was efficient, accountable, and sustainable.

20. The objectives of each sub-program of PSCAP under the two components are given below:

21. Sub-program 1—Civil service reform: The objective of this sub-program was to promote the development of an efficient, effective, transparent, accountable, ethical, and performance-

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oriented civil service through institutional reforms, systems development, and training. The sub-program had seven (7) major sub-components: i) strengthening the capacity of CSRP coordinating structures; ii) improving governance of financial resource management; iii) improving governance of human resource management; iv) improving performance and public service delivery; v) improving accountability and transparency; vi) strengthening top management systems; and vii) building the policy and institutional governance capacity of the four (4) least developed regions.

22. Sub-program 2—District-level decentralization: The objective of the sub-program was to deepen the devolution of power to the lower tiers of regional government and institutionalize decision-making processes at the grassroots level. This would be achieved through the following sub-components: i) refining Woreda institutions and organizations; ii) training and Woreda planning; iii) strengthening grassroots participation; iv) improving program development; v) building capacity for Woreda fiscal transfer and own revenue; vi) strengthening Woreda planning and financial control; vii) developing and implementing minimum service standards; and viii) supporting Woredas with necessary equipment for effective service delivery.

23. Sub-program 3—Justice system reform: This sub-program aimed to promote the rule of law as well as the efficient and effective functions of the justice system as part of Ethiopia’s broader democratization and private sector development processes under four (4) sub-components: i) strengthening the judiciary; ii) revising and reforming laws; iii) enhancing the capacity of law enforcement organizations; and iv) strengthening legislative organizations.

24. Sub-program 4—Urban management capacity building: This sub-program aimed to enhance the capacity of municipalities in the delivery of services, and enable urban centers to play a more effective role in social and economic development. These objectives would be achieved through the following sub-components: i) formulating and/or adapting enabling policy frameworks for the improvement of urban services; ii) deepening the process of decentralization; and iii) restructuring and capacity building of urban-local governments.

25. Sub-program 5—Tax systems reform: The sub-program aimed to develop a modern tax administration that would increase tax revenues, ensure equity and fairness, and encourage private sector investment and development. These objectives would be achieved through the following sub-components: i) tax policy and legislation; ii) presumptive taxation; iii) taxpayers identification number; iv) value added tax; v) operational program, systems and procedures; vi) organization and tax payers’ education; and vii) customs reform.

26. Sub-program 6—Information and communication technologies (ICTs): The objective of this sub-program was to harness ICTs for the development of human resources, democratization, service delivery, and good governance. These objectives were expected to be realized through the following sub-components: i) developing human resources for e-government; ii) using ICT for public service delivery and good governance; iii) developing applications for sectors; and iv) enabling communities to become centers of indigenous knowledge and content through community-based information systems and services.

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1.6 Revised Components

27. The components were not revised.

1.7 Other Significant Changes

28. IDA Additional Financing (AF) of US$50 million became effective in July 2010.The AF provided a pool of resources aimed at closing the financing gap that occurred due to the withdrawal of some expected bilateral donors’ funds following the 2005 election and the redeployment of US$20million IDA fund from the project to respond to the acute food crisis in Ethiopia in 2009, which required immediate support.

29. No changes were made to the project development objectives, components, or implementation modalities, including procurement and financial management except the replacement of Financial Management Reports with the Interim Financial Reports (IFRs). In addition, the closing date was extended from 7 July, 2009 to 31 December 2012. Furthermore, the provision in the project design for in-year reallocations between sub-programs and regions based on performance was removed in order to establish a level of certainty and predictability in PSCAP finances, and avoid penalizing the lagging regions that the program was meant to assist.

2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry

30. Quality at entry: Quality Enhancement Review (QER) was conducted and the project’s quality at entry was satisfactory. Soundness of the background and risk analysis, lessons from other operations, coupled with high level of government commitment and stakeholder participation contributed to the effectiveness of the project’s design.

31. Soundness of background analysis and knowledge transfer: A rich body of analytical work in the Bank’s country program underpinned support for PSCAP. These included a series of annual Public Expenditure Reviews dating back to the mid-1990s that reviewed progress of expenditure management reforms (especially the 2000, 2001, and 2002 reports); the 1999 Regionalization Study; the 2000 review of the Civil Service Reform Program (CSRP); a 2001 Rapid Assessment of Municipalities; and the 2001 Woreda Studies series. The Bank and several other donors jointly supported the preparation of the 2003 Country Financial Accountability Assessment, and the 2003 Country Procurement Assessment Report along with action plans. During the preparation, the Bank team, cooperating partners and government counterparts jointly prepared technical outputs in several areas critical to the public sector transformation process, including a concept note on urban land management and legislation, cost of decentralization in Oromia region, performance and service delivery improvement, and ICT investments to support core government businesses.

32. Lessons of earlier operations taken into account: The project design was built on lessons learned from Ethiopia as well as international experiences on public sector capacity building across a wide range of institutional settings. The design incorporated the lessons by: i) avoiding “stove-piping” through multi-sectoral programmatic lending and involvement of sector institutions in planning and implementation; and ii) ensuring “good fit” by building flexibility

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necessary to meet the fluid demands of institutional change and specific institutional transformation demands from each region. This was ensured by aligning the project with the inter-governmental fiscal system as a way of prioritizing and sequencing the implementation of capacity building activities across the six (6) PSCAP sub-programs, and delegation of financial management and implementation responsibilities to regions; iii) promoting strong donor coordination to leverage the core competencies of different members of donors through the donor-government working group, and formalizing it through signing of Memorandum of Understanding (MOU).The Project Appraisal Document (PAD) noted alternative approaches, the trade-offs between them, and rationale for the final decision.

33. Risk assessment: The team anticipated the risks that the project would face, and the overall risk of the project was candidly rated as High in the PAD. In addition, given Ethiopia’s historically hierarchical social arrangement and relatively new order that promotes federalism, insufficient expressed demands from citizens for improved public sector performance, weak capacity to carry out core financial, procurement, program management, M&E functions as well as constraints in absorptive capacity particularly by developing/emerging regions were rightly rated as high risk in the PAD. The ICR team agrees with this assessment. The PAD had also identified mitigation measures as deemed appropriate at that time. The Table in Annex 10 shows some of the High and Substantial risks and mitigation measures identified in the PAD, along with an assessment of the risks by the ICR team.

34. Adequacy of participatory processes: PSCAP was prepared in a highly participatory manner. For example, all regions, federal stakeholders and donors were meeting regularly during project design. Furthermore, the M&E framework was developed in a participatory manner and several training sessions were conducted for its users.

35. Adequacy of government commitment: At the time of project preparation, the government demonstrated a high level commitment to the objectives of the project. For example: (i) the government’s track-record of supporting rapid institutional change was arguably one of the most compelling indicators of its ownership of PSCAP and the state transformation agenda; (ii) the federal government committed and efficiently disbursed significant Treasury resources to PSCAP related sub-programs over the fiscal year 2002-03 period; (iii) under the leadership of the Ministry of Capacity Building (MCB), the government initiated an unprecedented nation-wide mobilization and strategic planning campaign around PSCAP and, specifically, the notion of “scaling up state transformation”; and (iv) the government acknowledged the considerable financial and technical assistance gap that remained in rolling out its various reform programs, and actively sought assistance and engagement from the international community. PSCAB benefitted from sustained government commitment and leadership for reforms during implementation.

2.2 Implementation

36. A significant event during the first year of the project’s implementation was the General Election of 2005. This was to have a considerable impact on the working context of Ethiopia. The most openly contested elections in Ethiopia’s history (held in May 2005) were followed by contestation of some results and a period of unrest, which resulted in violence and arrests. By January 2006 donors had reappraised their way of working with Ethiopia. What became clear

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was that ‘business as usual’ was not an option, resulting in a suspension of general budget support. Many donors revisited their political and financial commitments to Ethiopia as a result of the events surrounding the elections. In response to the election results of 2005, which defied predictions and showed that the ruling EDPRF had performed much more poorly than expected, the government set about invigorating and enhancing reform processes, particularly at woreda and kebele level. The ruling party set to win back ‘hearts and minds’ by raising public awareness and increasing mechanisms for allowing for social participation, especially at subnational levels. For example, the Good Governance Package could be seen as an initiative which responded to the challenges that marked the 2005-6 post-election period, reinforcing the roles of both party and state in the enhancement of decentralization processes.

37. Despite the above focus from government, the project made significant but uneven progress among sub-programs and with the different executing agencies in the first couple of years. Activities that were easier to manage such as in-house training on different government policies and strategies advanced while those that require more sophisticated skills lagged behind. The initial challenges that hampered even progress across executing agencies have been mostly covered under the risk section and include: i) lack of capacity at all levels of government, especially in respect of implementing World Bank procurement procedures, project management, financial management, budgeting and monitoring and evaluation; ii) centralization of International Competitive Bidding (ICB) at the MCB because of its prior experience in Bank operations; iii) adding PSCAP coordination activities to regular civil servants with other routine organizational tasks; iv) uneven coordination between federal sub-program directors and their regional counterparts; iv) shortage of procurement specialists in the Bank, which delayed receipt of no objections; v) reluctance to adopt PSCAP systems because of significant bilateral support provided to some of the federal and regional executing agencies; and vi) delays in releasing other donors’ funds. In addition to the initial hurdles, turnover of both officials and experts in the public sector and shortage of strong local firms with appropriate skills on critical areas of reform were persistent problems throughout the project life.

38. The Bank responded to start-up challenges with intensive joint government –donor supervision focusing on the level of institutionalization of the PSCAP systems and the progress in risk mitigation measures. This culminated in the mid-term review (MTR) in March 2008, which provided and several measures to tackle implementation hurdles. These included: i) decentralization of PSCAP administration from MCB to federal sub-programs and regional executing agencies by strengthening the direct communication between the Bank and implementing agencies; ii) streamlining the PSCAP annual planning, submission and approval of action and procurement plans; iii) improving procurement systems and capacity including decentralization of ICB to federal programs and regions, changing prior review thresholds from US$150,000 to US$500,000 for goods, from US$50,000 to US$100,000 for individual consultants, from US$100,000 to US$200,000 for firms; accelerated training in, and technical support to, procurement; adoption of a more efficient and effective approach to “bulking up” of goods for procurement, and strengthening the procurement reform and capacity development activity of the Public Procurement Agency, and iv) giving increased emphasis and resources to monitoring and evaluation (M&E), and gender mainstreaming in public sector capacity building in Ethiopia.

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39. The risk mitigation measures were continuously monitored and adjusted. The team closely monitored the risks during joint review missions to adjust existing rating and add new risks and mitigating measures as required. One good example is the risk identified in relation to possible disruption following the 2010 elections. The steady progress in tackling multiple risks had warranted revision of individual risks, and the program’s overall risk rating. However, the two aspects where the team still maintained substantial risk are related to demand side pressure and capacity weakness in emerging regions. Weak demand-side pressure is a structural feature of the Ethiopian context, associated with the country’s history and socio-political culture. PSCAP activities have been at the forefront of seeking to stimulate demand-side pressures, initiating and supporting a number of processes by which service users demand better services from the providers, albeit systems are at their infancy and will need careful nurturing, monitoring, and support. However, in the Ethiopian context it is not unreasonable to conclude that the primary driver of improved public sector performance has been supply-side leadership and investment, rather than client demand. Thus this risk, albeit rightly identified as high, has had much less of an impact on program objectives than anticipated. With regards to capacity, the overall financial management, procurement, reporting and implementation capacity at all levels of government has improved significantly over the period of the program, and in relation to PSCAP itself, well-staffed plan and programming directorates (PPDs) have been given a key boost. Recently, weaknesses seem to have emerged as a result of staff turnover and this need to be given attention. It is noted that new impetus has been given to public finance management capacitation at the national level. The detailed risk assessment is attached as Annex 10.

40. There were several conditions that had favorably affected implementation and achievement of outcomes. First, the homegrown technocratic solutions to institutional challenges were complemented with strong political vision around the state building agenda, including local democratization. For the political leadership, reforming the public service was seen as a long-term mission, rather than a brief experiment to appease the donor community. Second, the ambitious program was initially accompanied by establishing what in government was informally called a “Super Ministry”- the MCB, with a strong leadership and champion over a sustained period of time. This was essential in building a constituency for reform across the political leadership and amongst civil servants and made it relatively easier to drive reforms through the civil service bureaucracy. Ethiopia’s particular civil service model has therefore proved an asset in maintaining a fast pace of reform, though it is difficult to judge if this model will function well in the absence of a strong party or political leadership.

41. Third, ‘learning by doing’ or experimenting with what works best locally helped to scale up reform activities in institutions, regions, and localities. Features of learning by doing in the project included: (i) development of minimum mandatory capacity-building activities across sub-programs, and prioritizing them as the first in a sequence to ensure sub-national governments were able to utilize these transfers in a responsible manner; (ii) top-down prototype development for regional planning and implementation to ensure reforms were developed where capacity existed; (iii) cross-regional fertilization between advanced and developing regions through twinning arrangements; (iv) cross-fertilization between reforms; and (v) heavy investment made in establishing monitoring mechanisms such as the supply and demand side surveys to incorporate structured feedback from newly created local governments and the citizens.

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42. Fourth, the Sub-national focus demonstrated in the decision to allocate the lion’s share of the resources (80% of PSCAP funds), and provide autonomy to regions to plan and implement within the framework, was spearheaded by PSCAP, and did empower the right constituents where services were provided. This approach has been used by other large projects since then. Fifth, the decision of donors to support a single design and to harmonize their procedures with government made the learning curve rather short and smooth, and helped in enforcing PSCAP systems requirements. In addition, the establishment of a complementary Bank-executed Trust Fund financed by donors (DFID, Government of Italy, and CIDA) was critical in hiring additional people for providing handholding support, especially in procurement and M&E, and in conducting independent assessment of reforms, and management of the reforms.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

43. M&E design: The PAD included a logframe and the project also had a detailed monitoring and evaluation framework prepared in a participatory manner. Furthermore, the project uniquely put in place a mandatory independent survey instrument known as the Woreda and City Benchmarking Survey (WCBS) to establish a wider information base and benchmark for monitoring changes in institutional capacity, financial autonomy, service delivery, and accountability of rural and urban local governments over time by integrating supply and demand side components.

44. Nevertheless, the indicators reflected some weaknesses. Because of its large scope, the project had too many outcome and output indicators, and the indicators related to improving incentives for civil servants were not relevant, as there was no activity directly related to them. Baselines and targets were not specified clearly in the PAD, and some of the targets were reflected in nominal figures, which were not found to be the best measures given the high inflation the country experienced in recent years. Similarly, the one drawback of the Woreda and City Benchmarking survey was that the demand side survey started in 2008, well after some of the reforms had already advanced.

45. M&E implementation: Baselines and targets were further clarified during project implementation, using largely existing data from the Poverty Reduction Strategy documents, Woreda and City Benchmarking Survey, and government financial and progress reports. Several approaches were used to implement the M&E framework, namely:

46. Bi-annual joint review missions (including visits to all regions once a year) and joint government-donor PSCAP Managers’ Network meetings, which were used to report progress on outputs and outcomes, identify implementation issues, and suggest possible solutions. The main document used for these reviews were the status report of the action plans (participation and performance agreements), which each of the implementing agencies committed to deliver. The participation and performance agreements were prepared in line with the monitoring and evaluation framework, and showing the link between the activities, outputs and the outcomes.

47. The independent Woreda and City Benchmarking survey integrated structured feedback from supply and demand side stakeholders based on PSCAP’s agreed indicators under the project. The supply-side survey collected and analyzed the data from officials in local jurisdictions on aspects such as financial autonomy, institutional capacity and coordination,

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service delivery, participation, and openness of the local government affairs to citizens. Similarly, the Citizens’ Report Card, one of the instruments under the demand side survey, used household survey in 11,000 households in each round to collect and analyze the views, opinions and perceptions of citizens with regard to service delivery, openness/inclusiveness of the local governments, access to government information, level of participation and accountability. Four (4) rounds of the survey have been conducted and the fifth is underway. The first round of the Woreda and City Benchmarking Survey was carried out in 2005/06 and established a baseline in 78 jurisdictions, being around 10% of the then total districts and City governments. In the subsequent three rounds, the sample size increased to 291 jurisdictions (38%), 384 jurisdictions (50%), and 256 jurisdictions (33%), respectively. The initial 78 jurisdictions were included in each survey to allow the development of a time series of comparative data. Results from the survey are included in Annex 5.

48. Assessments and studies on the project as whole, and specific aspects of the project, were conducted to improve performance and suggest better ways of doing business to achieve results.

