World Bank Documentdocuments.worldbank.org/curated/en/305621511406035802/pdf/CAMEROON-P… · ICOR Incremental Output Ratio ICT Information and Communication Technology IDF Institutional

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Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 120729-CM

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF EUR 26.5 MILLION (US$31 MILLION EQUIVALENT)

TO THE

REPUBLIC OF CAMEROON

FOR A

STRENGTHENING PUBLIC SECTOR EFFECTIVENESS AND STATISTICAL CAPACITY PROJECT

October 30, 2017

Governance Global Practice Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective July 31, 2017)

Currency Unit

= CFA Franc (CFAF)

US$ 1 = EUR $0.852492

US$ 1 = CFAF 565

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

AFD French Agency for Development (Agence Française de Développement) AfDB African Development Bank AFRITAC Africa Regional Technical Assistance Center ANIF National Agency for Money Laundering (Agence Nationale d’Investigation

Financière) ARMP Public Procurement Regulatory Agency (Agence de Régulation des Marchés

Publics) BUCREP Census Bureau (Bureau Central du Recensement et des Etudes sur la

Population) CAA Autonomous Sinking Fund (Caisse Autonome d’Amortissement) CC Village-Level Community Committee (Comité de Concertation) CEMAC Economic and Monetary Community of Central Africa (Communauté

Economique et Monétaire d’Afrique Centrale) CHOC Change Habits, Oppose Corruption CIEP Interministerial Committee for the Review of the Programs (Comité

Interministériel d’Examen des Programmes) CL4D Collaborative Leadership for Development CONAC Anti-Corruption Agency (Commission nationale anti-corruption) CONSUPE Ministry of State Control (Conseil Supérieur de l’Etat) CLS Local Public Investment Monitoring Committee (Comité Participatif Local de

Suivi) CSO Civil Society Organization CSPM Special Interministerial Procurement Committee (Commission Spéciale de

Passation des Marchés) CV Curriculum Vitae DG Director General DPL Development Policy Loan DSA Debt Sustainability Analysis DSCE Growth and Employment Strategy (Document de Stratégie pour la Croissance

et l'Emploi)

ECAM Cameroon Household Survey (Enquête Camerounaise Auprès des Ménages) EITI Extractive Industries Transparency Initiative EU European Union FAO Food and Agriculture Organization of the United Nations GDP Gross Domestic Product GIZ German technical cooperation agency (Deutsche Gesellschaft fur International

Zusammenarbeit) GoC Government of Cameroon HIPC Heavily Indebted Poor Country HR Human Resources ICOR Incremental Output Ratio ICT Information and Communication Technology IDF Institutional Development Fund IFMIS Integrated Financial Information Management System IFR Interim Financial Report IMF International Monetary Fund INS National Institute of Statistics (Institut National des Statistiques) LFS Labor Force Survey M&E Monitoring and Evaluation MDG Millennium Development Goals MINEDUB Ministry of Basic Education (Ministère de l’Education de Base) MINSANTE Ministry of Health (Ministère de la Santé) MINEPAT Ministry of Economy, Planning, and Regional Development (Ministère de

l’Economie, de la Planification et de l’Aménagement du Territoire) MINFI Ministry of Finance (Ministère des Finances) MINMAP Ministry of Public Contracts (Ministère des Marchés Publics) MOOC Massive Open Online Courses MTEF Medium-Term Expenditure Framework MTBF Medium-Term Budgetary Framework NPF New Procurement Framework PBF Performance-Based Financing PCU Project Coordination Unit PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PFMP Public Finance Modernization Plan PIB Public Investment Budget PIP Public Investment Program PIM Project Investment Management PM Prime Minister PNDP Community Development Program (Programme National de Développement

Participatif)

PNG National Governance Program (Programme National de Gouvernance) PPBS Planning, Programming, Budgeting, and Monitoring (Planification,

Programmation, Budgétisation et Suivi) PPSD Project Procurement Strategy of Development PROMAGAR Public Administration Modernization and Implementing Result-Based

Management (Programme de Modernisation de l'Administration publique par la mise en œuvre de la Gestion Axée sur les Résultats)

RRA Rapid Results Approach RRI Rapid Result Initiative SG Permanent Secretary (Sécrétaire Général) SIGED Integrated Disbursement Management System (Système Intégré de Gestion

des Décaissements) SIGIPES Integrated Human Resources and Payroll Management System (Système

Intégré de Gestion du Personnel et de la Solde) SOE State-Owned Enterprise TA Technical Assistance TACD Transparency and Accountability Capacity Development Project TCS Special Criminal Court (Tribunal Criminel Spécial) UNDB United Nations Development Business UNDP United Nations Development Programme UNFPA United Nations Population Fund UNOPS United Nations Office for Project Services

Regional Vice President: Makhtar Diop

Country Director: Elisabeth Huybens

Senior Global Practice Director: Deborah L. Wetzel

Practice Manager: Chiara Bronchi

Task Team Leaders: Kolie Ousmane Maurice Megnan and Abel Paul Basile Bove

The World Bank Strengthening Public Sector Effectiveness and Statiscal Capacity Project (P151155)

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BASIC INFORMATION

Is this a regionally tagged project? Country(ies) Financing Instrument

No Investment Project Financing

[ ] Situations of Urgent Need of Assistance or Capacity Constraints

[ ] Financial Intermediaries

[ ] Series of Projects

Approval Date Closing Date Environmental Assessment Category

20-Nov-2017 31-Dec-2023 C - Not Required

Bank/IFC Collaboration

No

Proposed Development Objective(s) The project development objective is to improve the effectiveness of public spending in selected sectors and strengthen the statistics system for evidence-based decision making. Components Component Name Cost (US$, millions)