Title of the Study Results (a) independent assessment of PSCAP (2007)

Informed the mid-term review

b) results analysis of PSCAP (2009) Reviewed results before additional financing (c) assessment of training under PSCAP(2009), Shifted from mass orientation to a more

focused skills development (d) assessment of gender under PSCAP(2009), Helped to identify and enforce gender-related

minimum mandatory activities e ) assessment of ICT (2009), Helped in refocusing the purchase of

equipment on the business process review recommendations

f) assessment of Justice Program (2009), Ensured sufficient attention was given to all justice organs rather than focusing solely on the judiciary

(g) assessment of PSCAP impact on developing regions (2009),

Informed the special attention provided to them

h) assessment of M&E (2009) Helped in focusing on results and documented success stories;

(i)assessment of the Good Governance Package (2012),

Confirmed that the activities under the package are making a difference in governance (e.g. participation, access to information, and accountability at lower government).

i) Social Appraisal of PSCAP (2012) Reviewed risk assessment of the program

49. M&E utilization: The findings from the above monitoring mechanisms informed decision-making, particularly the formulation of future action plans (participation and performance agreements). The yearly review of the action plans took recommendations into account to make sure activities that were identified as lagging behind are given attention, and appropriate financial allocation was made for them. Likewise, reallocations were done between regions and the federal government in order to allow some activities to be managed at the center based on the comparative advantage.

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2.4 Safeguard and Fiduciary Compliance

50. Safeguard compliance: Because of the nature of the project, which is largely technical assistance, there were no safeguard issues during implementation.

51. Fiduciary compliance: In the initial years of the project, standard Interim Financial Reports (IFRs) were not submitted by the project. This was a non-compliance to the Development Credit Agreement (DCA) and when subsequently submitted, the IFRs showed the existence of significant advances and cash balances. The issue of large balances and delayed accountability existed throughout implementation. The timeliness and the quality of IFRs improved over the years.

52. Further, the project was required to submit audited financial statements nine (9) months after the end of each financial year as per the financing agreement. At the initial stage of the project, there were delays in submitting audit reports and the audit was qualified once. The audit report for the year ended 7 July 2007 was submitted to the Bank after eight (8) months of delay and was qualified due to the failure to observe cut off dates, recording expenditures in the wrong financial year, and due to large advances and payables. However, for the subsequent years, the timeliness of submitting audit reports improved. For the years July 2011 and July 2012, unqualified audit reports were received two months before their due date.

2.5 Post-completion Operation/Next Phase

53. The government will use funds from Treasury (US$ 5.7 million equivalent), DFID (US$ 7.5 million equivalent) and Italian Cooperation (US$ 1.8 million equivalent) to complete initiated activities until June 2013. In the Treasury budget for fiscal year 2012/13, the government has provided (US$ 5.7 million equivalent) to regions, and provision of fiscal year 2013/14 Treasury funding for PSCAP is under preparation.

54. The government is not currently envisioning any follow-on project through IDA financing, but has clearly expressed its intention to continue to work on public sector capacity building and governance issues with its own resources and grants. The government has recently appointed a new Minister of Civil Service, who also holds the rank of Deputy Prime Minister, and who will serve as the cluster leader on good governance and reforms. This sends a strong message of continuing high level government commitment to public sector reform, which is good for ensuring the sustainability of the results achieved so far. The government has developed the roadmap for next civil service reform in collaboration with the DfID in 2013.

55. The World Bank is also using its programmatic knowledge services program (fiscal year 2013-14) to support the government’s public sector and governance policy agenda through a series of analytical work and just-time technical assistance (TA).This includes analysis on public sector staff turnover, training and south to south collaborations in selected topics, analysis of long term perspectives on development impacts in rural Ethiopia, and continuing the Woreda and City Benchmarking Survey.

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3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation

56. Relevance of objective: The objectives of the project were and remain relevant as they reflect the paramount importance of a strong public sector at all levels of government, and engagement of civil society to realize the current needs of Ethiopia’s social and economic development. They are aligned to and support the public sector capacity building and governance pillar/component in the Government's Poverty Reduction Strategy and Development Plans (2003-present), the World Bank Strategy for Africa (2011), and World Bank Country Assistance Strategies/Country Partnership Strategies for Ethiopia (2003-present).The public sector capacity and governance pillar is meant to address systemic constraints in human and institutional capacity as well as inadequate accountability and transparency in order to provide better public service, empower citizens to participate in matters affecting their lives, and promote transparency and accountability in the public sector.

57. Relevance of design: The core design remains highly relevant and has largely worked well during implementation of the project. Based on analytical work and lessons from other countries, the project built the flexibility necessary to meet the changing demands of rapid institutional reforms and of beneficiaries. Given Ethiopia’s uneven capacity across regions, the project design embedded legally binding “minimum mandatory activities” across the different reforms to ensure no one region was left behind. The design also incorporated structured feedback from local governments, citizens and civil society to ensure that the interventions remain relevant and make an impact on people’s lives.

58. Relevance of implementation arrangement: The implementation arrangement remained largely relevant, although adjustments were made during implementation in response to changing situations. The Federal Supreme Court and the Ministry of Finance and Economic Development were given autonomy to administer their own activities during implementation. The merger of the MCB and Civil Service Agency into a new Ministry of Civil Service (MoCS) created fluctuations in performance of the Ministry as an overall coordinator of reforms and implementer of civil service and decentralization reforms. The gap in the coordination was addressed by the establishment of a national PSCAP Managers’ Network, which included political leaders, technocrats and donors to play a catalytic role in implementing the project. During the restructuring, there was also some lack of clarity on how the two sub-programs, namely, the CSRP and DLDP activities should be supported. Although implementing agencies continued to implement the BPR and the BSC, which were spearheaded by the previous Ministry of Capacity Building, regions seemed to have been confused by the hands-off approach the Ministry of Civil Service seemed to have taken during the restructuring. The Ministry later clarified that now the reforms are rolled out, it would like to see federal and regional implementers to play a more pro-active role. The recent appointment of the Deputy Prime Minister responsible for good governance and reforms as a Minister of Civil Service Ministry is a step in the right direction to demonstrate that the public sector and governance reforms extend beyond the normal technical remit of a single federal Ministry. It showed sustained commitment and leadership at the highest level of government and re-emphasized the integrated approach the country was pursuing for a good part of the project life. Overall, adopting the implementation

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arrangements, the request for additional financing, and reallocation of resources between federal and regional levels ensured the relevance of the design throughout the project.

59. Rating: Considering the above factors, the relevance of objectives, design, and implementation is rated as High.

3.2 Achievement of Project Development Objectives

Rating: Satisfactory 60. The project was successful in achieving its objectives. As mentioned in the results analysis section and Annex 2, outcome and output targets that enhance the overall quality of federal, regional and local institutions were met substantially. In summary, out of 16 PDO level indicators, 9 were fully achieved or exceeded, four (4) were substantially achieved, and only three (3) were not achieved. Similarly, out of 27 intermediate indicators, 22 (or 81%) were fully achieved or exceeded, three (3) were substantially achieved, one (1) was partially achieved, and one (1) was not achieved. Figure 1 below summarizes the extent to achievements of all the six areas of PDO level outcomes. Out of the six thematic areas of outcomes, only one (outcome 4) on enhanced incentives for civil servants was not achieved. There was significant improvement in public financial management in terms of predictability of financial flows to subnational levels, improved inclusiveness and transparency in planning, improved revenue administration and fiscal autonomy, especially at subnational levels, as well as increased transparency and accountability, though petty corruption seems to have increased.

Figure 1: Project Outcomes at a Glance

Outcome 1: Increased predictability and adequacy of financial resources flow (in-year and across years)

Outcome 2: Greater inclusiveness and transparency of planning and prioritization process

Indicator: Reduced budget variance (Achieved) Target: 10% Actual: 4% Indicator: Reduced federal-regional & regional-local fiscal gaps (Achieved) Target: a) 37.6 billion birr federal-regional transfer Actual: 56.6 billion birr

o Target: b) 20% annual average increment of own revenue by regions

o Actual: 26%

Indicator: Established practice of participatory budgeting & public reporting on budgets & performance at all levels (Achieved) Target: Participation of citizen is to be an established practice Actual: Voluntary bi-annual meeting with citizens has become an established practice Indicator: Regular involvement of civil society in planning and policymaking, budgeting and review processes (Achieved) Target: Participation of civil society organizations is an established practice. Actual: Local level civil society involvement in plan preparation and monitoring has become an established practice through membership in Kebele Inspection Team

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Outcome 3: Enhanced fiscal autonomy and improved revenue administration at all levels

Outcome 4: Enhanced incentive environment for public servants

Outcome 5: Improved quality and efficiency of operations

Outcome 6: Improved transparency and accountability

Indicator: Increased own revenues & unconditional transfers as a share of total expenditures at sub-national levels (Achieved) Target: 100%, (baseline not available) Actual: 100% (absorption capacity improved) Indicator: Increased tax efforts at all levels (Achieved) Target: 81.0 Million Birr Actual: 90 8 Million Birr

Indicator: Increased average civil service salary as percentage of living wage - (Not Achieved) Target: Reduced gap between living wage and average civil service salary Actual: Weighted average civil service salary is 82% of the living wage in 2011/12 Indicator: Private-public wage comparison (Not Achieved) Target: Reduced the gap between public and private wages Actual: The ratio of public-average private wage comparison, for instance, for an Executive Secretary is 1:1.82 in 2011/12 Indicator: Wage decompression ratios (Achieved) Target: Improved salary scale for skilled professionals Actual: Wage decompression ration in 2011/12 is 1:32.6

Indicator: Improved service levels in terms of access, responsiveness, and cost efficiency in priority sectors. (Achieved) Target: 85% of districts to provide basic service Actual: 88% Indicator: Reduced unit costs in priority sectors. (Substantially Achieved) Target: Reduced unit cost Actual: The real cost for solid waste, court and tax is achieved. Although the unit real unit cost p. health and education increased, there has been significant improvement in the number of health workers, teachers and text books. Indicator: Reduced processing time in priority sectors (Achieved) Target: The average processing time for tax collection will require 50 minutes, opening file in courts 40 minutes average and clearance rate for courts will be 80%.

o Actual: Average processing time for tax collection is reduced to 15 minutes, opening files in courts is 24 minutes and the average clearance rate for courts nationwide is increased to 98%.

Indicator: Reduced incidence of corruption and arbitrariness in rule enforcement (Not Achieved) Target: Reduction of incidence of corruption Actual: 6.5% of respondents in the Woreda and City Benchmarking Survey reported paying extra money outside the legal requirement against a baseline of 4.3%. Indicator: Increased access to justice, recourse and redress (Achieved) Target: Increased access to justice. Actual: The increases in the number of formal (850-942), social (additional 15,452), and mobile courts as well as the introduction of e-litigation have improved access to justice. Indicator: Enhanced independence of the judiciary (Substantially Achieved) Target: Enhanced independence of the judiciary Actual: The Judicial Admin. Commission is now independently organized. Nomination of Judges has become fully merit-based & the legal education was reformed to include exit exams, on the job training before joining the workforce & curriculum revised on 16 courses. Indicator: Increased access to government information (Substantially Achieved) Target: Information act to be issued and institutional focal points for information to be established. Actual: Right to information is enacted and the Office of the Ombudsman is designated as the implementer of the Act. In addition, Information Officers are in place in all offices including Kebele Managers who provide information and address complaints.

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Objective 1: Improving the scale, efficiency, and responsiveness of public service delivery at the federal, regional, and local level

61. The capacity to raise and manage public funds more effectively has improved: The adequacy and predictability of financing has been ameliorated by the increase in revenue collection and improvements made in budget planning, execution and reporting systems. Tax collection has increased nominally from 12.4 billion Ethiopian Birr in 2005 to 90.8 billion Ethiopian Birr in 2011/12, which is over double in real terms. The tax to GDP ratio has improved from 11.6% in 2005 to 12.5% in 2012. The Woreda and City Benchmarking Survey (supply side) shows that the percentage of local jurisdictions that have shown efficiency and comprehensiveness of accounting and auditing procedures increased from 30% in 2005 to 85% in 2011 survey. The Public Expenditure and Financial Accountability (PEFA) assessments conducted in 2007 and 2010 also confirmed improvement in 50% of the 28 indicators.

62. Government's capacity to deliver efficient, responsive and transparent service to citizens has improved: This is due to the rapid implementation of district level decentralization and other reforms that have updated legal and policy frameworks, unwieldy structures, cumbersome work processes and systems, as well as shortages of important skills in the public sector. The scaling up of district level decentralization from a baseline of four (4) regions to all regions has improved access to and responsiveness of the public services by bringing them closer to citizens. The decentralization is supported by enabling legal frameworks (Constitution, Proclamations) and restructuring of lower administrative units. According to the 2010/11 Woreda and City Benchmarking Survey, 88% of the local jurisdictions are providing basic services compared to only 25% in 2005. BPR has also simplified cumbersome work processes, set service delivery standards, created one-stop shops for related services, introduced open work place designs, and established complaint handling mechanisms in 145 federal, 404 regional, and over 19,600 district offices from a baseline of 11 ministries at the federal level. Efficiencies in processing time and unit cost have been seen across sectors, including in the courts, land cultivation, tax collection, solid waste management, health services and primary education.

63. E-Government Index: Ethiopia’s ranking for online service improved from 126 to 80 and for e-participation from 170 to 90 from a total of 174 countries on the UN E-Government Index done between 2005 and 2011 following the expansion of both infrastructure and applications that enhance service delivery and transparency.

64. Skills: Skills were strengthened through on-the-job training, study tours and short and long-term distance training at Diploma, BA, MA, and PhD level. The long term training has significantly increased the number of qualified civil servants and leaders at sub-national level. Some examples include the 2,000 urban management graduates at Masters’ level and two (2) at PhD level, over 500at MA and BA in taxation and customs, as well as over 10,600 MA, BA and diploma level graduates in a range of subjects including leadership, accounting, public administration, and law. A huge number of short-term training courses and sensitization workshops have also been delivered by each sub-program on new laws, directives, working systems and reforms, as well as to citizens and taxpayers. For instance, the CSRP delivered training to over 736,207; the District Level Decentralization Program (DLDP) to over 7,743,400, over 2 million in Oromiya region alone); the JSRP to over 159,290; the UMCBP to over 216,240; the ICT to over 140,450; the Tax Systems Reform Program (TSRP) to over 307,080

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(excluding taxpayer education using different media) and the Expenditure Management and Control Program (EMCP) to over 45,500. In an assessment made on training aspects of PSCAP, 87% of the responses were positive and spoke well of the usefulness of the training courses they had taken.

65. There is an improved citizens’ satisfaction with services: The Woreda and City Benchmarking Survey confirmed that satisfaction of citizens using government health facilities has increased from 50% in 2008 to 84% in 2011 in urban areas, and from 77% to 94% in rural areas, respectively. Overall satisfaction with health services increased from 62% to 70%, while households satisfied with waiting times, attitudes of the medical staff, and availability of drugs has also increased. The overall satisfaction with primary education services increased from 84% to 94%, with solid waste management from 70% to 74%, and with agricultural extension services from 90% to 94% over the same period. Even for water supply, where satisfaction had dropped from 61% in 2008 to 58% in 2011, there is marked fall (from 26% to 10%) in the proportion of the population who rely on unprotected water sources over the same period.

Objective 2: Empowering citizens to participate more effectively in shaping their own development

66. There is increased public participation and engagement in preparation and monitoring of plans, particularly at lower levels of government. This was initiated mainly through implementation of the good governance package that was rolled out to improve inclusion and accountability.

67. Necessary structures were established: At regional, Woreda, municipal and Kebele level, the good governance package (GGP) has created and/or strengthened pertinent structures to enable greater inclusion. These include: i) expanding the number of Kebele council members to 300 in the bigger regions and 70 in developing regions in order to ensure wider representation in grassroots assemblies; ii) establishing over 16,660 Kebele inspection and supervision teams consisting of Kebele level civil society organizations and council members charged with ensuring participation of citizens in planning as well as monitoring through public meetings; and iii) establishing bi-annual public meetings with communities on voluntary basis. However, given the dominance of the ruling party at all levels of government, and its grass root mass membership, participation by citizens has to be defined in this context, with no certainty that participation is done on free volition and as opened as possible.

68. Direct participation in service delivery: Citizens are more and more empowered to engage directly on service delivery, including on management of community tele-centers, community policing, social courts, and small scale infrastructure development. Under PSCAP, 153 multi-purpose community centers were established across the country with community ownership. Currently, these centers are offering employment opportunities to an average of 3-5 community members, and are providing access to diverse ICT services including basic computer training at a reasonable cost. Similarly, over 15,000 social courts, and a large number of community development and community policing committees were established/revamped.

69. Participation at federal level: The MoCS has initiated consultations on the reforms with top management and civil servants working in different sectors and on service delivery with

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representatives of Civil Society Organization (CSOs), the private sector and citizens. The feedback received from citizens’ groups on service delivery and related aspects is forwarded to the relevant offices for action, and is closely followed-up by the MoCS.

Objective 3: Promoting good governance and accountability

70. Horizontal accountability mechanisms or checks and balances were established to enhance transparency and accountability.

71. Establishment of systems and structures for improved sub-national governance: The evidence from the field shows that service standards were developed in service outlets as part of the BPR process, and are now being formalized through the Citizens Charter. The review of GGP by independent consultants has established the creation of new institutional arrangements that did not exist previously to expedite inclusion, transparency and accountability. This includes: i) the deployment of over 15,400 trained Kebele managers, designated as fulltime local government employees to serve as the secretariat for the Council, the main point of contract to provide information to citizens, responsible for compiling Kebele plan, and handling complaints; ii) establishment of information and complaint handling focal points at Woreda and regional level; and iii) establishment of over 690 information counters at all levels of courts to provide case-related information and a wide range of information about the courts, including court judgments.

72. ICT is increasingly being used to enhance citizens’ access to government information and services. Call centers have been established for 21 offices - in Addis Ababa (9), Oromia (6) and SNNPR (6) - as well as for the federal Supreme Court, which make use of toll free numbers with an average of 1,000 calls per day. Similarly, the national government portal is providing information to internal and external users and is being visited by over 7,000 users monthly. Overall, 162 websites have been developed at regional offices to serve a similar purpose.

73. Citizens’ awareness on government services is increasing: This was confirmed by the Woreda and City Benchmarking Survey through increased number of respondents who know such things as legal requirements relating to payment of taxes, their Woreda budgets and strategic plans, and which Woreda meetings are open to the public. In the 2011 Woreda and City Benchmarking Citizens’ Report Card Survey, 49% of the respondents think an ordinary person can do something to hold local government leaders to account, and this showed a 2% increase from 2010.

74. Improvement in dispute resolution mechanisms: The judiciary has made significant progress over the past ten years. Courts have improved records management systems and introduced court management and decision support systems. Video conferencing (VC) facilities, non-existent in 2005, now exist in 229 courts, clearing over 36,000 cases and thus improving access and reducing the cost of justice. Access to justice has also improved by increasing use of alternative dispute resolution mechanisms and mobile courts. Legal awareness to the public is also provided in different media. The average clearance rate has improved from less than 60% in 2005 to 98% in 2012.

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Progress on retaining skilled and professional personnel has been slow and remains a challenge.

75. Notwithstanding the above achievements, the challenges of attracting, motivating and retaining sound professionals in the public service remain. In the last two years, the government has taken a number of human resource management and development initiatives with the support of PSCAP, such as the development of job evaluation and grading, the introduction of balanced score card performance management system, the development of a human resources management information system, and development of a code of conduct for the civil service. In order to help the Government to better understand the causes of staff turnover, the World Bank is undertaking a study of the problem. The report will inform the Government’s policy and actions to address the challenge. Similarly, the project has been successful in achieving its target of laying the foundation for voluntary citizens’ participation through the establishment of systems and enhanced awareness of citizens and public sector accountability through development of service standards which are being formalized through citizen’s charters. However, given the dominance of party structures and leadership at all levels of government, free and non-partisan active citizenry will require more time and careful nurturing, monitoring, and support; particularly given citizens widespread preference to keep out of politics because of historical experience with local state actors. Both the Woreda and City Benchmarking and the 2nd Corruption survey acknowledged corruption remains a problem in the country and also confirmed that much of the corruption is petty corruption within the bureaucracy. Other studies also noted that in the absence of the reform program, it is probable that petty corruption would have been much higher. However, corruption is not the top problem or challenge faced by citizens.

76. For details on Outcome and Output Indicators, see Results Framework Analysis (Section F, Data Sheet).

3.3 Efficiency

Sub-rating: Satisfactory 77. Annex 4 of the PAD notes that quantitative analysis of economic return is not applicable for this project. Nevertheless, there were operational and administrative efficiencies that are worth noting, and which came as a result of design choices and the actual implementation approaches. These have significantly reduced duplication of efforts by different sub-programs and different tiers of government, and strengthened local institutional capacity and ownership in a sustainable and efficient manner. Savings have also been made both in time and cost of delivery some services to citizens.

78. Use of public sector training institutions to increase in-house trainers from different organizations through training of trainers (TOT) and establishing courses for critical skills in the public sector: The government made strategic use of the Ethiopia Management Institute and Ethiopia Civil Service University to produce 83 trainers/reform outreach team who went to organizations and regions to transfer skills and create awareness on reforms within a short time. This has enabled the government to deepen the reform country-wide within a short time and saved money by avoiding mass traveling of civil servants to central training institutions.

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Similarly, the establishment of courses on urban management, tax and customs in Ethiopia has reduced the cost of training overseas significantly. For instance, it used to cost the government US$ 18,000 to send one civil servant overseas to get Masters level training on urban management. Currently, as a result of establishing the course locally, over 2,544 civil servants have been trained on urban management at Masters level, and this has saved the government US$35.5 million in the last four (4) years and reduced the shortage of urban professionals significantly. Similarly, over 500 officers were trained locally on tax and customs at diploma, BA and masters level, and are serving the government indifferent capacities.

79. Use of VC assisted meetings and training and other automations: The investment in Video Conferencing (VC) infrastructure made by the project has resulted in huge savings by allowing meetings and training sessions to happen in duty stations, thereby obviating the need for civil servants to travel away from their domiciles. The government has saved US$ 13 million from travel, accommodation and per-diem as a result of multi-point video connection for an average of 174,000 participants annually. Similarly, huge savings have come from automation of services and processes. For instance, the Oromia Regional State Communication Office has saved about US$113,000 using a Management Information System (MIS) that reduced consumption of paper, fax and video cassettes. Similarly, the Ministry of Education has saved over US$400,000 annually by using an automated national exam registration system instead of importing special registration paper.

80. Centralizing capacity building activities that require national level prototyping at federal level has brought about significant savings by leveraging the relatively high skilled labor at the federal level for complex prototypes and creating consistency across tiers of government. This approach, complemented with the administrative autonomy provided to the sub-national governments to plan and implement these prototypes, has also proved to secure value for money because they are also the right people to reconcile the prototype with the specific institutional demands and context.

81. Managing operational costs: Based on the latest Interim Financing Report (IFR), the operational cost for the project was 7.6%. This is relatively low compared to similar projects, and is efficient, particularly given its outreach in terms of sectors, implementing agencies and different tiers of government. It shows the discipline exercised by almost all the implementing agencies. A breakdown of operational costs by implementing agency shows some variations. The bigger regions maintained operational cost below 2%, while the other smaller regions maintained such costs at between 3-7%. Harari, the smallest of all the regions, has spent 10.7% in operational costs, which is the highest among regions.

82. For additional details see Annex 3.

3.4 Justification of Overall Outcome Rating

Rating: Satisfactory.

83. Relevance: As explained in Section 3.1, the relevance of objectives, design, and implementation is rated as Satisfactory. Achievement of PDOs: As explained in Section 3.2, the project has many satisfactory and highly satisfactory achievements to its credit: For example, the

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project was successful in achieving its objectives of improving the scale, efficiency, and responsiveness of public service delivery at federal, regional and local level, empowering citizens to participate more effectively in shaping their own development, and promoting good governance and accountability. Out of 16 PDO-level indicators, 9 were fully achieved or exceeded, four (4) were substantially achieved, and only three (3) were not achieved. Similarly, out of 27 intermediate indicators, 22 were fully achieved or exceeded, three (3) were substantially achieved, one (1) is partially achieved, and one (1) was not achieved. Thus, based on the extent of outcome of the project, the achievement of PDOs is rated as Satisfactory.

84. Efficiency: Despite the lack of data for more rigorous analysis of efficiency issues, the various examples shown in Section 3.3 and Annex 3 have demonstrated that there were operational and administrative efficiencies which came as a result of design choices and the actual implementation approaches employed under the project. Based on the above factors and the discussion in sections 3.1–3.3, the overall outcome is rated Satisfactory.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty impacts, gender aspects, and social development

85. Poverty impacts: The project had a positive impact on poverty in a number of ways. First, the micro and small enterprise strategy of Southern Region supported by the project has become the main government strategy for urban poverty reduction. The strategy targets unemployed young men and women and provided various assistance in order to help them engage in business activities. Second, ICT incubation centers in four (4) regional states have resulted in the creation of jobs for 83 young people organized in 23 micro and small enterprises (MSEs). Third, the housing strategy supported by the project has been implemented in major cities of the country to address the housing needs of low income people. Fourth, poor people are getting services at a lower cost. For example, because of VC facilities, instead of travelling to distant places to attend court proceedings, people are now able to attend at their nearest VC-equipped location. Similarly, poor people are getting court services using the toll free calls, thus they are able to save time in traveling, and reduce the cost. For instance, in Oromia Regional State, the 2024 e-litigation users from two centers saved US$ 25,000, while toll-free callers collectively saved US$1.2 million. Also proximity of service facilities which resulted from decentralization is seen by citizens as important in reducing time and financial cost for the poor. 88% of the local jurisdictions surveyed in 2011 WCBS are providing basic services (health, education, water supply) as a result of devolution of power, thus improving access to services. The poor also made use of social courts due to the smaller amounts of money required and the oral nature of the lower courts.

86. Fifth, after receiving computer training from community centers at a reasonable cost, many unemployed people have succeeded in getting employed both in public and private sectors. In addition, over 600 youth, women, and disabled people are managing the multi-purpose tele-centers.

87. Gender aspects: Gender-related activities, including gender-responsive recruitment and training mechanisms, were implemented to increase the number of women in the public sector and create awareness of gender issues amongst policy makers and civil servants. As a result, there was an increase in female recruitment between 2004 and 2010 by 114%. The percentage

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increase of female recruitment before the project (between 1998 and 2004) was only 42%. Similarly, there was an increase in the number of women in leadership positions at Kebele and Woreda levels.

88. Social development: The institutionalization of participatory planning, particularly at Kebele level provides opportunity and voice for the poor in decision making processes. PSCAP has made contribution to cross cutting issues such as HIV/AIDS, environment, gender, etc. In terms of environment, UMCBP has supported urban greenery activities in Tigray and in Amhara; it has supported a study on environmental protection.

(b) Institutional change/Strengthening

89. The project also resulted in a substantial institutional development impact in the following areas. First, strategic planning was the first management tool introduced into the civil service. Now all civil service institutions develop strategic plans as a regular procedure. These plans are aligned with the budget and, most importantly, owned by Ministers. The Balanced Score Card (BSC) provides an opportunity to embed strategic management in organizations. Second, Ministerial-level Steering Committee led by the Ministry of Federal Affairs (MoFA) has been established, which meets quarterly to provide direction for the support to the developing regions. Its membership comprises the Ministers of Health, Education, Water, Agriculture, Women’s Affairs, Civil Service, Finance and Small and Medium Enterprises. The Steering Committee is supported by a technical committee, which convenes on a monthly basis. The MoCS has commissioned the Ethiopia Management Institute and the Ethiopia Civil Service University to run a training of trainers program and then provide the on-job coaching and support. Third, each of the four emerging regions has been formally twinned with one of the developed regions, which are responsible for providing training, mentoring and support to their less experienced counterparts. This relationship is highly valued by the emerging regions, and it seems to be working well. Fourth, skills have been developed through short and long-term training, on-the-job training and local and external knowledge sharing events. The project improved the capacity of the Civil Service to provide higher level training in critical areas such as urban, tax and customs. The Civil Service University has trained over 2,000 urban managers at Masters degree level to address urgent knowledge gaps in the management of Ethiopian cities and around 500 in tax and customs.. Sixth, the legal and policy framework has significantly been strengthened in areas such as finance, tax, civil service, decentralization, justice, and Information and Communication Technology. Seventh, the business process review is implemented in over 20,000 offices across the country to streamline work processes and bring customer orientation in the public service. The use of IT assisted by several sectors also brought significant improvement in service delivery, information exchange between government and with the public. These have streamlined functions and structures in government and significantly reduced overlaps. For details, see Section 3.2.

(c) Other unintended outcomes and impacts (positive or negative)

90. Progress made in ICT facilities has been instrumental in farmers getting up-to-date information on prices of commodities. Courts in Oromia have started sending automatic reminders on court hearing dates to plaintiffs and defendants, thereby increasing the efficiency of the court.

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91. As a fall out of the PSCAP’s empowerment efforts, there is an increasing involvement of citizens in small infrastructure and other developmental projects. For example, in Addis Ababa, about 800 Community Development Committees have been established and are managing small scale road access, drainage, sewerage and school maintenance activities in collaboration with the local government.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

92. Please see Annex 5.

4. Assessment of Risk to Development Outcome

Rating: Moderate

93. The ICR team considers that the risk to development outcome is Moderate, based on the following factors:

• The government has clearly expressed its willingness and commitment to continue working on public sector capacity building and governance issues with its own resources and grants. There is significant demand, especially from the regions where 80% of resources were spent, for sustaining and expanding these services. Therefore, there will be a tremendous pressure on the government to come up with adequate resources to meet this demand after the closure of the project. The issue is whether the government will be able to meet the demand without additional support from development partners. In the team’s assessment, there is sufficient goodwill to sustain the achievement of the project and its development objectives.

In the Treasury budget for fiscal year 2012/13, the government has provided (US$ 5.7 million equivalent) to regions, and provision of fiscal year 2013/14 Treasury funding for PSCAP is under preparation. The annual average disbursement of IDA was US$16 million during the project years. Thus, there is a financing gap that needs to be filled and likely to be partially met with bilateral donor funds. (for details, see Section 2.5).

• The ability of the public sector to motivate and retain well qualified professionals is weak, with the resultant staff turnover. The government has introduced a number of human resource management (HRM) rules and regulations recently, but it is too early to gauge their impact on staff retention. The study on staff turnover currently being undertaken by the World Bank, at the request of the Government, will provide information and options to the Government in dealing with the problem.

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5. Assessment of Bank and Borrower Performance 5.1 Bank Performance

Bank performance in ensuring quality at entry. Rating: Satisfactory 94. QER was carried out by a panel of reviewers for the project. The panel rated the quality of design, participation and partnerships and development impact as Highly Satisfactory, and implementation and Bank inputs and processes as Satisfactory. The panel noted that the PSCAP was notable for several strong features. For example: (i) On Ownership, the program for capacity building was launched many months before the World Bank became involved. (ii) On leadership: The government created a so-called Super-Ministry of Capacity Building and appointed a major leader of the ruling party as its head to drive home the CB program. (iii) On design, while there were arguably too many components (14), and too many sectors in the Bank-supported program (6). The focus on the decentralized units of government put the emphasis where it was needed most. (iv).On, collaboration: The PSCAP involved collaborative funding and support among several bilateral and multilateral donors, all working to a common program. (v) Flexibility: PSCAP allowed for different approaches in different circumstances, with only a few predetermined aspects such as principles governing inter-government resource transfers.

95. According to the assessment of the ICR team, the Bank's performance in the identification, preparation, and appraisal of the project was satisfactory. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects, such as technical, financial, economic, and institutional, including procurement and financial management. Major risk factors and lessons learned from other earlier projects in the public sector were considered and incorporated into the project design. The project was also prepared in a highly participatory manner.

96. Project preparation was carried out with an adequate number of specialists who provided the technical skill mix necessary to address sector concerns and a good project design. The Bank provided adequate resources in terms of staff weeks and dollar amount to ensure quality preparation and appraisal work. The project was consistent with the CAS and government priorities in the sector at the time. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal.

Quality of supervision: Rating: Satisfactory

97. Bank's performance during the implementation of the project was satisfactory for the following reasons:

98. Monitoring and problem identification: The project was adequately supervised and closely monitored through regular administrative procedures such as implementation support missions and several independent reviews and studies. Throughout the project’s life, financial management (FM) supervision missions and post-procurement reviews were undertaken to ensure that the recommended measures were implemented and the FM arrangements remained acceptable to the Bank. The task team regularly prepared Aides-Memoire, alerted the

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Government of Ethiopia and implementing agencies about issues found during project execution, and facilitated prompt corrective action. The Implementation Status Reports (ISRs) realistically rated the performance of the project both in terms of achievement of development objectives and project implementation. Initially, there were delays in the Bank issuing No Objection Certificate (NOC) for procurement because of lower threshold limit and shortage of procurement specialists in the Bank’s country office. However, with the raising of the threshold limit and with the recruitment of more procurement specialists, this issue was resolved. The Bank’s procurement and financial management staff worked with implementing agencies’ staff to explain the rules and procedures to be applied during project implementation, with regard to procurement of goods and works, and selection of consultants, accountants and auditors. The team also used the MTR to address significantly the key challenges around planning, M&E as well as procurement management. In addition, the task team was proactive in conducting supply and demand side survey to stay relevant to the issues that are important to the citizens and local governments. The team, however, missed the opportunity to streamline the indicators on incentives during the additional financing.

99. Generating knowledge for learning and informing implementation: A number of independent assessments and in-depth reviews on the overall program and specific elements of the reform were conducted to bring experiences from other countries to strengthen the program. These included: Independent Assessment of PSCAP (2007); Analysis of PSCAP(2009); Assessment of Training under PSCAP (2009), which changed the shift from mass orientation to a more focused skills development; Assessment of Gender under PSCAP (2009), which helped in identifying and enforcing gender-related minimum mandatory activities; Assessment of ICT (2009), which shifted the purchase of equipment to be based on the business process review recommendations; Assessment of Justice Program (2009), which ensured that sufficient attention was given to all justice organs rather than focusing only on the judiciary; Assessment of PSCAP Impact on Developing Regions (2009), which directed special attention to these regions; Assessment of M&E (2009), which made the focus on results and documenting the success stories; Assessment of the Good Governance Package (2012); and Social Appraisal of PSCAP, which confirmed that the activities under the package are actually making changes in participation, access to information, accountability at lower government and need to be monitored closely for it to make continuous improvement and for the donors to understand the political economy of the public sector in Ethiopia. The team has also supported the establishment of training on procurement of goods and consultants with the Ethiopia Management Institute using the PSCAP Facility to ensure ownership and sustainability of training.