Consolidating the program budgeting reform in selected sectors 6.00

Improving quality of public investment in selected sectors 5.50

Strengthening the performance of the public procurement system and developing capacity for better service delivery

7.00

Enhancing the use of statistics for policy-making 9.00

Project coordination 3.50


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Organizations Borrower :

Republic of Cameroon

Implementing Agency : Ministry of Economy Planning and Regional Development

PROJECT FINANCING DATA (US$, Millions)

[ ] Counterpart Funding

[ ] IBRD [ ✔ ] IDA Credit

[ ] IDA Grant

[ ] Trust Funds

[ ] Parallel Financing

FIN_COST_OLD

Total Project Cost: Total Financing: Financing Gap:

31.00 31.00 0.00

Of Which Bank Financing (IBRD/IDA):

31.00

Financing (in US$, millions) FIN_SUMM_OLD

Financing Source Amount

International Development Association (IDA) 31.00

Total 31.00

Expected Disbursements (in US$, millions)

Fiscal Year 2018 2019 2020 2021 2022 2023

Annual 0.76 2.36 3.78 7.01 9.94 7.14

Cumulative 0.76 3.13 6.91 13.92 23.86 31.00


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INSTITUTIONAL DATA

Practice Area (Lead)

Governance

Contributing Practice Areas

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF No b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment No c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating

1. Political and Governance High

2. Macroeconomic Substantial

3. Sector Strategies and Policies Moderate

4. Technical Design of Project or Program Substantial

5. Institutional Capacity for Implementation and Sustainability Substantial

6. Fiduciary Substantial

7. Environment and Social Low

8. Stakeholders Substantial


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9. Other

10. Overall High

COMPLIANCE

Policy

Does the project depart from the CPF in content or in other significant respects?

[ ] Yes [✔] No

Does the project require any waivers of Bank policies?

[ ] Yes [✔] No

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 ✔

Natural Habitats OP/BP 4.04 ✔

Forests OP/BP 4.36 ✔

Pest Management OP 4.09 ✔

Physical Cultural Resources OP/BP 4.11 ✔

Indigenous Peoples OP/BP 4.10 ✔

Involuntary Resettlement OP/BP 4.12 ✔

Safety of Dams OP/BP 4.37 ✔

Projects on International Waterways OP/BP 7.50 ✔

Projects in Disputed Areas OP/BP 7.60 ✔

Legal Covenants

Sections and Description No later than six (6) months after the Effective Date, the Recipient shall recruit to Project Coordination Unit, an

accountant and a monitoring and evaluations specialist, all with qualifications, experience and terms of reference

satisfactory to the Association [Schedule 2, Section I, A , 2, (a), (ii)]

Sections and Description No later than six (6 ) months after the Effective Date, the Recipient shall procure and install the budgeting and


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accounting module of integrated disbursement system (SIGED) to handle accounting and reporting needs under

the project. [Schedule 2, Section IV, A, 1]

Sections and Description No later than nine (9) months after the Effective Date, the recipient shall recruit an external auditor to conduct

annual financial audit of the financial statements of the project along with the review of the internal control

system. [Schedule 2, Section IV, A, 2]

Conditions

Type Description Effectiveness The Recipient has established the Project Orientation and Monitoring Committee

in accordance with the provisions of the Section I.A.1 of Schedule 2 to the Financing Agreement. (Article IV, 4.01, a)

Type Description Effectiveness The Recipient has established the Project Coordination Unit within MINEPAT,

appointed a Project coordinator and recruited to said Project Coordination Unit, a financial management officer and a procurement specialist all in accordance with Section I. A.2 of Schedule 2 to the Financing Agreement. (Article IV, 4.01, b)

Type Description Effectiveness The Recipient has adopted the Project Implementation Manual in accordance with

Section I.B of Schedule 2 to the Financing Agreement. (Article IV, 4.01, c)

PROJECT TEAM

Bank Staff

Name Role Specialization Unit

Kolie Ousmane Maurice Megnan

Team Leader(ADM Responsible)

Sr Financial Management Specialist

GGO23

Abel Paul Basile Bove Team Leader Governance Specialist GGO13

Ibrah Rahamane Sanoussi Procurement Specialist(ADM Responsible)

Sr Procurement Specialist GGO07

Celestin Adjalou Niamien Financial Management Specialist

Sr Financial Management Specialist

GGO26

Aissatou Diallo Team Member Sr Finance Officer WFALN


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Benjamina Randrianarivelo Team Member Sr Operations Officer GGO28

Cyrille Valence Ngouana Kengne

Environmental Safeguards Specialist

Sr Environment Specialist GEN07

Dolele Sylla Team Member ICT GGO13

Erik Reed Environmental Safeguards Specialist

Environmental Safeguard GEN07

Herimpamonjy Mavoarisoa Ranaivoarivelo

Team Member Operations Analyst GGO13

Joel A. Turkewitz Team Member Lead Public Sector Specialist GGOOS

Kristyna Bishop Social Safeguards Specialist Social Safeguards Specialist GSU01

Monique Mogue Kamga Team Member Program Assistant AFCC1

Monique Ndome Didiba Epse Azonfack

Team Member Procurement GGO07

Nneoma Veronica Nwogu Counsel Legal LEGDF

Patrice Sade Team Member Program Assistant GGO13

Prospere R. Backiny-Yetna Team Member Statistics GPV07

Shiho Nagaki Team Member Sr Public Sector Specialist GGO13

Sylvie Munchep Ndze Team Member Procurement Assistant AFCC1

Yemdaogo Tougma Team Member Research Analyst GGO28

Yoko Kagawa Team Member Sr Public Sector Specialist GGO13

Extended Team

Name Title Organization Location


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CAMEROON

STRENGTHENING PUBLIC SECTOR EFFECTIVENESS AND STATISTICAL CAPACITY PROJECT

TABLE OF CONTENTS

I. STRATEGIC CONTEXT ...................................................................................................... 9

A. Country Context .................................................................................................................. 9

B. Sector and Institutional Context ....................................................................................... 10

C. Higher Level Objectives to which the Project Contributes ............................................... 19

II. PROJECT DEVELOPMENT OBJECTIVES ............................................................................ 19

A. PDO .................................................................................................................................... 19

B. PDO-Level Results Indicators............................................................................................. 20

C. Project Components .......................................................................................................... 20

D. Project Cost and Financing (US$, millions) ....................................................................... 25

E. Lessons Learned and Reflected in the Project Design ....................................................... 25

III. IMPLEMENTATION ........................................................................................................ 28

A. Institutional and Implementation Arrangements ............................................................. 28

B. Results Monitoring and Evaluation ................................................................................... 28

C. Sustainability ..................................................................................................................... 28

D. Role of Partners................................................................................................................. 29

IV. KEY RISKS ..................................................................................................................... 29

A. Overall Risk Rating and Explanation of Key Risks .............................................................. 29

V. APPRAISAL SUMMARY .................................................................................................. 31

A. Economic and Financial (if applicable) Analysis ................................................................ 31

B. Technical ............................................................................................................................ 32

C. Financial Management ...................................................................................................... 32

D. Procurement ..................................................................................................................... 33

E. Social (including Safeguards) ............................................................................................. 34

F. Environment (including Safeguards) ................................................................................. 35

G. Other Safeguard Policies (if applicable) ............................................................................ 35

VI. RESULTS FRAMEWORK AND MONITORING ..................................................................... 36

ANNEX 1: DETAILED PROJECT DESCRIPTION ......................................................................... 46


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ANNEX 2: IMPLEMENTATION ARRANGEMENTS .................................................................... 58

ANNEX 3: IMPLEMENTATION SUPPORT PLAN ...................................................................... 70

ANNEX 4: CAMEROON GOVERNANCE REFORMS SINCE HIPC (2006) ...................................... 72

ANNEX 5: KEY DATA ON GOVERNANCE AND PUBLIC INVESTMENT MANAGEMENT ............... 73

ANNEX 6: PROJECT LOGIC FRAMEWORK .............................................................................. 76

ANNEX 7: MAPPING OF DONORS’ INTERVENTIONS IN THE PFM REFORM AGENDA ............... 80

ANNEX 8: CAMEROON’S RAPID RESULT INITIATIVE (RRI) ...................................................... 82

ANNEX 9: PROJECT ALIGNED WITH THE GOC’S LATEST ORIENTATIONS ON PFM REFORM ..... 85

ANNEX 10: COST-BENEFIT ANALYSIS .................................................................................... 86


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I. STRATEGIC CONTEXT

A. Country Context

1. Cameroon, a lower-middle-income country with a population of 22.8 million people, vast natural resources, and strategically located has great growth potential. Its natural resources include oil, timber, and crops such as coffee, cotton, and cocoa, while natural gas, bauxite, diamonds, gold, iron, and cobalt are relatively untapped resources. Cameroon is also the gateway to landlocked Central African Republic and Chad and a trade route between Western and Central African economies. However, over the past decade, growth has been below the expectations set in Cameroon’s Vision 20351 and short of the country’s potential. Average Gross Domestic Product (GDP) growth, which was less than three percent over 2005–2010, improved to 5.1 percent in 2011–2016, mostly spurred by large public investments in infrastructure (‘grandes réalisations’).

2. Current macroeconomic challenges call for fiscal consolidation and structural reforms. Because of a growth model largely based on public investment, the public sector debt to GDP ratio nearly doubled between 2012 and 2015, from 16.7 to 33 percent. In the context of the 2014-16 oil price shock, and of Cameroon’s reliance on oil exports, this level was considered as ‘high risk of debt distress’ under the 2016 IMF-Bank Debt Sustainability Assessment (DSA). Further challenges for Cameroon arose as the whole ‘CEMAC’ area2 underwent a severe macroeconomic crisis following the 2014-15 oil price shock. As regional foreign reserves were depleting at a fast pace, threatening the peg to the euro, the CEMAC’s six Heads of States decided, at the December 2016 Yaoundé summit, to preserve the currency peg, to carry out internal fiscal adjustment with the assistance of the International Monetary Fund (IMF) and other development partners including the World Bank, and to promote economic diversification. For Cameroon, this translated into an IMF Extended Fund Facility approved in July 2017, under which the Government of Cameroon has committed to narrow its fiscal deficit from 6.5 percent of GDP in 2016 to 1.6 percent of GDP in 2020, through contraction in capital and recurrent spending, and increase in non-oil revenue. Spending reductions will be achieved by prioritizing public investment, while a gradual expansion in non-oil tax revenues will support higher revenue mobilization. The Bank is also preparing to support this agenda through a series of three Development Policy Operations, the first of which would be submitted to the Executive Directors in November 2017. Based on these concerted efforts, and on the latest DSA, Cameroon’s risk rating of its public debt stands a good chance to be upgraded to “moderate” should the country deliver the economic program embedded in the IMF-supported program.