100. Fostering ownership: The team helped in establishing “PSCAP Managers’ Network” to stimulate dialogue and decision making by creating a forum for mutual responsibility and accountability among important actors, including the political and technical staff involved in the program as well as donors. Similarly, in promoting mutual ownership of the program by all cooperating donors, the team with the support of PSCAP-supporting donors established PSCAP support facility to coordinate donors’ technical assistance and funding inputs and provide quality implementation support around public sector issues. Both these initiatives have been identified as good practices in the country management unit. The team was inclusive in the way they did their business. The relationship between the Government of Ethiopia, the Bank and donors was managed as per the signed MOU among themselves.

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101. Strengthening results orientation: The task team focused on the project’s development impact. Despite the large number of indicators, the team was able to collect the necessary data to measure achievement of results. The team continuously supported the government to make use of result oriented participation and performance agreements that link the activities to the outputs and outcomes. They also provided a number of training events, including the “demystifying the results agenda” training to continuously focus on the results. The continuous use of the Woreda and City Benchmarking Survey by the team to monitor impact of the program has been critical in identifying gaps and possible solutions. The application of the findings of the survey has now expanded to other large donor-financed government programs such as Protection of Basic Services (PBS) and Urban Local Government Development Program (ULGDP)

Justification of Rating for Overall Bank Performance

Rating: Satisfactory

102. With a Satisfactory rating for quality at entry and a Satisfactory rating for quality of supervision, overall Bank performance is rated as Satisfactory in accordance with IEG’s harmonized rating criteria

5.2 Borrower Performance

Government performance


103. Preparation: As discussed in Section 2.1, at project preparation the government had demonstrated its commitment to the project. The government performance during preparation is thus rated Satisfactory.

104. Implementation: The government consistently maintained its commitment throughout the implementation. In particular, the Government of Ethiopia was committed to ensuring sustainability of the capacity development activities because they comprised a primary means of ensuring continued social and economic development. The government officials worked closely with the Bank's project team on a continual basis, and cooperated fully with the task team.

105. Even though the government had disbursed only US$68.4 million to the program, which was 50% less than the pledged amount of US$137 million, this had no significant impact on the achievement of the project objectives and outcomes as other sources of funding and the additional World Bank financing compensated for this. However, as mentioned in Section 2.5, the government is committed to supporting the program after the Bank’s support stopped in December 2012 and has allocated resources in the budget to support the project, in addition to appointing a top level official (Deputy Prime Minister to coordinate reforms.

106. The project was complex because it integrated multiple sectors, multiple levels of government and multiple donors. Given its complexity, the responsibility of coordinating all these actors and managing procurement, financial management and M&E was daunting and as a

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result had an understandably slow start in the initial years but picked up speed, particularly after the mid-term.

107. The government performance during implementation is thus rated Satisfactory.

Implementing agency or agencies’ performance


108. The Ministry of Finance and MoCS had two hats- as coordinators and as implementers of the sub-program/s housed in their respective ministries. The Ministry of Finance and Economic Development (MoFED), as an overall coordinator of financial administration of the project, struggled in submitting the IFRs in the initial years. Subsequently, it improved significantly and submitted reports on time. The ministry was also implementer of the Expenditure Management and Control sub-program, a role it performed well. It has exceeded the agreed actions, something which has contributed to Ethiopia having shown improvement in 50% of PEFA indicators. Overall, the public financial management aspect of the project made significant progress and achieved its outcomes by the implementing agencies.

109. The MCB did not have any staffing issues and as a ‘Super Ministry’ it coordinated all project activities with other ministries. Following the restructuring of MCB into the MoCS, performance fluctuated, and it also had capacity constraints and high staff turnover. It was responsible for conducting several project activities, including BPR, developing prototypes of different reforms, project coordination, and DLDP. Reform of human resources management and control, including incentive mechanisms did not go as originally planned.

110. The Ministry of Information and Communication Technology maintained very close relationships with state level counterparts, and a good M&E system. It planned its activities jointly with regional counterparts, and was consistent in its performance and prompt in planning and reporting.

111. The Ministry of Urban Development and Construction supported cities by conducting courses for staff at Bachelor’s and Master’s degree level and, as a result, its graduates are managing cities in various capacities. It was also successful in strengthening the legal frameworks for cities, implementing city planning system and cadaster system.

112. The role expected of the Ministry of Justice was unusually complex because its activities covered a wide range of beneficiaries, including police, prisons, prosecution, and democratic institutions. Even though the responsibility for coordination of the justice program was moved a few times, the Ministry was successful in implementing activities such as introducing community policing, forensic laboratory, upgrading the legal education through revisions to the curriculum, and introduction of exit exams and apprenticeship before joining the workforce.

113. The Federal Supreme Court (FSC) implemented court reforms very well in the first 5-6 years of the project, but could not maintain the same tempo later on. The FSC implemented many innovative activities in improving access to justice and making justice information available to its users.

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114. The ERCA was very focused and organized in implementing its activities.

115. Regions: Regarding regions, their capacity was very low at the beginning but they improved over the years, and their overall performance was satisfactory.

116. Financial management: Based on the overall supervision missions conducted during the life of the project, the overall financial management rating of the project was maintained at Moderately Satisfactory. At the close of the project, the overall project risk was rated to be Moderate.

117. On many occasions, the project did not use the budget adequately as a management tool to help with decision making. The internal control system of the project was Moderately Satisfactory. Most of those control procedures prescribed in the government system were applied for the project. The project’s external audits from time to time reported weaknesses in the internal control system, and annually the project had worked towards fixing these weaknesses. Areas of weaknesses were mostly systemic, with the exception of weak monitoring of advances, non-existence of internal audit, and poor coordination between implementing agencies.

118. Procurement: The procurement system under the PSCAP project was implemented in about 20 implementing agencies. Implementation of the procurement aspect of both the original project as well as the additional financing shared the overall problems, which were encountered in the procurement system of the country. Some of the major problems which were encountered included lack of procurement personnel at all levels, low level of salary structure, and the consequent high level of staff turnover, as well as lack of familiarity with the Bank’s procurement rules and procedures.

119. At the initial stage of the project, the procurement aspect of the project was characterized by a considerable delay in the procurement processing of particularly the ICB contracts. Particularly, the centralization of the procurement of bulk items and equipment in the focal organization was considered a major impediment to the successful implementation of the project. Following the MTR, several measures were taken to improve the procurement performance of the project. The procurement process was decentralized and all implementing agencies, particularly the regional project implementing agencies, were entrusted with the responsibility of handling the procurement of ICB contracts.

Justification of rating for overall borrower performance


120. With a Satisfactory rating for Government performance and a Satisfactory rating for implementing agencies’ performance, overall borrower performance is rated as Satisfactory in accordance with IEG’s harmonized rating criteria. The satisfactory outcome achieved by the project was largely due to sustained government commitment and leadership and implementing agencies’ performance in executing their part of the project activities.

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6. Lessons Learned 121. There are a number of lessons that can be learned from PSCAP, both in the context of managing public sector reform projects, and in terms of lessons for the Ethiopia portfolio.

122. Invest time and effort in alignment and securing political support: PSCAP has been made up of a complex array of reforms across different sectors, fused together into a holistic and integrated approach. It would have been difficult for the World Bank to maintain its engagement without significant alignment of the project to the government’s own strategic plan, thus securing high level political support, ownership and commitment from the Government of Ethiopia. Much energy was invested at project design, and in the early days of the project, to understand the government’s vision and thereby secure a high degree of alignment, and in continuing to secure political commitment to the program. Public sector reform as a window into the state building agenda: Much of the core activities supported by PSCAP, in particular the rolling out of the decentralization agenda, are central to the government’s own vision of state building. Through its involvement, the Bank has learnt much about the dynamics of power, politics and government’s own vision for Ethiopia as a developmental state. This knowledge has been useful to the Bank in terms of informing its other engagements across the portfolio, and also in terms of its overall approach, which is now much better grounded in understanding of the context. There is a strong case for continued engagement in the public sector reform agenda, even if that is in provision of knowledge services as a partner to the government.

123. Engage more with support to sub-national governments where the bulk of service delivery takes place: One of PSCAP’s major characteristics was the support given directly to regions and their governments. Federal government is normally reluctant to allow direct donor-regional government relations, and thus PSCAP has not been typical. Agreement for the Bank and other donors to do business in this way was secured after a great deal of negotiation, but it has paid dividends. Regions have, under the program, been able to adapt national reform policies to meet their own priorities. Reform has been sequenced differently in different regions to reflect context. The program has thus been able to support the decentralization process much more effectively. At the same time, the Bank and other donors have been able to gain a better appreciation of the individual dynamics of each region, and better focus their support. The success of this approach has implications for the way in which the Bank and other donors might manage their portfolio and design their operations in the future.

124. Innovative use of streamlining client satisfaction surveys in operations help to provide feedback to influence behaviors in institutions: Streamlining the Woreda and City Benchmarking Survey has been instrumental in helping to assess the effectiveness of reform, particularly at decentralized level, as part of gauging the ‘demand’ side customer satisfaction. This has allowed both the donor team and the government to identify gaps and shortfalls, and also areas where there are success stories. A measure of the survey’s success is the increasing government ownership of the process and use of its outputs, to the extent that the survey will almost certainly outlive the project and be conducted by the government in the future.

125. The ‘learning by doing’ approach was a pragmatic approach to reforms: The project had employed an approach to reform where activities had been sequenced, and where things were tried out locally to see what worked best before being scaled up. Sequencing reforms so

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that the more institutionally advanced regions undergo certain activities in advance of other regions has been successful, as have arrangements where the developing regions ‘twin’ with their more developed neighbors (e.g. Afar and Tigray) so that mentoring support can be given practitioner to practitioner. This approach has resulted in reforms being grounded in actual practice rather than ‘one –size fits all’ approach.

126. Enforcing “minimum mandatory activities” in framework type projects: Given Ethiopia’s uneven capacity among regions, the development and enforcement of prioritizing the basic capacity building in HR, Finance, and working systems as “minimum mandatory activities” enabled the regions to utilize the transfers responsibly and get the results across implementing agencies regardless of initial capacity.

127. Context matters - customizing reform according to context: This has been particularly relevant in the four developing regions, where capacity constraints have meant that reform needs to be approached in a different way from the more developed regions.

128. Realism of Supervision Budgets: The Bank’s supervision budgets for this large and complex project were not sufficient. The team had to look for other donors support in the first two years to ensure quality implementation support is provided to the client. The quality of the support provided to the client is significantly enhanced following the establishment of the trust funds. Thus use of complementary financial instruments was a useful lesson.

129. Have a simple and implementable strategy for Information, Education and Communication: The appraisal concluded that a strong campaign of IEC is essential to the satisfactory implementation of public sector reforms. To this end, an IEC strategy was developed at the beginning and consultant was hired to simplify the document during implementation. Although IEC activities were implemented, they were not implemented systematically to maximize awareness and support from all stakeholders.

130. Complex design, multiple sectors and implementing agencies as well as multiple donors make implementation support and monitoring very challenging. While this approach have worked well in Ethiopia, it is not certain it will work elsewhere, especially without strong political leadership. It also means overstretching supervision teams and complexity of assessment of achievements. 16 PDOs indicators and over 27 intermediate outcome indicators is rather too complex to manage, despite the success in the case of Ethiopia.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners 131. See Annex 7.

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Annex 1: Project Costs and Financing

(a) Project cost by component (in US$ million equivalent)

(Total rows and percentage column will be calculated by the system) Components Appraisal Estimate

(US$ million) Actual /Latest Estimate (US$ million)

Percentage of Appraisal

1. Federal PSCAP 76.0 86.5 33 2. Regional PSCAP 301.9 173.7 67 3. Other payment 2.0

Total Baseline Cost 377.9 262.2 69 Contingencies 19.9 0 Total Project Costs 397.8 262.2 66

Project Preparation Facility (PPF)

0.35 0

Front-end fee (IBRD only) - - Total Financing Required

397.8

(b) Co-financing

(The appraisal estimate will be pre-populated from the financing data in SAP/AUS; Percentage of Appraisal column will be calculated by the system) Source of Funds Type of

Financing Appraisal Estimate (US$ million)

Actual/Latest Estimate (US$ million)

Percentage of Appraisal

Borrower 137.5 67.3 49 IDA 100.0 1 129 100 CIDA Grant 38.8 16 41 SIDA Grant 8.6 0 - Other Donors (DfID, Irish, Italy, EU)

Grant 113.0 502 44

Total 397.8 262.3 66

1 Later revised to US$ 80 million and International Development Association Additional Funding (IDAAF) pooled US$ 50 million.

2 Donors’ money is still available in the government PSCAP pool fund. The EAs will access this money until June 2013. Therefore, this amount does not include the unused budget of this pooled fund.

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Annex 2: PSCAP overall outputs and sub-programs

Output 1—Strengthened Legal and Policy Framework

Civil service reform Program (CSRP) • The revised civil service proclamation was enacted and adopted by all regions.

• A number of human resource management (HRM) rules and regulations (recruitment and selection, transfer, promotion, etc) were made operational.

• A gender-responsive recruitment mechanism is one of the features included in the revised civil servants proclamation and provides for affirmative action towards females to join the civil service.

• The business process reengineering (BPR) guideline was approved by the Council of Ministers and has become operational at all levels of government to streamline work processes. It has, specifically: i) clarified the strategic vision, mission, mandates and products of public organizations; ii) allowed redesigning of work process by removing non value-adding steps; iii) developed service standards and reduced required documentations from service users as well as established the practice of posting of the service standards by organizations; iii) transformed the highly hierarchical organizational structures into more flat and process-oriented structures; iv) decentralized tasks to lower levels of government; v) merged and/or established new offices, including one-stop shops; vi) customer-focused and empowered front-line staffs; vii) enforced wearing of name badges, establishing information counters, and open office layouts; and viii) exerted a lot of effort in changing values and attitudes needed for organizational change.

• Legislation and operating systems have been prototyped for strengthening accountability and transparency in Amhara, Tigray, SNNPR, Gambella, and Afar.

• Quick wins implementation guidelines have been prepared and implemented.

• Civil service charter and citizen charter initiative was launched.

• Service delivery policy and grievance handling guideline have been implemented in all regions.

• National ethics and anti-corruption policy and training manual handbook was developed. Each region has established an Ethics and Anti-corruption Commission, and corruption legislation with the exception of Somali region.

• 18 federal ministries are undertaking risk assessments to reduce the opportunities for corruption (rent seeking).

• Four (4) big regions and Harari have codes of conduct in force. Civil service ethics proclamation, principle and directive have been adopted in Gambella.

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• All federal and regional MABs have introduced affirmative action measures by giving extra points for female candidates in selection for recruitment. Three developed regions have also introduced affirmative action in promotion decisions. All regions claimed that affirmative action had increased the percentage of female civil servants.

• Gender mainstreaming guideline was adopted in Oromia, Addis Ababa and Benishangul.

Expenditure Management Control Program (EMCP)

• PSCAP fully supported the legal framework reforms, which include amending and distributing the financial proclamation, developing the prototype public finance management regulation and directive, and enacting and amending the Procurement Act and training modules. The cash management directive has also been rolled out in all regions from a baseline of zero regions. The cash management reform identified and closed many inactive and unnecessary bank accounts, introduced zero balance system based on cash flow and drawing limits, introduced key cash flow sheets, disbursement, and approval forms. As a result, an accurate and reliable cash management and control system was established.

District Level Decentralization Program (DLDP)

• The model local government legislative framework was developed by the Ministry of Capacity Building. Eight (8) regions (Tigray, Harari, Amhara, Oromia, Benishangul-Gumuz, SNNPR, Somali, and Gambella) proclaimed and implemented the Act, which determines powers and duties of Woredas. Afar prepared a directive to determine the functional assignment between region and Woredas.

• Woreda legislative bodies’ guidelines, and Kebele council functional assignment proclamation were enacted in Gambella.

• District level decentralization strategy/program document or Decentralization Act (including capacity building) and review of plan were prepared in all regions.

• Human resource development plans and guidelines in Amhara, Tigray and Gambella are in place.

• The good governance package issued 10 directives and 16 service delivery formats, implemented in all regions.

• Kebele committees, Kebele cabinet, Kebele inspection directives in Somali are all in place.