3. The poverty rate has remained flat and geographical disparities and inequalities have worsened. Poverty incidence was 37.5 percent in 2014, close to the 40.2 percent in 2001. While it improved in urban areas, from 17.9 percent in 2001 to 9 percent in 2014, poverty incidence worsened in rural areas, from 52.1 percent in 2001 to 56.8 percent in 2014. Also, inequalities increased with the Gini coefficient rising from 40.4 in 2001 to 44.0 in 2014. Cameroon’s Human Development Index has been

1 The document sets the objective of Cameroon being a Middle-Income Country by 2015.

2 ‘Communauté Economique et Monétaire d’Afrique Centrale’, a monetary and economic union including

Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of Congo, with a common currency pegged to the euro, backed by the French Treasury.


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stagnant with the country ranking 153 out of 188 in the 2016 Human Development Index. Most of the Millennium Development Goals (MDGs) were not achieved.

4. The fragile situation in northern Cameroon is also affecting the country. Since 2014, Boko Haram has carried out violent attacks in Cameroon, escalating to a small war in the Far North region. Insecurity has hindered economic activities and cross-border trade. Flows of refugees (350,000 as of 2017) and internally displaced populations are increasing in Far North, already a host to most of the poor (74.3 poverty incidence in Far North in 2014) as well as in East, Adamawa, and North regions—intensifying tensions between communities. Violence in the context of poverty and social discontent about perceived Government ineffectiveness, corruption, and a lack of economic opportunities are a serious concern for the GoC.

5. To cope with the fiscal constraints and fragility risks, the GoC is pushing forward key reforms to increase the effectiveness and efficiency of public spending. The GoC recognizes that effective and efficient public investments are the key to sustainable growth and shared prosperity. The surge in public investment has contributed to growth, but has not yet contributed to better service delivery for users in general, and the poor in particular. Weaknesses and bottlenecks in the public investment management chain and procurement processes have hindered the impact of public investments on growth. Also, the public finance reform introducing result-oriented management has yet to trickle down in improved service delivery. Increased efficiency and effectiveness in performance budgeting, public investment cycle, expenditures, and control processes are needed. Regular statistics are also needed to inform resource allocation strategically, feed policies’ implementation and evaluation, and increase the value for money of public spending.

B. Sector and Institutional Context

Overall Governance

6. Structural reforms related to governance in Cameroon have so far failed to significantly change the status quo. The National Governance Programs (Programme National de Gouvernance, PNGs), PNG I 2001–2005 and PNG II 2006–2010, led by the Office of the Prime Minister (PM) set up the strategic orientation for governance reforms—decentralization, justice, economic governance, civil society, public administration— to be implemented by specific projects. However, reform implementation has faced delays, lack of enforcement, and failed to translate into behavior changes (Annex 4). Cameroon has ranked consistently in the lower quintile of world governance indicators for the last two decades (Figures 5-1 and 5-2, Annex 5). Governance, Government effectiveness, and corruption are consistently acknowledged as key issues by Cameroonians,3 the private sector,4 and the GoC.5

3 Transparency International (2013), Global Corruption Barometer, Afrobarometer (2011–2013 and 2014–2015).

4 World Bank (2009) Cameroon Enterprise Surveys, INS (2009) firm census, GoC (2011) Business Climate Survey;

WEF (World Economic Forum). 2015. Global Competitiveness Report 2014–2015. 5 DSCE 2010–2020; President Paul Biya’s New Year Speeches in December 2003, 2005, 2006, 2007, 2014, 2015 or official

communication to Cabinet in December 2004, September 2006, September 2007, March 2008, July 2009, and October 2015.

https://www.weforum.org/


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7. Donors’ track record in supporting economic governance reforms is mixed. The previous IDA-financed project, the Transparency and Accountability Capacity Development Project (TACD), and an African Development Bank (AfDB) project, both supporting Public Finance Management (PFM) reform, respectively in 2008–2012 and 2006–2012, were cancelled before closing. The main achievement of the EU-funded 2007–2015 Public Financial Management Reform Program, Programme d’Appui à la Réforme des Finances Publiques (PARFIP) is the conception of the integrated database of HR and payroll information (SIGIPES II), for which preparatory work had been achieved with TACD support. The German Cooperation PFM project preparation started in 2014 and was delayed because of insufficient coordination between the Ministry of Economy, Planning, and Regional Development (MINEPAT) and the Ministry of Finance (MINFI). The Multi-Donor Trust Fund project supporting anticorruption reform Change Habits, Oppose Corruption (CHOC) was not extended to a third phase in 2012 due to the lack of GoC commitment in passing a revised anticorruption law. Finally, the United Nations Development Program (UNDP) support to civil service reform (2013–2017) developed public services standards, but implementation in pilot ministries is facing delays.

8. However, positive examples of public sector reforms have proved that enhancing transparency, accountability, and civil servants’ performance in Cameroon is possible. The introduction of performance-based financing (PBF) in the health sector since 2012 has shifted financing from centralized and input-based financing to results-based financing. Consequently, service delivery outcomes have significantly improved, as well as the governance of health centers, from finance to human resource management. With greater management autonomy, health centers extended performance management to individual staff.6 A performance monitoring system of custom agents was piloted in 2010 and has been extended to all Douala custom offices. Customs agents’ individual performance contracts enabled a weekly monitoring of performance based on clear targets. The new system led to increased revenue collection,7 less delays,8 and less corruption. Finally, Cameroon has institutionalized, since 2006, an innovative procedure enabling quarterly citizens’ oversight of public investment budget (PIB) execution at the local level. This project is designed to build on those experiences to increase efficiency of public investment management and procurement.

9. Against this backdrop, this project focuses on public sector management issues that are both crucial and likely to succeed because of clear GoC commitment and progress made over the past few years. A number of reforms aiming at mainstreaming result-oriented management have been monitored at the PM Office level through the Public Administration Modernization and Implementing Result-Based Management (Programme de Modernisation de l'Administration publique par la mise en œuvre de la Gestion Axée sur les Résultats, PROMAGAR). The introduction of three-year program budgeting since 2013 (PFM Law 2007) is one of its major components. An allocation of US$17 million in the budget for the Population Census in 2017 is an indication of the Government’s strong commitment to develop

6 Source: GoC (2014) midline qualitative study findings report, Cameroon PBF Impact Evaluation.

7 Revenue collection by customs increased steadily from 4.71 percent of GDP in 2007 to 6.21 percent of GDP in 2012; or an

increase of 15 percent of collection revenue in 2012 compared to 2008, that is, approximately US$150 million (World Bank, 2014, Implementation of Revised Risk Analysis in Cameroon Customs). 8 Average customs clearance time in Douala reduced from 22 hours to 2 hours in 2009-2011 for the container office, and 15

hours to less than 1 hour for the office clearing cars (World Bank, 2014, Implementation of Revised Risk Analysis in Cameroon Customs).


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timely and credible statistics to inform program budgeting and monitoring and evaluation (M&E) of public policies. Finally, the improvement of PIP execution is a Government top priority. In 2015, the Head of State pledged the continuation of the growth strategy with public investment but requested support to increase fiscal space and improve debt sustainability. The Government was instructed to (a) complete the first series of major public investments, (b) initiate the preparation of the second series, and (c) implement the Emergency Plan to accelerate growth9. The following sections identify the key bottlenecks as well as the areas where the appetite for reform is the highest.

PFM Reforms

10. PFM reforms have been making slow progress. Cameroon passed a PFM Organic Law (Loi relative au régime financier de l’Etat)10 in 2007 to transition from a traditional, input-based line item budget to a multi-year program budget, which became effective from 2013. The Directorate of Budget (MINFI) has been in charge of overseeing reform implementation, under the umbrella of the PFM reform Technical Secretariat created in 2010. A new PEFA just finalized (September 2017) is laying the ground for a new comprehensive PFM reform strategy. Also, the September 2016 instruction from the Prime Minister to all ministers spells out the PFM reform priority areas, including (a) completion of the transcription of the CEMAC PFM Directives in Cameroon legislation; (b) strengthening of the links between sector policies and program budgeting, notably by including investment and salary appropriations in ministries’ programs; (c) improvement of budget procedures for multiyear budget management with a focus on public investment projects preparation, scope and design of the programs, year-end budget procedures; (d) improving the accounting framework; (e) implementation of a change management process in public administration; and (f) upgrade of the integrated financial management information system (IFMIS). The proposed project is aligned with the PM circular and with findings of the recent PEFA.11 In addition, two laws were promulgated on July 12, 2017,12 reforming SOE management and oversight according to CEMAC Directives. The proposed project will also support the operationalization of those two laws.

11. Significant progress has been made in implementing program-budgeting, with the development of programming tools and multiyear budgets, and in the management and institutional framework of the 2007 reform from the onset in 2013. The comprehensiveness and the accuracy of the financial statements improved over the past few years thanks to support from the Africa Regional Technical Assistance Center (AFRITAC) of the IMF, as evidenced by the production of full sets of financial statements, including a balance sheet, profit and loss statements, and cash flow statements since 2012. However, the actual use of most of the new tools developed for budget programming and execution remains a challenge.

9 Plan d'Urgence Triennal pour l'Accélération de la Croissance Économique

10 The Cameroon PFM Act is mostly in line with Economic and Monetary Community of Central Africa (CEMAC) PFM Directives

promoting a performance-based budgeting system and greater Parliament oversight. Some gaps remain; and the GoC intends to use the transposition of CEMAC directives to review the PFM act. 11

Circular No. 003/PM of September 2016. See annex 9. 12

Law 2017/010 and Law 2017/011.


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12. Implementation of the PFM Act since 2013 has been undermined by the following weaknesses.

Budget preparation. The Medium-Term Budgetary Framework (MTBF), the overall Medium-Term Expenditure Framework (MTEF), the sector MTEFs, the ministries’ program budgets, as well as the local development plans are not aligned as they should be. In addition, there is no established calendar for budget preparation, which is hence dependent on the annual budget preparation circular. Past Cameroon PEFAs13 found that this was an impediment to smooth budget preparation. It should be noted; however, that the 2018 budget preparation circular was very clear and comprehensive. Also, a significant share of MTEF is poorly designed, while it is supposed to inform strategic resource allocation and the overall coherence of program expenditures (particularly on the capital budget expenditures).14 For instance, health and education budgets do not appear to be allocated according to strategic needs.15 Moreover, the external resources allocated to the health sector are not systematically included in the MTEF. Health centers at the decentralized level are not closely involved in budget preparation (less than 30 percent of the health centers have confirmed being involved in the budget preparation).16 Likewise, in the basic education sector, 93 percent of the resources are managed at the central level and district allocations are not based on actual needs.17

Budget execution and reporting is hampered by (a) weaknesses in the use of the budget execution tools (procurement plans and budget forecast plans), (b) delays in budget availability, (c) in-year cash rationing affecting budget execution and resulting in an increased use of exceptional procedures for budget execution at the end of the fiscal year, and (d) weaknesses in financial management information systems. In the social sectors, for example, the late release of the budget allocation (two to three months after the start of the fiscal year) has been a recurrent issue, leading to disruption in service delivery. Other issues are related to weak capacity at the sectoral level to (a) implement and reap the benefits of the innovations introduced by the program budgeting approach and (b) adapt to the new procurement procedures, translating into delays in budget execution. It should be noted that the recent creation of a specialized Paymaster in the Ministry of Health (MINSANTE) is expected to improve the execution and reporting issues.