Justice System Reform Program (JSRP)

• A larger number of laws were enacted or revised, including: i) regional family laws, which were adopted by Somali, Gambella, Benishangul-Gumuz, Oromia, Tigray, SNNPR, Amhara and Harari; ii) regional constitutions amended by Amhara, Gambella, Benishangul-Gumuz, Oromia and Somali; iii) over twenty (20) establishment or re-establishment proclamation of executive organs enacted in all regions; iv) proclamations

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on the establishment of urban and rural centers; v) establishment proclamation of judiciary administrations, including Kebele social courts in all regions; vi) code of conduct for civil servants, prosecutors, police, appointed officials or council members, etc; vii) The proclamation for vital events registration, and the criminal procedure laws which is being drafted; viii) rule and regulations of police force developed in Oromia, Tigray, Amhara and Somali; ix) criminal code with its explanatory note drafted in Oromia; x) Labor proclamation and revised criminal code translated into oromiffa and somali languages; xi) transparency and accountability laws enacted in Amhara, Tigray, SNNPR, Gambella and Afar; xii) regional attorney registration license law and customary laws enacted in Afar and Somali; xiii) regulation and rules of the treatment of prisoners/rehabilitation prepared in Somali region; xiv) mechanism developed for communication of members of the council to their constituents and for the Council to have an eye over the Cabinet in Amhara and Tigray; and xv) regulation and directives for the establishment of members of the community policing and determination of their roles and responsibilities developed in Afar and Somali.

• Legislative drafting manual has been developed to serve as a guideline for drafting and amending laws.

• Case handling manual has been developed for the ombudsman.

• The proclamation for asset and income sources disclosure and registration for public officials was enacted in 2010, and implementation has started at the federal level. The second corruption survey was also completed by an international firm. The survey points out the corruption hotspots, which will require attention from government.

Urban Management Capacity Building Program (UMCBP)

• National urban development policy has been developed and implemented.

• All nine (9) regions adopted the city/municipal proclamation from a baseline of four (4) regions at the beginning of the PSCAP. Addis Ababa and Dire Dawa have been established as chartered cities.

• National Urban Training Strategy has been developed.

• Legal and Institutional Framework Study for the four (4) Emerging Regions and Harari has been conducted. Draft proclamations have been completed and given to the regions to review.

• The prototyped financial regulations have been implemented in Tigray, Harari and Somali regions.

• Urban land development and management policy directions and implementation strategy document has been developed.

• Regulations and directives were issued in land, finance, revenue, human resources, and a large number of municipal services (such as compensation of property, solid waste

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management, building permit, advertisement service, market upgrading, etc). Different municipal manuals have been developed, such as: Market upgrading and administration manual (Tigray, SNNPR and Dire Dawa); Slum upgrading study and manual (Dire Dawa); Municipal accounting system and procedures (Oromia); Result-oriented performance evaluation manual (Tigray); Construction contracting and administration manual (Amhara and Tigray); Participation manual (Dire Dawa, Harari, Gambella and Somali); Sample revenue collection format (Gambella);Regional house rent manuals and format (Gambella); Rural urban linkage manual (Gambella); Coblestone construction manual (Somali); Housing transfer manual (Somali); Municipal enterprises service delivery manuals (SNNPR); Information and public relations services modality manual (SNNPR); Training services modality manual (SNNPR); Organizational services modality manual (SNNPR); One-stop shop service modality manual (SNNPR); Training manual for personnel, property, quality, project management (SNNPR); Urban organization and human resource management guideline (SNNPR);and Fixed asset capitalization and inventory control manual (Tigray).

• National and regional urban development and housing policies and strategy were developed by federal government in 2005 and implemented in all nine (9) regions.

• Cadastral manual was prepared in Amhara and Dire Dawa.

• Infrastructure delivery and financing strategies and implementation plans were completed for the four (4) major regions and Dire Dawa.

• Condominium proclamation, regulation and guideline were developed in Tigray, Dire Dawa and Somali.

• City Master Plan preparation, issuance, and implementation proclamation was finalized in Dire Dawa, Harari and Somali.

• The property registration proclamation was enacted at federal level in 2011.

• The urban land development and management policy, along with its capacity development framework, 16 legal frameworks, and 19 standards and manuals were developed by federal and adopted by Dire Dawa, Harari, Benishangul, Somali and Afar.

• Regional urban environmental protection strategy and directives were prepared in Oromia and Amhara.

• Municipal judicial administration and legal framework for municipalities were prepared in Somali region.

• Manual for tariff proposal was prepared in Oromia, Dire Dawa, Gambella, Harari and Somali.

• Fiscal transfer framework for urban local government was prepared in Dire Dawa and Gambella.

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• Design urban development and administration policy strategies, manuals and guidelines; compensation regulation and manual; legal framework for urban centres; guideline to municipal incorporation, were all prepared in Gambella.

• Urban planning regulation was prepared and revised; rental urban land administration legislation/ regulation was issued in Somali, Tigray and SNNPR.

• SNNPR developed different business development and technical skill development manuals.

• Urban infrastructure service guideline; public participation and environmental development guideline; urban justice and legal framework guideline were developed in SNNPR.

• Guidelines for upgrading Kebele housing and neighbourhood were prepared in Tigray.

• Good governance packages were implemented in all regions.

• Urban centers establishment and organization proclamation and regulation (legal framework) were prepared in Gambella and Somali.

Tax System Reform Program (TSRP)

• The government has enacted the proclamation for income tax, amended VAT, revised turnover tax, excise tax, customs duty, stamp duty, post-clearance audit directive, etc.

• All regions adopted the income tax, turnover tax, excise tax, VAT, agricultural income tax and land use fee.

• A large number of tax laws were issued by regional governments, such as the chat tax, livestock tax, etc.

• Stamp duty proclamation was developed in Tigray, SNNPR and Benishangul.

• Mining income tax proclamation was introduced in Tigray region. Benishangul drafted the proclamation.

• Use of rural land for investment proclamation was developed in Benishangul and Somali region.

• Municipality tax laws and service charge laws were prepared in Tigray, Benishangul and Somali.

• Municipal revenue regulation was introduced in Tigray.

• Withholding guideline was adopted in Harari, Gambella and Benishangul.

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• Presumptive taxation guidelines for implementing withholding taxes and assessing presumptive tax bases were developed. A national profitability rate was issued for all types of small businesses as a model adopted by all regional states. The standard assessment replaced the estimated assessment, which was prone to corrupt practices.

Information Communication Technology (ICT)

• National ICT policy was developed and adopted.

• National e-government strategy document was developed and implemented.

• ICT community development strategy was developed and implemented.

• Community information center guidelines were adopted by regions.

• National architectural framework for e-government was developed.

• ICT human resource development strategy was developed and adopted by regions.

• Guidelines for public key infrastructure were developed.

• ICT research and development guidelines were developed.

• Enterprise architecture framework was developed.

• Federal network master plan document was prepared and implemented.

• E-service quality management framework for Ethiopia is in place.

• ICT infrastructure and service management framework and guidelines were developed.

• Translation of ICT terminologies to Afar and Somali languages concluded and included on Google.

• Quality assurance guidelines were developed.

• Software development standard and inter-operability guidelines were prepared in Amhara.

• Strategy document was developed/ customized to improve community information access in Somali.

• ICT material procurement guidelines were prepared in SNNPR.

• Regulations for the establishment of ICT Development Agency were developed in regions.

• ICT Steering Committee Guideline was developed in Amhara.

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Output 2—Restructuring and Performance Improvements

Civil Service Reform Program (CSRP)

• Around 145 federal, 404 regional and 19,635 at Woreda level ministries, bureaus and agencies (MABs) completed the BPR. In developed regions, it is implemented at service delivery outlets. Regarding the emerging regions, some have cascaded BPR to service delivery outlets, while others are at the pilot testing stage.

• CSR coordination structures, operational systems and practices, and strategy have been implemented in all regions.

• All regions have functioning organization structures that oversee and manage CSRP.

• All federal and regional ministries, agencies and bureaus prepared the medium term strategic plan, which made up the Growth and Transformation Plan (GTP), and which is the equivalent of the poverty reduction strategy.

Justice System reform Program (JSRP)

• The House of People’s Representatives adopted new parliamentary procedures and code of conduct for its members. A revised proclamation for law-making procedures, including the process of three-step reading and public hearings, was introduced in Oromia, Tigray, Afar and Benishangul-Gumuz.

• Improvement has been reported in the justice organization’s filing and recording system for their personnel, prisoner’s records, and case flow in Oromia, SNNPR, Harari, Addis Ababa, Benishangul and Somali. SNNPR put in place an information management system for the justice/prosecutor’s office and Oromia and Somali are developing the system.

• Court reform program has been implemented in all courts at all tiers of government. As a result, opening file in federal and regional supreme courts requires only one step and takes an average of 24 minutes now compared to eight (8) steps and a minimum of one day in 2005. The average clearance rate improved from less than 60% in 2005 to 98% in 2012 across the national courts. Congestion rate improved from more than 1:3.6 in 2005 to 1:1.5 in 2012.

• 15,452 social courts are established across the nation to handle small claims and mediations.

• Mobile benches have been introduced particularly in remote areas in Oromia, SNNPR, Tigray, Somali and over 42,368 cases have been heard in these regions over the last three (3) years.

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• The “real-time dispatch” has been put in place in the advanced regions, and Addis Ababa, Gambella, Benishangul, Afar and Somali, thus allowing the sentences to be taken within one day, in cases of clear identification of the crime and culprit in petty offences.

• The use of color coded filing system has been expanded from 115 in 2005 to 884 in 2012.

• Court case flow management system was implemented in 466 courts in 2012 compared to 25 in 2005.

• The number of courts with functional transcribing and recording systems is now over 135.

• The number of courts with LAN is over 130.

• The courts are using different mechanisms to enhance access to justice information. 692 Information Counters have been established to provide case related information and a wide range of information about the courts, including court judgments.

• The Federal Supreme Court is using websites, touch screen and the interactive voice response system, which provides case-related information to clients 24 hours a day and 7 days a week through a toll free hotline number.

• A total of 30,700 judges and court supporting personnel were trained, of which over 4,800 are judges.


• Situation analysis was completed in 18 towns.

• Restructuring and performance improvement plans were prepared for 18 towns, and some are being implemented through PSCAP as from end of fiscal year 1999.

• Organizational structures and staffing were established in towns in the four (4) major regions, Harar, Dire Dawa, Addis Ababa, Benishangul and Somali.

• Urban human resources development strategy and directive has been prepared in Tigray.

• Personnel management manuals and systems have been developed and implemented in the four (4) major regions, Addis Ababa, Dire Dawa, Harari and Benishangul.

• Computerized financial management and accounting system was developed and implemented in Addis Ababa and Dire Dawa.

• Prototype computerized financial management and accounting system was developed for other towns.

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• Sixteen (16) service delivery manuals were prepared and other operational manuals/handbooks prepared, ready for publication, dissemination and implementation at city level.

• Nineteen (19) urban land development and management standards and manuals have been prepared.

• Infrastructure assessment and infrastructure inventories were completed in 18 towns.

• Five year municipal infrastructure investment plans (MIIPs) were prepared for 18 towns from different regions.

• The urban land information system is used in many regions.

• City administration structure was developed in four (4) urban centers graded in Gambella and Somali regions.

• Structural plans for cities have been prepared by regions.

• PASDEP strategy document with “Emerging Urban Agenda” was prepared.

• Development plans for towns and municipalities were prepared in Amhara, Tigray, Dire Dawa and Gambella.


• The Ministry of Revenue, Federal Inland Revenue Authority (FIRA) and the Ethiopia Customs Authority (ECuA) conducted a comprehensive BPR that looked thoroughly at the three organizations to create a seamless organization and bring about institutional transformation. FIRA, ECuA and Ministry of Revenue were merged into one office (Ethiopian Revenue and Customs Authority) in June 2008. Regional tax administration offices were separately organized to incorporate nationally similar functions.

• The BPR allowed a more competitive salary structure for tax officials and resulted in significant reduction in processing of tax and customs-related services.

• Computerized taxpayer identification number (TIN) was implemented in all regions. TIN is now complemented with biometric technology that fingerprints taxpayers. Over 2 million taxpayers’ information was collected and registered through the biometric system. The Standard Integrated Government Tax Administration System (SIGTAS) was implemented in all federal branches and also rolled out to eight (8) regions (4 big regions, Addis Ababa, Dire Dawa, Harari and Afar) for all taxes except presumptive tax. ASYCUDA++ was implemented in all 28 sites across the nation compared to the target set at 17.

• Tax and Customs Institute was established and strengthened. Over 565 people had graduated at BA and MA level, and hundreds are also in the pipeline. In addition, the Institute is managing all short-term training and new staff orientations.

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• The computerized taxpayer identification number (TIN) has been implemented in all regions, and the number of businesses issued with TIN certificate increased from 15,555 in 2005 to 2,021,087in 2012.

• Tax information system security strategy and plan was introduced by federal government in order to protect the security of the systems. TIN is interfaced fully with customs and National Bank of Ethiopia, and is underway with Ministry of Trade, and Ethiopian Commodity Exchange.


• Major IT-infrastructure investment was made in strengthening the existing national, 11 regional and 560 district/Woreda data centers, which were initiated by the government and expanding the Woreda net infrastructure to additional 175 new Woredas.

• These infrastructures were initially being used for video conferencing, active directory (file sharing), messaging (e-mail) and voice over IP. The use of the national database has now expanded to hosting 8 portals, 28 federal websites, and 10 applications including the Integrated Budget and Expenditure management system (IBEX) and VC-assisted court proceedings.

• The number of courts that have video conference facilities is now 229 compared to zero in 2005.Since 2009, over 36,012 court cases have been heard using the VC facility, which enhances access to justice service and reduces cost of justice service. Similarly, the average number of training conducted using the Woreda net is 127,715 per year, excluding a huge number of meetings, which has reduced the cost of training significantly.

• In addition, the federal network master plan is fully operational in 32 federal ministries and agencies, and the implementation of the same in additional 15 federal ministries and agencies is under procurement. This is expected to be completed by close of the project.

• The federal ICT has developed web pages for five regional Women’s Affairs Bureau and Ethiopian Tourism Portal, and also upgraded four ministries web portals.

• A number of information systems and applications were developed. Common administrative applications are also being developed for human resources management information systems, property management, records management, transport fleet management, purchase management, digital documentation and payroll systems.

• Online applications such as online trade registration and licensing, online exam registration and placement are being implemented.

• Provision of information on currency exchange, electric bill and 10th and 12th grade results and placement through the mobile phone was launched (number 8181).

• The first phase e-service expansion, which consists of 33 new informational and transactional e-services application for 5 ministries and one agency was launched and the

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second phase for 31 online services and 44 informational services through mobile and internet will also be launched by close of the project.

• Management information system (MIS) software for different institutions such as Ministry of Transport, National Library and Archives, and Environment Protection Authority is operational to increase their effectiveness in sharing information at federal and regional level. Similarly, to cite some examples, Oromia developed MIS for six (6) sector bureaus, Tigray for land and transportation management, Amhara for land and food security Pass, Benshangul for health, education, etc.

• Connecting offices through networking is used in more and more regional offices. This has expanded from 17 in 2005 to 174 in 2012.

• A system has been developed for spelling corrector of Amharic text and web-based malaria expert system, with embedded Amharic and Oromifa languages.

• ICT training manual has been prepared in regions such as Harari, Somali, SNNPR, and Amhara.

• ICT curricula for technical and vocational training have been developed in Harari and Somali.

• Several ICT-related studies have been conducted in Somali region, and also the following developed: the videoconferencing training manual in local language; ICT training assessment: IT training strategy and program; hardware and software requirement for the computerization of the court; ICT fast-track curriculum; and ICT manpower assessment and development strategy.

• ICT training needs assessment has been conducted in Afar.

• Amhara region conducted ICT Infrastructure Survey for Amhara National Regional State and ICT Impact Assessment in 2012. It has also developed user manuals for data collection, analysis, compilation; training centers management; training documentation; as well as for using personal computers for fax.

Output 3—Reforms of Expenditure Management System

• Expenditure management Control Program (EMCP). The financial laws, regulations and manuals were rolled out at federal level and regions.

• The procurement and property administration proclamation was prepared at federal level and adopted by all regions.

• Internal control/audit system legislations have been refined in all regions.

• Most regions had initiated the reforms on budget, accounts, financial management information systems using Treasury and USAID-led Decentralized Support Activities

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(DSA) financing. PSCAP continued strengthening the initiated systems in the bigger regions, but made a major contribution in streamlining these reforms in the four (4) developing regions, particularly in Somali.

• Currently, no accounts backlog at federal and regional level, except in Gambella, which has two (2) years accounts backlog compared to 4/5 years backlog. Similarly, there is no audit backlog except in Gambella, which has four (4) year backlog compared to over eight (8) years.

• In addition, the EMCP supported the development of a program budgeting manual, stock management manual, revision of accounts manual based on the new public finance management, fixed asset manual and training modules, as well as establishment of standards for fixed assets and supplies standards. Furthermore, the sub-program concluded the assessment of harmonized and integrated pool system of state and municipal financial administration functions, integrating the property management and budget module with information management system, connecting finance bureaus and Woreda net for reporting; translating budget manuals; and institutionalizing training for procurement professionals.

Output 4—Improved Personnel Management Systems in Practice

Civil Service Reform Program (CSRP)

• A new system of job evaluation and grading (JEG) has been developed and is being tested on a representative sample of jobs.

• The performance management system, known as the Balanced Score Card (BSC), is now being implemented in 145 federal and over 270 regional offices, and for the first time in the history of the civil service in Ethiopia, the institutions have integrated balanced scorecard measures in their strategic plans. A system of individual performance agreements linked to team and organizational performance targets derived from the balanced scorecard methodology is also being implemented in the above mentioned organizations. The performance appraisal manual developed in April 2012 has been pilot-tested in some offices for the last quarter of fiscal year 2011/12.