13. Program budgeting was launched in 2013, but has failed to impact practices due to flaws in design and implementation arrangements. The Parliament has approved in each fiscal year a three-year program-based budget since 2013. Every ministry has gone through the process of designing 3-year programs and identifying objectives and indicators. However, there is scope for improving the quality and relevance of indicators (a) most of them are poorly formulated (e.g. more input and output than outcome) and (b) reporting chains are not clear, timely, and reliable enough to inform the program manager in time to adjust implementation. In some instances, programs and activities are not consistent

13

PEFAs were carried out in 2007 and 2016. 14

Results of the review of the 2013–2015 shown 33 percent of rejection of the MTEF poorly designed. 15

Cf. World Bank Public Expenditures Review (forthcoming). For example, public investment budget allocation in health and

education is not correlated with health and education indicators. 16

2016 World Bank PFM in health sector study. 17

2015 United Nations Children’s Fund Public Expenditure Review (PER) in social sectors.


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with the ministries’ mission. Lastly, ministries’ program budget appropriations are not comprehensive enough. As an example, the payroll appropriation is missing and continues to be centralized in the MINFI program. An integrated HR/payroll information management system has been developed with support from the donors (mainly the World Bank and EU) to improve wage bill management as well as to promote transparency in the civil service. However, its deployment in line ministries suffers from a lack of financial resources and is not yet effective. The full deployment of SIGIPES II will improve payroll management and could free fiscal space for additional investment projects, particularly in the health and education sectors.

14. Results-oriented management has not yet had an impact on financial and HR management in sector ministries. While program managers are now fully responsible for the implementation of their program, they are not prepared to carry out their duties, nor do they have the institutional autonomy and authority to implement their programs. A training program delivered to program managers in 2013 did not include sufficient hands-on support during implementation to facilitate change. Several tools, such as a ministerial management charter (‘charte ministérielle de gestion’) or a program dashboard are being developed—to integrate results-oriented management into their program, clarifying roles, responsibilities, and budget execution modalities. Lastly, the assessment of programs performance—the Annual Performance Report—lacks in-depth analysis.

15. Performance management has not yet trickled down to state-owned enterprises (SOEs) despite their weight in the economy and for the budget. SOEs and public agencies play an important role in the economy. The 54 commercial SOEs had a combined total revenue equivalent to 18 percent of GDP on average between 2011 and 2015, they held assets worth 21 percent of GDP, and employed nearly 60,000 staff. Transfers and subsidies from the Government to SOEs and public agencies averaged 2.1 percent of GDP over the last few years. The total cost of SOEs and public agencies is around 11 percent of state revenues on average when counting all transfers and arrears between SOEs and the state.

16. While performance varies greatly, most SOEs perform poorly and require significant state financial support. Most SOEs that are fully or majority-owned by the Government continue to lose money, while companies with minority Government ownership are better performers. The average net profit for fully Government-owned companies was minus 11 percent, while majority Government-owned companies was minus 3 percent, and minority Government-owned companies was plus 13 percent. In 2015, twenty SOEs lost a combined FCFA 166 billion, equivalent to 1 percent of GDP. Debts and arrears are very high (averaging 12 percent of GDP combined), and many companies have negative net worth. Most SOEs are unable to access capital without state guarantees, and many companies have high debt/equity ratios, suggesting that they are financing themselves through debt rather than earnings. This implies a significant fiscal burden on the state, which is required to spend a significant share of its revenues on supporting SOEs, whose effectiveness in delivering public services and achieving other policy objectives remains uncertain due to a near complete lack of clear performance targets and monitoring of these. Transparency and external control are very limited, with little or no information published on company financial and operational performance. The result is a large and underperforming SOE sector that is in urgent need of reform to consolidate and diversify ownership where necessary and to increase private sector participation in competitive sectors with a view to easing the burden on the state budget.


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Public Investment Management

17. Public investment quality and efficiency is low. Since Cameroon reached the heavily indebted poor country completion point in 2006, the percentage of public investment to GDP has continuously increased with a significant reduction of the gap with Sub-Saharan countries’ average (Annex 5). However, this political choice to increase public investment spending is undermined by persistent shortcomings in execution: (a) while the level of commitment of the investment budget increased from 40 percent in 2008 to 68 percent in 2011, implementation and disbursements were much lower (around 40 percent) as a result of the lack of preparation of investment projects until recent improvements in 2016; (b) increases in the rate of commitments in 2014 (above 90 percent) were generated by the exceptional extension for about three months of the commitment authorization by Presidential decree; and (c) improved implementation and disbursements in 2015 (at about 90 percent) resulted from the use of exceptional procedures (emergency procedure in procurement and provisional commitment)18 (Annex 5) – while improvements in 2016 resulted from tighter implementation monitoring by the MINEPAT. However, the impact on service delivery and development indicators is not perceived yet because of shortcomings in the selection and implementation of investment projects, especially at the decentralized level. Thus, the perception on the quality of public investment is lower than both Sub-Saharan countries’ average (Annex 5). Access to infrastructure also tends to be lower than in other countries (Annex 5).

18. Insufficient preparation of investment projects selected in the budget law translates into delays in procurement processes during execution. The articulation of planning, programming, and budgeting has improved. A key step was the establishment in 2009 of a Planning, Programming, Budgeting, and Monitoring Committee (Comité de Planification, Programmation, Budgétisation et Suivi, PPBS) in charge of public investment expenditures in each line ministry. However, major challenges remain in project preparation. The link between the preparation of public investment project and budget needs significant strengthening. Several additional shortcomings affect the preparation and selection of public investment projects: (a) lack of accountability throughout the capital budget preparation cycle, both between the decentralized and central levels, and between MINEPAT and MINFI, (b) lack of accountability and incentive for line ministries to ensure full preparation given the lack of detailed mandatory procedures leaving room for insufficiently prepared projects to be budgeted thanks to the political clout of some actors, (c) lack of clarity on the resettlement’s compensation process,19 and (d) delay in mobilizing counterpart funds, which affected the execution of major infrastructure, such as roads and dams, financed by donor-funded projects resulting in a low disbursement ratio. Slow implementation of projects resulted in a large volume of contracted but non-disbursed debt (at 20 percent of GDP at end-2016), which indicates continued debt vulnerability and results in large commitment fees.

19. Monitoring of public investment implementation could be stepped up through better access to information and improved oversight. A plethora of actors are involved in the monitoring of public

18

Under this procedure, the budget appropriation is considered executed at the end of the fiscal year and the equivalent cash is transferred in the interim account waiting for the invoices that will be submitted during the following years. In the absence of these exceptional measures, the execution rate would have been about 50 percent 19

For investment projects affecting the population.


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investment execution. MINEPAT’s unit in charge of public investment budget monitoring (sous-direction du suivi du Budget d’Investissement Public) monitors quarterly the execution of decentralized public investment by consolidating data from the Directorate of Treasury of MINFI and from the Local Public Investment Monitoring Committees (Comités Participatifs Locaux de Suivi du Budget d’Investissement Public, CLS) at the levels of local council, district, region, and country. Those committees meet quarterly and compile information on execution from deconcentrated line ministries, local elected representatives (officially chairing the CLS), civil society, and any citizens. The public investment projects database (Journal des Projets) has been widely disseminated at the beginning of every year since 2008. In addition, other central institutions are involved in the monitoring of public investments, including: (a) the MINEPAT Brigade Control; (b) the Ministry of State Control (Conseil Supérieur de l’Etat, CONSUPE) attached to the Presidency; (c) the Anti-Corruption Agency (Commission nationale anti-corruption, CONAC) attached to the Presidency; and (d) the Ministry of Public Contracts (Ministère des Marchés Publics, MINMAP). However, this multiplicity of actors does not translate into efficiency in control and monitoring. There is no information management system enabling basic information sharing between those institutions. Therefore, the limited time and resource allocated to control is largely spent on basic information gathering and less on field missions. Finally, some FM practices negatively affect control and monitoring: (a) inadequate reporting format; (b) extension of execution beyond 15 months (annual closing process); (c) unused budget allocations carried over in the treasury account; and (d) insufficient management accounting practices affecting the timeliness and reliability of reporting.

20. In districts where civil society organizations (CSOs) and citizens were actively engaged in independent monitoring, not only the execution rate but also the quality of execution improved. However, (a) participative monitoring of PIB and actual usage of the space offered by the CLS are uneven; (b) consolidation of execution information does not respect the four weeks period lead time; (c) access to information in reusable format and with sufficient details to ensure proper monitoring is not ensured; (d) information on the PIB managed at the central level is not published in details, nor is it followed by the CLS; and (e) CLS monitoring activity is not sufficiently widely disseminated to build citizens’ trust and interest in the system. Finally, citizens’ participation fostered by the Community Development Program, (Programme National de Developpement Participatif, PNDP) phase 3 - PNDP 3 (2016–2019) is strengthening the interaction between the Village-Level Community Committee (comité de concertation, CC) and local councils in budget preparation and monitoring. Those CCs are potential local focal points for monitoring public investment’s projects.

Procurement Reforms

21. Public procurement continues to face issues of effectiveness and efficiency, despite the adoption of major reforms in 2011. The establishment of MINMAP in December 2011 was intended to improve public procurement oversight and to address the issues of slow capital budget execution, lack of technical skills within line Ministries, and corruption and lack of transparency in public procurement. The MINMAP reports directly to the Presidency and performs the following functions: (a) carry out procurement of contracts above predefined thresholds, (b) provide quality control and clearance to line ministries for procurement of contracts below the threshold, (c) handle complaints from bidders in collaboration with the Public Procurement Regulatory Agency (Agence de Régulation des Marchés Publics, ARMP), (d) provide clearance on requests for payment of contracts; (e) oversee contract


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execution on the ground, and (f) initiate policy reform and capacity development in liaison with the ARMP.

22. The impact of the institutional innovation has not yet met expectations in terms of improving the procurement system’s performance. The creation of MINMAP could have provided the impetus for improving regulations, standardizing practices, enhancing the competencies of officials responsible for executing procurement, and initiating the use of modern information technology to process transactions and monitor system performance. Each of these factors is associated with improved performance. Instead, MINMAP has attempted to fulfill its functions without a capacity-building strategy, operations guidelines, or the benefit of e-procurement. MINMAP has struggled to train its staff of 2,500 officials to establish clear and transparent performance expectation or standards. Some steps have been taken to begin to develop e-procurement but the introduction of an e-procurement system remains relatively distant. Finally, some responsibilities of the ARMP and MINMAP still overlap and need to be clarified.

23. Public procurement remains a complex and lengthy process that frequently delays the implementation of public investment projects. Overall, the procurement process up to the signature of a contract was estimated in 2015 to last an average of 167 days in the case of the Special Interministerial Procurement Committee (Commission Spéciale de Passation des Marchés, CSPM) and an average of 366 days in MINMAP’s case; and 28 administrative stages in CSPM’s case compared to 58 when MINMAP is involved—showing room for quick improvement. There are no procedures or tools to track the procurement processes comprehensively to identify delays and bottlenecks. The lack of tracking mechanisms prevents effective performance monitoring and accountability. Line ministries are also short of competent staff to expedite the process in the new context, and the drafting of procurement plans and tender documents during the preparation stage is rare, resulting in further delays. There is a lack of resources and expertise on public procurement management to ensure the quality of programming, records of tenders, elaboration of tender evaluation reports, and contract monitoring.