• Several regions attempted to develop the IT-based personnel management system, including Addis Ababa, SNNPR, Amhara, Somali, Tigray, Benshanagul and Afar. Moreover, the nation-wide integrated civil service management information system that is expected to streamline all systems is under development. The user requirement is finalized and the software customization will be finalized before June 2013, with support provided by other cooperating partners.

• A significant part of PSCAP funding went to skill enhancing activities. Skills were strengthened through on-the-job training, study tours, and short and long term distance training at Diploma, BA, MA and PhD level. Some examples include 2 PhD graduates, 2,621 urban management graduates at Masters’ level, over 565at MA and BA in taxation and customs, as well as over 10,600 graduates of MA, BA and diploma level in a range of

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subjects, including leadership, accounting, public administration, law, etc. The long term training has significantly increased the number of qualified civil servants at sub-national level. A huge number of short term training courses have also been delivered by each sub-program on new laws, directives, working systems, and reforms as well as to citizens on good governance under DLDP, tax payer education under TSRP, etc. The CSRP delivered training to over 736,207; the DLDP to over 7,743,404 staff and citizens; the JSRP to over 159,297; the UMCBP to over 216,246; the ICT to over 140,456; the TSRP to over 307,082 (excluding tax payer education using different media) and the EMCP to over 45,505.

Output 5—Intergovernmental Fiscal and Revenue Mobilization Mechanisms in Place

District Level Decentralization Program (DLDP)

• The model fiscal transfer formula for both sedentary and pastoral-based regions was developed by the Ministry of Capacity Building. All regions, except Harari, have developed a fiscal transfer formula, compared to only four regions in 2005. Predictable and transparent formula-based fiscal transfers have been developed for regions and Woredas.

• Specific purpose grants for capital investments were introduced from the federal level to 51 pilot Woredas in the four (4) relatively-advanced regions and Benishangul–Gumuz through BPS, and cities through ULGDP.


• Five-year municipal capital investment plans were prepared with the participation of stakeholders. In addition, 19 reforming cities produced a three-year investment plan.

• Revenue enhancement plan was prepared in Tigray, Dire Dawa and Somali.

• Fiscal transfer framework for urban local government was developed in Dire Dawa and Gambella.


• Different manuals were developed and made operational at federal and regional level, including tax accounting and auditing manual, tariff manual, customs transit and clearance manual, anti-smuggling strategy and manual, risk management procedure, receipt keeping and utilization manual, tariff manual, complaint handling manual, post-clearance audit manual, cash register manual, translation of VAT audit and collection manual, and forms to local languages, etc.

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Output 6–Vertical Accountability Mechanisms Established

Civil Service Reform Program (CSRP) • All offices have established service standards as a result of the BPR initiative. These

were developed in consultation with clients. Standards are publicized through the media, pamphlets, notice boards (where the service is provided). Efforts are now exerted to formalize these standards through the Citizens Charter. The Ministry of Civil Service pioneered the first ever Citizen Charter in 2012. This was followed by consultation and training workshops with sectors and regions to roll out the system at all levels. Fourteen (14) federal ministries have developed Citizen’s Charters and publicizing them has been initiated. Amhara region has developed charters for all regional bureaus. Three other big regions have developed charters for their Civil Service Bureaus as a model, based on the charter developed by the Federal Ministry of Civil Service.

Output 7–Horizontal Accountability Mechanisms (or Checks and Balances) Established

District Level Decentralization Program (DLDP) • Devolution of basic services to the district/Woreda level scaled up to all nine (9) regions

and two (2) city administrations compared to four (4) regions in 2005.

• All regions have adopted the framework for grassroots participation.

• All regions implementing the good governance package have strengthened participation by establishing the following key institutional focal points for participation: i) Kebele Managers: These are lower level professionals hired to coordinate and mobilize resources for effective service delivery. They provide a one-stop shop service to citizens, address requests and complaints, present issues and complaints beyond their capacity to the Kebele Council or administration for decision, compiles and makes available Kebele data, consolidates Kebele plan in collaboration with plan experts, and mobilizes people and resources as needed; ii) Kebele Supervision and Inspection Team: The team reports to the Kebele Council and has nine (9) members consisting two (2) members from youth, two (2) members from women associations, and the other five (5) from voting and non-voting Kebele Council members. The team is responsible for reviewing and reporting whether plans are prepared in a participatory manner and activities are implemented according to plan using the right procedures and in a fair and transparent manner.

Justice System Reform Program (JSRP)

• The recent study on independence, transparency and accountability in the Ethiopian judiciary reports that the independence of courts is adequately recognized and protected in the Ethiopian Constitution and the various laws concerning the judiciary. Significant efforts are exerted through short and long-term training to address gaps in understanding and respect for the principles of judicial independence, both by all judges and by executives. Judicial Administration Commission (JAC) is now independently organized and the board has been made to include lawyers, legal educationists, and prominent citizen figures to make it more transparent. Judge nomination has become fully merit-based. In addition, the justice system reform focused on reforming legal education to

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produce qualified legal professionals. Assessment was made on the entire curriculum and 16 out of 67 courses were found to be below standard. These curriculums have been revised and upgraded. Manuals to administer the mandatory exit exams and apprenticeship were developed, and are being enforced for all legal students.

• A study has been conducted on recurrent petitions to prevent maladministration and citizen right violation.

• Guidelines for legal teaching material and textbook have been prepared.

• Clinical legal education manual and code of conduct governing students engaged in clinical program and externship program have been developed.

• Other regulatory frameworks and guidelines have been developed, such as distance legal education in Ethiopia directive, continuous professional legal development directive, and short term legal training in Ethiopia directive.

• Research has been conducted on the traditional legal system of Tigray (Wajirat), Afar and SNNPR (Konso) regions.

• Public perception survey on justice system has been conducted.

• Each region has established an Ethics and Anti-corruption Commission, except Somali region. At federal level, 18 ministries are undertaking risk assessments to reduce the opportunities for corruption (rent seeking).

• All civil service institutions at federal and regional levels are audited annually by the auditor-general, and the reports are presented to their respective parliaments. Annual physical performance reports are also submitted to the respective parliaments (semi-annually in the case of federal MABs). Standing committees function at regional and Woreda level in all regions.


• The framework for urban public participation was developed by the Ministry of Urban Development and Construction.


• ICT is increasingly being used to enhance citizen’s access to government information and services. Call centers are established for 21 offices in Addis Ababa, Oromia and SNNPR, which make use of toll free numbers (888-Addis Ababa and Oromia and 942 for SNNPR). Averages of 1,000 calls are received daily on the system. Similarly, the national government portal is providing information to internal and external users and is being visited by over 7,000 users monthly. Overall, 162 websites were developed at regional offices to serve a similar purpose.

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Annex 3: Economic and Financial Analysis

Additional Examples of the Project’s Efficiency Almost all the sub-programs have advanced beyond what was anticipated under the five (5)- year

action plan. • In decentralization, the good governance package attempted to streamline all principles of

good governance (accountability, transparency, efficiency, effectiveness, rule of law, participation and consensus building, etc) rather than addressing only participation of citizens. It also helped to institutionalize the Kebeles (village) level administration in service delivery and decision making process. In doing this, decentralization has helped to provide services to the population in an efficient way.

• The urban component managed to more than double the target of Masters’ level urban graduates from a planned target of 1,000 to 2,621, of which 2,102 (80.2%) came from regions.

• Expenditure management and control introduced program budgeting, fixed asset management systems, etc in addition to rolling out the reforms initiated earlier. In addition, the improvements in planning, budgeting, execution and reporting will have trickle-down effects in other programs.

• The biometric taxpayer information registration system that is implemented across the nation registered over 2 million taxpayers’ information from a baseline of zero (0) in the last three years.

• Justice supported new initiatives such as asset registration and disclosure, and reforms in legal education.

• The promulgation and implementation of land lease system is the major activity of cities, which has brought efficiency in land delivery system.

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Annex 4: Bank Lending and Implementation Support/Supervision Processes

(a) Task team members

Names Title Unit Supervision/ICR Tafesse Freminatos Abrham Consultant AFTMW Elsa Araya Senior Public Sector Management Specialist AFTP2 Berhanu LegesseAyane Senior Public Sector Management Specialist AFTP2 Deepak Bhatia Lead e-Government Specialist TWICT Rupert Bladon Senior Public Sector Specialist AFTP2 Melvyn Blunt Ex-Task Team Leader AFTP2 George Ferreira Da Silva Finance Analyst CTRLA David G. De Groot Consultant and Ex-Task Team Leader AFTU1 Rohit Gawri Information Analyst IMTOS Samuel Haile Selassie Senior Procurement Specialist SARPS Navin Girisharnkar Lead Evaluation Officer and Ex-Task Team Leader IEGPS Kallaikuruchi Jairaj Senior Public Sector Management Specialist AFTPR-HIS Siele Shifferaw Ketema Program Assistant MNSHD Hanna K. Hailu Team Assistant AFCE3 George Addo Larbi Lead Public Sector Management Specialist AFTP2 Lillian Brenda Namutebi E T Consultant AFTME Richard Olowo Lead Procurement Specialist AFTPE Asegid Regassa Consultant AFTP2 Francisco Roquette Consultant AFTP2 Shenaz Ahmed Saifulla E T Temporary HDNED Francesco Sarno Consultant MIGOP Tilahun Wolde Consultant AFTP2 Shimelis Woldehawariat Senior Procurement Specialist AFTPE Serdar Yilmaz Senior Economist AFTP4 Eshetu Yimer Senior Financial Management Specialist AFTME

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(b) Staff time and cost Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of Staff Weeks US$ Thousands (including Travel and Consultant Costs)

Lending FY02 38.30 FY03 28 158.68 FY04 80 237.98 FY05 0.00 FY06 0.00 FY07 0.00 FY08 0.00

Total: 108 434.96 Supervision/ICR

FY02 0.00 FY03 0.00 FY04 0.00 FY05 65 156.86 FY06 86 209.55 FY07 109 174.40 FY08 105 253.59 FY09 83 131.60 FY10 55 97.19 FY11 70 68.40 FY12 63 77.50 FY13 45 96.65

Total 681 1265.74 FY=Fiscal year

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Annex 5: Beneficiary Survey Results

Woreda and City Administrations Benchmarking Survey IV: Citizens’ Report Card (CRC) Survey of Service Delivery Satisfaction Status The Public Sector Capacity Building Program Support Project finances six (6) core sub-programs that are directly linked to the outcomes. One or more sub-programs may contribute for each of the outcomes. One of the binding agreements in the project is to initiate Woreda/district and city level benchmarking as one of the main monitoring tools. The Woreda and City Benchmarking Survey helped in creating the baselines data and to measure progress over the years. The first survey was conducted in 2005/06 in a limited number of local governments and covered the supply side survey only. Starting the second survey conducted in 2008, it incorporated the demand-side survey. The supply-side survey collects and analyzes the data from officials in local jurisdictions on aspects such as financial autonomy, institutional capacity and coordination, service delivery, practice of participation, and openness of the local government affairs to citizens. The demand side survey, on the other hand, collects and analyzes the views, opinions and perceptions of citizens with regard to service delivery, openness of the local governments, including access to government information, participation and accountability. The demand side survey uses three tools (Citizens’ Report Card using household survey), Focus Group Discussion with citizens representatives, and Key Informant Interviews with civil society organizations). The first round of the Woreda and City Benchmarking Survey was carried out in 2005/06 and established a baseline in a limited number of jurisdictions - 78 jurisdictions (10% of the total districts and city governments). In the subsequent three rounds, the sample size increased to 291 jurisdictions (38%), 384 jurisdictions (50%), and 256 jurisdictions (33%), respectively, including the initial (10%) jurisdictions used for time series comparison. The Citizens’ Report Card component, which is using household survey, aims to collect and analyze the views, opinions and perceptions of citizens with regard to governance and service delivery at the local administration level. In every round of the survey, it covers about 11,000 households. The survey result indicates a confidence interval of +/- 3 percentage points at 95% confidence interval. According to the survey results, the proportion of households satisfied with overall health services has increased from 62% to 70% between 2008 and 2011 (WCBSII and WCBSIV). While primary education satisfaction has risen from 84% to 91%, the agriculture extension service satisfaction has also increased from 90% to 94% for the same period. In relation to transparency and access to government information, citizens who know what taxes and fees they are legally required to pay increased from 60% in 2008 to 81% in 2011. Those who know about their Woreda budget and strategic plan increased from 13% and 17% in 2008 to 20% and 19% in 2011, respectively. Citizens who know council meetings are open to the public increased from 11% in 2008 to 32% in 2011, while those who are personally consulted on development issues increased from 17% to 20% over the same period. In the recent Woreda and City Benchmarking Citizens Report Card, 49% of the respondents think an ordinary person can do something to hold local government leaders to account if they fail to keep their promises. Similarly, the loss of confidence that concerns raised regarding local government’s service

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quality will be addressed also seems to recover slightly after considerable loss between 2008 and 2010. Confidence that concerns raised in relation to quality of service in health increased from 56% to 58% and in water from 8% to 14%. Key indicators from the 23 Woredas used in each Citizens Report Card survey round 2008 2011 Health

% satisfied: Public health service – mean of: 62% 70% % satisfied: waiting time for medical attention 66% 81% % satisfied: attitudes of medical personnel 66% 74% % satisfied: availability of drugs 53% 54% Use of public health facilities in cities 50% 84% Use of public health facilities in rural areas 77% 94%

Primary Education - % satisfied 84% 91% Agricultural Extension Service - % satisfied 90% 94% Solid Waste - % satisfied 70% 71% Water Supply - % satisfied 61% 58%

% very confident that concerns with water quality raised with woreda or city administrations would be addressed?

28% 12%

Tax collection - % satisfied 53% 53% City residents who say they pay income tax 17% 63%

Rural residents reporting land tax payments 42% 92%

2. Transparency of the public sector and access to government Information by citizens

Citizens who know what taxes and fees they are legally required to pay 60% 81%

Citizens who know the woreda budget 13% 20% Citizens who know the woreda’s strategic plan 17% 19%

Citizens who know woreda council meetings are open to the public 11% 32%

Citizens personally consulted 21%

3. Accountability of public officials Citizens who think an ordinary person can do at least something to hold Woreda/City Administration leaders to account if they fail to keep their promises.

49%

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Annex 6: Stakeholder Workshop Report and Results

I. Report on the First Workshop of the PSCAP Project Managers’ Network (PPMN) 12 April 2011: Desalegn Hotel, Addis Ababa

Introduction The Ministry of Civil Service in collaboration with the World Bank and the PSCAP Facility hosted the 1st PSCAP Project Managers Network Workshop on 12 April 2011. It was attended by Heads of Capacity Building/Civil Service Bureaus and Planning and Programming Officers of the nine (9) Regional States and two (2) City Administration; State Ministers, Directors and Program Coordinators of the Federal implementing agencies and the relevant Directors at the Ministry of Finance and Economic Development. The main objectives of the Workshop were to: i) establish the PSCAP Project Managers Network; ii) review the progress of PSCAP in the first six (6) months of the current fiscal year; iii) agree on the way forward on earlier agreed actions; and iv) identify areas of further clarification and direction. PSCAP Managers Network: Terms of Reference Participants appreciated the effort made by Ministry of Civil Service (MoCS) and the World Bank to establish a network that will provide a national forum to closely follow up PSCAP implementation. The draft Terms of Reference was discussed and several comments on the membership, functions and modalities were provided. Some of the major comments included expanding the membership to Heads of Bureaus of Finance and Economic Development, who are administering PSCAP’s finances and PPD Heads in regions who are following up the day to day activities of PSCAP; convening the meeting quarterly with a provision to call emergency meetings as needed; and to include both physical and financial aspects of PSCAP in the review. It was recommended that a document be produced to incorporate the network in the current institutional arrangements to avoid duplication and the document be disseminated to all the participants along with the revised Terms of Reference. The issue of strengthening the steering committee at the regional level will also need to be taken up by the Bureaus of Capacity Building/Civil Service in line with the comprehensive institutional framework to be developed. The next meeting of the PPMN was also tentatively planned to be held on 12 July 2011. PSCAP Six Months Report (June-December 2010) Performance of Implementing Agencies: The report covers the period between June and December 2010 and reports the activities that are completed 100%. The report shows that all regions received the Treasury component of PSCAP in July 2010. At federal level, good progress was documented in ICT, EMCP in strengthening the legal and policy framework as well as systems development, followed by Justice, Supreme Court, and Urban. The activities under Tax system reform are mostly completed and the few suggested require more time to complete because of their nature. On the other hand, progress was not made in CSRP and DLDP during the report period.

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At regional level, a relatively slower pace was witnessed in the last six (6) months. Dire Dawa from the relatively advanced regions and Somali from the developing regions were able to progress their activities better. Amhara, Tigray, Oromia, Harari, Somali, and SNNPR made progress on selected activities. On the other hand, it was not clear from the report how much was done in Gambella and Addis Ababa. In addition, no report was received from Afar and Benshangul. Performance of thematic areas and categories of expenditures: Overall, activities that contribute towards improving performance of service delivery and those that enhance transparency of the public sector progressed relatively well than those that relate to strengthening the participation of citizens and civil society organizations in the development process. The financial regulation and directives, manuals for procurement, budget, property management and stock management were revised. Integrating the budget manual and property management into the information system was also completed by the EMCP sub-program. Similarly, the ICT sub-program developed the e-government strategy, e-government architecture framework, and Public Key Infrastructure (PKI) framework and guideline. These were complemented with skill-developing training activities that added value in improving performance of the public service delivery. The training from CSRP focused more on the balanced score card; DLDP on good governance; EMCP and Court Reform on developed or revised regulations, manuals and systems; JSRP on roles and responsibilities of the three branches of government, ethics, alternative dispute resolution; ICT on basic and advanced ICT; Tax on taxpayers education; Urban on Masters degree in urban management, and short-term training on urban systems such as base map development. Similarly, the Federal Supreme Court and ICT sub-program developed several systems that enhance access to government information, thus contributing to increasing transparency of the public sector. The establishment of the call center for six (6) federal institutions and the development of the portal for six (6) federal institutions are worth mentioning. On average, 35,000 people made use of the call center to resolve their issues and 2,500 people visited the portal to get information. Similarly, the Court reform also updated its website and interactive voice response system, which allowed users to get case-related information by calling a hotline number. Format of the physical progress report: Most of the implementing agencies used the appropriate Participation and Performance Agreement (PPA) format to track their progress. However, Oromia and Gambella did not provide sufficient detail on the PPA, and Amhara, A.A, and Somali did not use the full PPA format to report. In almost all reports, the level of detail provided in the narrative is either not sufficient or too elaborated. The report from the Federal ICT seemed to balance the two by producing short but clear report. This was promised to be disseminated to all for reference. Finally, as one of the minimum mandatory activities, the report on training should have included gender disaggregated number of participants, but none of the reports incorporated this aspect and was recommended to be included in the annual report at the end of the fiscal year.

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Financial report: The Interim Financial Report (IFR) was submitted a little late but has improved a lot compared to the previous years. Audit for year that ended on July 2010 was received on time. Key recommendations: All agencies should submit their reports on time, incorporating a summary narrative on results, tracking developments on the agreed PPA, and providing gender disaggregated information on the training provided. Coordination between Federal and Regional Sub-program Directors The ICT sub-program has been identified as the best practice in terms of the coordination between the federal and regional counterparts. Ato Abiy Tessemma, Coordinator of PSCAP at the Ministry of Information and Communication Technology, made a presentation on the sub-programs experience. Determinants of the success include the leadership’s commitment, and determined dates for reporting and meeting. The regions are benefiting from these meetings by learning from others and getting answers for their questions. The participants appreciated the need for close working relationship between federal and regional sub-program directors to ensure the plan reflects the country’s overall direction in each sector. It was agreed that all the sub-program Directors meet with their regional counterparts in the next couple of months and PSCAP’s plan for end of fiscal year 2004 be conducted together before a finalized document is produced by regions. This should be followed by six (6) monthly meetings to review progress. The MCS will organize a meeting with Ato Abiy for federal agencies that need further guidance, and a copy of the presentation will be sent to all. Strengthening the Four Developing Regions The Ministry of Civil Service reported on the support provided to all regions in implementing the reforms over the past six (6) years, but the result was mixed. Based on the Ministry’s assessment, only the four (4) developing regions would require further support from the ministry. Accordingly, the Ministry has finalized its plan of action to build the capacity of the leadership and the professionals in these regions on four basic areas: i) human resources management system; ii) financial management and audit; iii) planning, implementing, monitoring and reporting on activities; and iv) leadership, change management, and team building. The plan has already been sent to the four regions for their reactions. The support is already being initiated in the Somali Regional State. About 75 professionals were trained on Training of Trainers (ToTs), and this was done in collaboration with the Ethiopian Management Institute and Ethiopian Civil Service College. Ethiopian Management Institute (EMI) and Ethiopian Civil Service Collage (ECSC) will continue to support the trainers to conduct training to 3,000 professionals and leaders in the coming months. The Afar Regional State representative reported receiving the plan and expressed their agreement. They requested the Ministry to initiate the process late April 2011, as they are conducting the BPR in the region. Representative of the Benshangul-Gumuz Regional State also reported receiving the plan and are happy to get the training, but noted that their region is in much better situation than others. Gambella’s representative was not familiar with the plan and was asked to convey the message to the leadership. The PPMN agreed with the Ministry’s plan to support the four (4) regions in building the capacity in the four (4)

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indicated areas and also use the PSCAP facility to enhance their capacity in procurement, financial management, and M&E. Synergies between big Programs such as PSCAP, LIG, PBS, ULGDP, DIP Protection of Basic Services (PBS), Local Investment Grant (LIG), and Urban Local Government Development Program (ULGDP) are three large initiatives that provide recurrent and capital investment to rural and urban local governments, while Democratic Institution Program (DIP) supports the democratic institutions. It was noted that the success of these programs is dependent on adequate capacity for planning, service delivery and expenditure management, and accountability, which PSCAP is expected to deliver. Good results are already achieved in ULGDP as a result of the graduates from the Masters in Urban Management Program supported by PSCAP, and who are now working in the different cities to implement ULGDP. Similarly, PSCAP funding was used to build the capacity in the Ministry of Finance and Economic Development - MoFED/Bureau of Finance and Economic Development - BoFEDin order to manage the big programs indicated above. In the current fiscal year, efforts have been made to avoid duplications in EMCP and DIP-supported institutions. It was noted that the Channel One Coordinating Unit was established in MoFED, and was able to produce and apply uniform procedures on all large channel one programs. However, a lot can be done to make aid more effective by synergizing them. The network agreed that a group from the MoFED, MCS and the Bank to meet the Channel One Department at the Ministry of Finance to identify further areas of synergy between these programs. PSCAP Facility Work Plan The Bank made a brief summary of the purpose of the PSCAP Facility and the eligible expenditures, and reported the activities suggested by the contributing donors. This was followed by a request to the participants on other activities that they think will improve the implementation of PSCAP. The participants will send their suggestion by e-mail. Participation under PSCAP One of the pillars of the government’s homegrown “good governance package” is participation. The good governance package was implemented in all the relatively advanced regions, and is being initiated in the four developing regions. From the report provided by the regions, the package seemed to focus at Woreda and particularly at Kebele level. In the advanced regions, 16 service delivery formats and 10 directives, including participation manual, were produced and training was given to women, youth, teacher associations, development committees and inspection teams. As a result, the Kebele structure was revised and the mechanisms for citizens and civil society organization participation were expanded by increasing the number of Kebele council members to 300 and establishment of four (4) development committees and a separate inspection and supervision team that consists of both the citizens and members of the Kebele Council. These development committees’ comment on plan, priority list, identification of sites, time of execution, and modalities of implementation. The inspection and supervision teams also review plans, monitor the implementation of the plans, and report to the Council (quarterly) and the public (six monthly). Youth, women and others were encouraged to form associations. In

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addition, citizens are also participating directly in development activities with monetary and non-monetary contributions, and a lot is being done by the citizens. One example is the establishment of “Development Ketean” in Addis Ababa. These are development committees that have a chair, secretary and auditor and are responsible for identifying problems, and prioritizing on what needs to be done. They have already met the citizens’ needs in health, water, road, etc. Similar examples were cited from all regions. Another area where the citizens are participating is in community policing. On the other hand, the expenditure management and control sub-program also described the financial transparency and accountability initiative supported by the Basic Protection of Services. The initiative covers federal, regional and Woreda levels and four (4) manuals were produced and supported with five (5) people at the federal level, one person at regional, three (3) at zone and five (5) at Woreda level. Training was provided to these focal persons and at least 50 people from each Woreda on participation of citizens in budget planning and monitoring of budget. The initiative focuses on developing user friendly information to laypersons on budget, using easily understood pictures. This discussion was complemented by a presentation made by Mr. Per Wam, a Social Scientist on the general international experience in the area of participation and accountability and some of the work done by PBS. The network recommended that a consultant be hired to review what is happening on the ground, to track results and areas of improvement, and integration between the work that is done in PSCAP and PBS. Major Points of Concern and Suggested Actions Shortage of funds: The Head of the Treasury Department explained to the participants that Statement of Expenditures have to be sent by implementing agencies to replenish the utilized funds. He explained that the Treasury component of PSCAP fund was sent as an advance to all the regions but the fund from the Bank was sent to only six (6) regions because the other five (5) regions have not accounted for what they have already taken. All regions must submit the Statement of Expenditure (SOE) as soon as possible to get the replenishment. Delayed finalization of PPA and procurement plan: The main problem behind the delay in the PPA finalization is the lack of focus in the draft PPA sent by regions. It was noted that the World Bank has given its no objection to most activities and suggested to proceed with exception of those few that require further revision. But still, the final procurement document was submitted by Dire Dawa, Harari, Oromia, A.A, Tigray, and Amhara. All have received their no objection except Amhara, which was planned to be revised with MCS but the suggested staff from MCS has now left the Ministry. From the Federal Agencies, the Urban Development Capacity Building Office (UDCBO) and Information and Communication Technology Agency (ICTDA) submitted. UDCBO received its no objection, while the procurement staff from ICTDA is expected to finalize the document with the World Bank’s Procurement staff. SNNPR, Somali, Benshangul, Gambella, and Afar from Regions and EMCP, JSRP, Court, CSRP, DLDP, Tax need to submit their final procurement plan to the World Bank, and the Procurement Specialist will provide support in finalizing it to those that require assistance. Clarification on procurement procedures: Some of the participants requested clarification on the procurement procedures particularly in relation to whether regions should use the government or the Bank’s procurement procedures, and whether there is a predetermined preference on whether

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to use the regular budget or the PSCAP fund to buy goods because of VAT payment. The network agreed that clarification on the suggested questions should be provided by MCS and the World Bank as soon as possible. M&E capacity: Implementing agencies reported that they have put in place procurement and M&E staff. Strengthening the capacity of M&E and procurement in implementing agencies is a continuous process. MCS informed the participants that four (4) days M&E training is under preparation and will be conducted on 25-28 May 2011. II. Report on the Second Workshop of the PSCAP Project Managers’ Network, 3 October, 2011, Kaleb Hotel, Addis Ababa Introduction The Ministry of Civil Service in Collaboration with the World Bank and the PSCAP Facility hosted the 2nd PSCAP Project Managers Network Workshop on 3 October 2011. The meeting was chaired by H. E. Ato Adamu Ayana, State Minister of PSCAP and co-chaired by Wzo Elsa Araya, the task team leader of PSCAP. It was attended by Heads of Civil Service Bureaus, Planning and Programming Officers of the nine (9) Regional States and two (2) City Administration; State Ministers, Directors and Program Coordinators of the Federal implementing agencies, the relevant Directors at the Ministry of Finance and Economic Development and their Regional counterparts, as well as donors from DfID and the EU. The main objectives of the workshop were to: i) review the progress of PSCAP in light of the agreed actions in the last network meeting and the joint review mission; and ii) brainstorm on the future operation of PSCAP. Agenda 1: Status of Agreed Actions–Previous Network Meeting and the Joint Review Mission Leadership and Coordination Steering Committee: The most impressive improvement was observed in the effort to revamp the steering committees in all regional states and city administrations. All regions have reinstated the steering committees that are chaired by the President or Deputy Presidents of the regions. The 2004 participation and performance agreements were reviewed and approved by these steering committees, and the cover letters signed by the President or Deputy Presidents. Coordination between Federal and Regions Program Directors: The coordination between federal and regional sub-programs has also improved. Almost all programs have met with their regional counterparts. The draft 2004 plan was discussed on a three day workshop in Debreziet, and later the revised version from regions were commented on by all sub-programs, except urban. Strengthen communication with PSCAP stakeholders: PSCAP Managers’ Network has continued to serve as the medium for all partners to share information, agree on issues of common interest, and dialogue on important policy issues. The second network meeting was conducted on 3 October 2011, though after some delay.

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Program Management Coordinating office at the Ministry of Civil Service: The Ministry has still a lot of way to go to make the PSCAP coordinating office fully effective. There is a PSCAP focal person and one out of the two agreed M&E staff continued to work on PSCAP, although still not focusing on M&E. One procurement staff was hired but the Finance Officer and the replacement for the Director are not yet hired. Program coordination and management in Gambella and Benshangul: The Ministry of Civil Service reported that they will have a meeting with the representatives of these regions following the network meeting. However, the agreed orientation to wider stakeholders in these regions has not yet been conducted. Streamlined and strengthened JSRP management: Four (4) monitoring and evaluation staff were assigned to follow up on the activities of JSRP, but the full time Procurement Officer is not yet hired. Concerted support to Developing Regions: The Ministry of Civil Service continued its effort in providing an intensive training of trainers in planning, government financial management, audit, human resource management and team building to create the basic capacity. In addition, the Ministry has allocated funds to hire professionals for each region to continue its support. Disbursement and financial management: The Bank has replenished the government account two times following MoFED’s two submissions in July and August. The Audit Report Action plan was also prepared by MoFED, and details were discussed and agreement was reached to provide response by 10 October 2011. Regular meetings between MoFED and MCS have not yet materialized, although they communicate informally when need arises. Strengthening monitoring and evaluation: A comprehensive M&E training was conducted in collaboration with the World Bank from 29 May to 1 June 2011. Currently, there is one out of two agreed M&E staff at the Ministry of Civil Service. All regions have submitted their annual report and there is slight improvement in reporting results and providing gender disaggregated data. Program Activities Review of participation of citizens and civil society: The consultants were hired and have completed their field visits. The draft report is expected to be produced at the beginning of November 2011. Initiate studies in performance-oriented incentive system: The integration of individual performance management was not included in the 2004 CSRP PPA. Therefore, comment was sent to CSRP to get this activity included in this year’s Participation and Performance Agreement (PPA).

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The development of application for e-services: The contract for the development was awarded. Agenda No. 2: Brainstorming the future PSCAP A kick-off presentation was made by the World Bank. The presentation included comparison between Ethiopia’s public sector reform approach and other countries, the results documented so far by PSCAP, and a few suggestions on the possible strategic issues the follow-up PSCAP should deal with. Some of the suggestions touched on the need to develop effective institutions in terms of using resources, attracting and retaining good professionals, using ICT, etc. In addition, issues of corruption particularly in urban land administration, strengthening accountability mechanisms, enhancing the rule of law and independency of the judiciary, as well as enhancing citizen’s participation were mentioned. It was noted that previously used systems were replaced with new ways of thinking, but these are at their infant stage, and continuous support is needed to ensure institutionalization of the new systems. The meeting recommended that the Ministry of Civil Service convene a meeting to initiate this discussion shortly. Agreed Actions 1. All implementing agencies will take the necessary measures on the current agreed actions,

and those that were agreed before but were not fully achieved. 2. The steering committee will convene meetings quarterly and the regional technical team on

a monthly basis to ensure continuous involvement of the high level leadership and effective implementation of the program by the technical staff(ongoing).

3. Regular monthly meetings will be convened between the Federal Ministry of Civil Service and Ministry of Finance and Economic Development to address implementation issues timely(ongoing).

4. Responses on the actions taken in relation to the audit findings will be sent to MCS/MoFED by Monday, 10 October 2011. In addition, all implementing agencies need to make their utmost effort to clear advance payments timely.

5. Federal and regional implementing agencies will confirm/notify the Ministry of Civil Service on: i)the Directors and focal persons working on PSCAP and whether the staff who had taken the M&E training are still in place and conducting M&E-related work(20 October 2011).

6. All federal and regional implementing agencies should focus on results in their reports and also provide gender disaggregated data where it applies(ongoing).

7. The Ministry of Civil Service will convene a meeting shortly in relation to future PSCAP(4 November 2011).

8. MoFED, as an overall coordinator of programs, will initiate the discussion on synergies that could be maximized between PSCAP, PBS, ULGDP and DIP (14 November, 2011).

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Annex 7: Summary of Borrower's ICR and/or Comments on Draft ICR

Overall, the report is good and it is appreciated since it tries to incorporate quantitative data, which is difficult in such kind of projects. But we have some comments in general.

Considering PSCAP activities as an additional task is wrong perception by the implementers, since their routine activities include support to reform. Since PSCAP is a reform activity, the implementers should perceive it as additional responsibility. Therefore, the solution may be for the respective implementing departments to incorporate PSCAP activities in the job description of the relevant staff and include it in their performance evaluation. The other solution would be to assign separate individuals the PSCAP activity as a coordinator at federal level.

There were capacity gaps among implementing bodies. Their implementation performance also varied from region to region and program to program. Other challenges were timing problems in planning, monitoring and evaluation of PSCAP activities.

We have to be cautious when we mention the regions that achieved some results. In that case, there might be other regions (beyond the listed regions) that achieved some result but did not use PSCAP resources. Therefore, the report should recognize this fact. For example, regional constitution was amended by many regions other than those listed in this report (i.e. Amhara, Gambella, Benishangul, Ormia, Somali). The regions mentioned used PSCAP funds to amend their constitutions. But other regions might have amended without using PSCAP resources for this purpose. It would be useful to make this distinction.

The issue of cross cutting areas was a challenge for the whole project implementation period. PSCAP has three cross cutting issues: Gender, HIV and Environment. Specifically, HIV and environment were not properly addressed. In fact, there is some effort but that is not enough and was not as expected. The EAs had difficulties in mainstreaming these activities in their annual plans. It may be because of the nature of the sector, but there must have been some solutions to address this challenge since the problem was identified during the MTR period.

We agree the problem of staff turnover is general and needs attention. It affected the performance of the project and institutional memory of the project.

Information, Education and Communication (IEC) was part of project activities, but it was not properly implemented.

Annex 8: Comments of Co-financiers and Other Partners/Stakeholders

Written comments on the draft ICRR on PSCAP were received from the Department for International Development, Italian Cooperation and European Union. The comments broadly confirmed the findings and appreciated the effort to substantiate the achievements with quantitative data which is usually difficult in such kind of projects. The comments are summarized below:

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General Consolidating Core Government Functions: PSCAP was very helpful in consolidating core government functions at all tiers of government. It is difficult to summarize all PSCAP achievements in quantitative terms as qualitative aspect is as important as the quantitative results, if not more. (DFID) The long-term nature of reforms Vs project cycle.: It is important to note the long term nature of reforms in the public administration and appreciate the mismatch between the accepted project life cycle and the need for long-term engagement on the issue in a developing country like Ethiopia. (Italy). Design The project was well designed and appropriate for public sector capacity building implemented across the country. The two issues indicated in the document such as the performance-based budgeting and indicators related to incentives could have been reengineered during the MTR. (EU) The design of PSCAP is comprehensive and probably the best in principle but the capacity to manage it effectively has been an issue because of capacity. (DFID) Implementation “Super” Ministry of Capacity Building Vs. Ministry of Civil Service: The document can differentiate the profile and level of focus the project had enjoyed before and after the restructuring of the former Super Ministry to the current Ministry of Civil Service which seems to have reduced scope and coverage. The restructuring compounded by turnover of skilled staff resulted in disruption of implementation. (EU, Italy) Information Education and Communication Strategy: The reforms, given the achievements, were not complemented with an appropriate communication strategy that systematically keeps everyone informed and prompts the good work. (EU, Italy) Synergies with other large programs: PSCAP was the first program that was in place to address public administration in the country. Although, there has been an effort to coordinate the activities that were originally covered by PSCAP and later on picked up by other large programs that came after it such as PBS, LIG, ULGDP, greater synergy could have been maximized (Italy). Delay in donors’ funds: The delay in other donors’ funds was partly caused by the absence of clarity on the part of the government on the future of the program when the new Ministry of Civil Service was created. (EU) MoFED’s Role: The dichotomy in the expected roles of the MoFED as fund manager/financial manager as well as the beneficiary as part of one of the components of the program could have

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contributed to delay in approval. MoFED performs well when it is both the owner and administrator of any program. (EU) Risk: The original risk assessment didn’t explicitly included high turnover of key staffs and top officials the program encountered later. Way Forward Road Map: The Ministry of Civil Service has also developed a Roadmap for Civil Service Reform for the next 5 to 10 years in collaboration with DFID. The document was accepted by the government. (DFID)

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Annex 9: List of Supporting Documents

• Project Implementation Plan • Project Appraisal Document for Ethiopia Public Sector Capacity Building Program

Support Project (PSCAP) dated 25thMarch 2004 (Report No: 28191-ET). • Aide Memoires, Back-to-Office Reports, and Implementation Status Reports. • Project Progress Reports.

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Additional Annex 10: ICR Assessment of the Risks Risk Rating at

Appraisal Risk Mitigation Measure Agreed at Appraisal

Progress Over the last 8 years Current Rating

From Outputs to Objective

Insufficient expressed demand on the part of citizens, civil society, and the private sector for improved public sector performance in terms of service delivery, empowerment, and good governance

H IEC campaigns prior to implementation continued; systematic disclosure of findings of service delivery and related assessment; regular workshops with clients governed by institutional charters across civil service institutions

The PAD rightly identified “insufficient expressed demand on the part of citizens, civil society and the private sector for improved public sector performance in terms of service delivery, empowerment, and good governance.” Weak demand-side pressure is a structural feature of the Ethiopian context, associated with the country’s history and socio-political culture. Ongoing patterns of social and political interaction have both reinforced and shifted this existing pattern, and IEC campaigns, client workshops, feedback and disclosure of findings regarding service delivery have undoubtedly had an impact here. In this respect, PSCAP activities have been at the forefront of seeking to stimulate demand-side pressures, initiating and supporting a number of processes by which service users demand better services from the providers, albeit systems that remain in their infancy. The embryonic call center experience suggests that service users may be becoming more demanding, a trend also apparently indicated by the results of successive WCBSs giving service users’ feedback on a range of services and resources. Over the period since 2004, however, increasing doubt has been cast on the scope, impact and validity of demand side pressure as either “single” or central explanation in the improvement of local public goods and services. New research has reiterated the importance, under certain circumstances, of supply-side pressures, notably

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Risk Rating at Appraisal

Risk Mitigation Measure Agreed at Appraisal


effective political leadership to create a conducive incentives environment. In the Ethiopian context, it is not unreasonable to conclude that the primary driver of improved public sector performance has been supply-side leadership and investment, rather than client demand so that this risk, albeit rightly identified as high, has had much less of an impact on program objectives than anticipated.

Absence of or delay in Woredas’ and municipalities’ access to fiscal support for investment and recurrent service delivery needs, after receiving capacity building support

N Both budget and capital investment support will provide fiscal additionality to capacitated local jurisdictions to meet recurrent and investment service delivery needs

The analysis that this was a relatively negligible risk at the beginning has been borne out of experience. Through much of the program period, concern focused primarily on the low levels of non-salary budget available to Woredas, considered to be a primary constraint on the autonomy and creativity of local decision-making, with the overwhelming majority of locally available resources consumed by salaries. In recent years, research has suggested that total resource flows to Woreda level include significant capital expenditures, albeit often accounted for as Specific Purpose Grants, a number of which are not integrated in the quantification of overall resource flows incorporated under MOFED’s automated IBEX treasury financial tracking and management system. The review concludes that a more holistic accounting process could potentially increase the evidence available to citizens of the “value added” provided by the public sector. If this accounting incorporated “community contributions”, which are currently invisible, this could be expected, in turn, to change citizen perspectives on the contributions they make to local service delivery, boosting their sense of ownership in the delivery of local services, and of a funding

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relationship premised on partnership rather than either central subsidy or local extraction. Public posting of Woreda budgets has already raised awareness about resources spent locally, although there is great scope for more work in this area. It is to be noted that the most recent PSCAP Aide Memoire comments that the cancellation of LIG from the forthcoming phases of PBS may have an impact on the local availability of capital funds. While the risk rating remained unchanged, this was largely as a result of the Aide Memoire team’s conclusion that the GoE’s substantial MDG fund will contribute in alleviating any resulting shortfalls, particularly for regional local governments struggling to achieve MDG-related objectives.

Over-emphasis on process rather than the bottom-line of service delivery and empowerment

PSCAP outcomes are defined in terms of service delivery impact rather than simply triggers; over time, outcomes rather than outputs provide basis for allocation and reallocation decisions

The definition of PSCAP outcomes in terms of service delivery improvements seems to have secured measurable as well as processual results, and many of these have been documented in Joint Government-Donor Working Group work on results (PSCAP Support Project 2009, 2007). A focus from the beginning on outcomes as well as outputs has been a key part of this success, as has been the systemic impact of support for a high-level and comprehensive commitment to BPR. Systemic gains have gone well beyond the original focus on “quick wins” to stave off stakeholder cynicism, and the review and downgrading of this risk from substantial to moderate in the most recent Aide Memoire is appropriate. Nevertheless, as indicated above, more attention needs to be given to articulating the individual links in the “value chain” or “theory of change” between inputs, outputs and outcomes. This would seek to trace the relationships between improved service delivery outcomes, and improved

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citizen-state accountability, transparency, and inclusion outcomes. While the former may be adequate to the achievement of MDGs, for instance, transformation in relation to the latter will be required to obtain the overall outcomes envisaged in PSCAP planning. Tracing these processes and connections, as repeatedly noted above, requires a political analysis of state building processes and their impact on citizenship norms.

Lack of coordination between sub-programs and their outputs, or lack of consistency of public sector reform programs across regions

S The design empowers regions to prioritize between sub-programs, exploiting synergies between them, and at the same time leveraging the expertise of federal sub-program directors to ensure compliance with national policy directions and standards for content and implementation

The complexity of PSCAP meant that the risk of poor co-ordination between sub-programs, or lack of consistency across regions was regarded as substantial. This risk has also been downgraded as a reflection both of the maturity of regional financial and implementation autonomy, and of the capacity and efficacy of coordination between federal and regional counterparts.

M

Political commitment to institutional transformation wavers, or Government is unable to sustain focus on PSCAP because its ambitious development agenda (including food security, human development, rural development, and private sector development)

M High level political involvement in consensus building around PSCAP across ministries, among regional leaders; establishment of a nation-wide structure of capacity building bureaus and offices with budgetary responsibilities

Political commitment to public sector capacity building has sustained in the last eight years. The government was committed to ensuring sustainability of the capacity development activities because they comprise a primary means of ensuring continued social and economic development as well as contributing to the continuing legitimacy of Ethiopia as a Federal State through PSCAP’s concentration (80% of total funding) on capacity building at regional level and below. It has expressed that it would like to continue to work on public sector capacity building and governance issues with its own resource and grants. The government continues to provide funding to regions and has also received OK from the EU to continue supporting the program and requested extension of use of funding from the UK and Italy, which is under process.

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IDA will supplement using its knowledge and partnership mechanisms to stay engaged.

From Components to Outputs

Vested interests at regional and federal levels hamper various reforms, including restructuring, accountability, and systems modernization efforts

S At the regional level, allow for prioritization and reallocation from sub-programs that are stalled towards those proceeding rapidly

Eight (8) years of experience of the PSCAP program implementation regime has brought familiarity with a structure that allows flexibility in prioritization, and this seems effectively to have precluded problems with vested interests presenting blocks on program implementation. Strong, disciplined, centralized reform leadership has precluded the capture of program processes or resources by interest groups. Meanwhile, this centralized reform leadership alongside the constitutional self-determination vested in the NRSs under federalism seem to have combined to curtail the scope of a range of federal vested interests, as the strength of NRS voice, interest and autonomy have gradually begun to emerge. These processes are embryonic but increasingly significant.

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Lack of coordination among donors supporting the Sector Wide Approach

M Establishment of a Joint Government-Donor PSCAP Working Group to facilitate joint quarterly review meetings, semi-annual supervision, and annual review missions; increased supervision intensity for Bank and donor team, including measures to better meet due diligence requirements in regions, Woredas, and municipalities

Considerable progress has been made in the formal adoption of the Terms of Reference for the Joint Government-Donors PSCAP Working Group and the signing of the MOU for pooling donors under the PSCAP SWAp. The joint working group conducted all implementation support missions together. In addition, a multi-donor trust fund was established and managed by the Bank to effectively support the government in tacking implementation issues and coordinating inputs. In 2011, the PSCAP Managers’ Network was established and includes federal and regional counterparts as well as donors supporting PSCAP. The progress warrants a reduction in the risk rating.

N

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Constraints on the cost, innovation, quality, timeliness, and efficiency of the supply response of purely public sector supply of training and capacity building in Ethiopia

H Assessment of the supply-side of training and capacity building across Ethiopia’s public, private, and non-profit sectors; pre-qualification of training suppliers for “generic training” activities; and strengthening of public sector training institutions to carry out “in house” training activities

Both federal and regional implementing agencies are now using both the public and the private sector for providing some of the generic training particularly on ICT. The originally identified risk of constraints on the supply of training does not seem to have been borne out by events. It is perhaps reasonable to conclude that a different risk has emerged: that of quality, efficacy, impact and sustainability of training. If this area of programming is a feature of co-operation going forward, attention needs to be given to the quality of the teaching-learning process. Traditional approaches to “rolling out” policies and training programs seem to inform the majority of training undertaken, and their limitations in pedagogic terms are well documented. On this point, however, it is worth noting that there is limited evidence that private sector training is necessarily more effective or enlightened than public sector or in-house programs.

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Weak institutional capacity at the regional and federal levels to carry out core financial, procurement, program management, and M&E activities, particularly in emerging regions

H Establishment of well-staffed Planning and Programming Directorates (PPDs) and sub-program offices or equivalents; contracting in skills, preparation of sample Terms of Reference and procurement materials; intensive training of government officials; preparation of M&E Action Plan as part of PIP/OM; incorporation of semi-annual and annual output commitment into participation and performance agreements

Overall financial management, procurement, reporting and implementation capacity at all levels of government has grown significantly over the period of the program, and in relation to PSCAP itself. Planning and programming directorates (PPDs) have given a key boost. Recently, weaknesses seem to have emerged as a result of staff turnover, and new impetus has been given to PFM capacitation at the national level, outside the remit of PSCAP.

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Arbitrariness in resource allocation across federal institutions and to regions, and weak capacity to effect mid-year and annual reallocation of drawing rights against plans

S Formula-driven drawing rights with clear decision rules for performance-based reallocation; strengthening of the network of PPDs to support planning and M&E

Arbitrary resource allocation, although originally identified as a substantial risk, does not seem to have emerged as a substantial problem. The PSCAP budgeting process is generally robust. The vertical division between regional and federal resources is largely consistent with the agreed 80-20 split. The government used the chart of accounts to annualize budgets across sub-programs and regions in line with the PIP’s rules. Complications expected to arise in relation to the reallocation draw down formula were precluded by a decision not to apply this mechanism in practice. Although allocation is decided by formula, as the resources began to be in short supply, project implementation units and their regional Bureaus heads began to prioritize. The issue, however, relates to dissemination of information to all bureaus.

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Severe constraints on absorptive capacity in emerging regions

H Strong program support prior to project effectiveness with the assistance of the Ministry of Federal Affairs; offering premia on fees for consulting assignments in remote regions; establishment of “minimum mandatory” amount of capacity building and a floor on reallocation of drawing rights from any given region

The risk of severe constraints on the absorptive capacity of developing regions has been borne out as being high. Absorptive capacity per se is perhaps not the key problem now, as the establishment of local governments in these areas is an expensive and complex process: absorptive capacity relating to reforms which have a central, identifiable and sustainable impact is more complex. The anticipated role for MoFA in relation to PSCAP has not been consolidated the way it was planned. However, the minimum mandatory standards approach has had a positive impact and recently, a Ministerial-level Steering Committee led by the Ministry of Federal Affairs (MoFA) is established and meets quarterly to guide the support provided to the developing regions. The Ministers of health, education, water, agriculture, women’s affairs, civil service, finance and small and medium enterprises are members of the steering committee. The steering

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committee is supported by a technical committee comprised of technical staff from the same ministries and meet monthly. As a member of the Steering Committee, the Ministry of Civil Service visited all four developing regions and jointly with regional governments conducted gap analysis study and developed an action plan to create the basic capacity in planning and M&E, government financial management, audit, human resource management and team building in both the existing civil servants and leadership. The Ministry has signed a memorandum of understanding with the Ethiopia Management Institute and the Ethiopia Civil Service College to conduct training of trainers (TOT) and also support the training sessions, which will be conducted by the trained trainers. It is certainly the case that it requires “continuous follow up” and better impact assessment mechanisms are needed for the remotest parts of the country.

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Bahir Dar

Mekele

Gambela

Awasa

Asosa

Asayita

JijigaADDISABABA

T I G R AY

A FA RA M H A R A

S O M A L I

O R O M I YAG A M B E L A

DIRE DAWA

SOUTHERN NATIONS,NATIONALITESAND PEOPLES

ADDIS ABABA

BENSHANGUL

HARARI

SUDAN

SOUTHSUDAN

ERITREA

SOMALIA

UGANDA KENYA

DJIBOUTI

REP.OF

YEMEN

Dinder

Tekeze

Atbara

Blue Nile

Aw

ash Akobo

Genale

Dawa

Baro

Abay

Hang

er

Didesa

W

abe Shebele

Ramis

Wabe G

estro Wabe Shebele

INDIANOCEAN

LakeTana

LakeTurkana

R e d S e a

G u l f o f A d e n

To Keren

To Gedaref

To Marsabit

To Wajir To

Mogadishu

To Mogadishu

To Hargeysa

E t h i o p i a nP l a t e a u

De

na

ki l D

es

er

t

Gr

ea

t

R

if

t

V

al l

ey

O g a d e n

Ras DashenTerara (4620 m)

14°N

36°E 40°E 44°E

46°E 48°E

42°E32°E

34°E 36°E 38°E 40°E 44°E 46°E 48°E42°E32°E

12°N

14°N

12°N

10°N

8°N

6°N

4°N

10°N

8°N

6°N

4°N

ETHIOPIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 50 100 150

0 50 100 150 Miles

200 Kilometers

IBRD 33405 R2

JULY 2011

ETHIOPIASELECTED CITIES AND TOWNS

REGION CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

REGION BOUNDARIES

INTERNATIONAL BOUNDARIES