Statistics System

24. Budget preparation does not satisfactorily make use of the available data, and the M&E system of program budget is weak. Program budgets do not integrate national statistics enough into their indicators and M&E system. Similarly, the public investment preparation process does not have a systematic evidence-based assessment of return on investment to inform selection and prioritization of public investment projects, despite the availability of good national statistics overall. Public spending planning and programming would have a higher impact with better use of available statistics to inform resource allocation according to the population, poverty level, and other socioeconomic indicators.

25. The statistics system is adequate overall but is obviously under strain. The National Institute of Statistics (Institut National de la Statistique, INS) produces and publishes economic statistics (national accounts, prices indices, external trade, enterprises) and social statistics (poverty and living condition, demographic, health) of satisfactory quality. Cameroon has a solid experience in rolling out large data collection operations such as population censuses, living standard household surveys, and demographic surveys. The quality of training of Cameroonian statisticians is good. The sub regional training institute (Institut Sous Régional de Statistique et d’Economie Appliquée) recruits through a rigorous open competitive exam jointly with the statistics training institutes of Abidjan and Dakar.


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26. However, the periodicity of basic surveys and censuses is not observed, and quality could be improved. The general population censuses were conducted in 1976, 1987, and then 2005, while the international recommendation is to conduct a census survey every 10 years. The GoC is planning the next population census end of 2017 - early 2018, and preparatory work already started in 2016. Full financing for 2017 data collection and analysis is nearly secured.20 The Cameroon household surveys (Enquête Camerounaise Auprès des Ménages, ECAM) were conducted in 1996, 2001, 2007, and 2014, with a complementing survey in 2016.21 The last three ECAMs had similar methodologies enabling solid trend analysis. However, ECAMs are supposed to be conducted at least every five years according to INS standards, and the World Bank recommends a survey every three or four years to monitor more closely the impact of public policies. Also, the ECAMs could be improved (a) upstream in the design to integrate specific issues related to poverty in rural areas or northern regions where poverty is the highest, including more frequent data production, and (b) downstream with more in-depth analysis. Also, the system of labor statistics is weak. On the supply side, labor force surveys (LFSs) are irregular and not frequent enough. On the demand side, the annual enterprises survey does not emphasize employment issues, the informal sector survey is as irregular as the LFS, and there is no annual agricultural survey. Finally, line ministries could benefit from INS data production and expertise to inform program preparation and M&E.

27. National accounts are engaged in a modernization process requiring support but suffer from a lack of sufficient and comprehensive trade data. While many Sub-Saharan countries are still following the 1993 national accounts framework, Cameroon transitioned successfully to the 2008 system and has been producing trimestral accounts since 2015. However, the classic annual national accounts suffer from a lack of reliable agriculture statistics. The last agriculture and livestock census was undertaken in 1984 and annual surveys stopped in the early 1990s. The Ministry of Livestock, Fishery, and Animal Industry and the Ministry of Agriculture Rural Development currently rely on indirect sources to produce the necessary basic sector statistics. A new agricultural and livestock census was originally planned for 2017, but the cost is high compared to similar exercises in the region (CFAF 23.6 billion). However, the AfDB and EU are exploring ways to contribute to the financing of this census in synergy with the population census. Data on cross-border trade are not fully included in the national accounts, whereas trade is significant for the local economies close to borders (North-West region with Nigeria and North and Far North regions with Chad and Nigeria). The quarterly national accounts methodology also needs to be consolidated.

28. While data management (from archiving to dissemination) is adequate, there is a need for enhancement by utilizing more online tools. Statistics are useful if they are both accessible and usable not only by authorities but also by academics, students, civil society, international organizations, among others. INS sets up databases of socioeconomics data, and data on trade, prices, and national accounts are available on the National Data Dashboard (Page Nationale Récapitulative des Données). However,

20

The Government has financed CFAF 4 billion for the first phase of the census, that is, the cartography. The amount needed to complete the second phase, that is, data collection, is estimated at CFAF 18.4 billion. So far, the Government has budgeted CFAF 11 billion, the AfDB CFAF 1 billion, and the World Bank CFAF 2.2 billion (US$4 million from the PAISS Project). The Census Bureau (Bureau Central du Recensement et des Etudes sur la Population, BUCREP) gave the assurance that the gap of CFAF 4.2 billion will be filled in by the Government. 21

Enquête Complémentaire ECAM 4, data collection representative at the local council level (October 2016 - January 2017).


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(a) archiving of data on enterprise statistics is weak; (b) the current INS archiving platform does not include sector data (agriculture, education, health); and (c) dissemination is limited to access to raw data online. The new INS headquarters is currently under construction, which represents a good opportunity to set up an efficient archiving system enabling data consolidation and dissemination.

C. Higher Level Objectives to which the Project Contributes 29. The project intends to support improvement of some key features affecting the effectiveness of the Cameroon PFM system, particularly public procurement, capital budget execution, and financial information systems. This will contribute to accelerating the pace of implementation of the reforms promoted by the 2016 PM Circular and lead towards a more orderly and transparent PFM system. The project will contribute to (a) improving the impact of public spending, especially in health and education sectors, by improving budget allocation and public investment management and (b) improving value for money owing to more efficient procurement processes. Public spending will also likely have higher impact due to better informed program design and monitoring owing to reliable and regular statistics production. Finally, by introducing cost-benefit analysis in PIB preparation, including improving the poverty dimension because of statistics support, and improving overall PIB execution, the project will contribute to poverty reduction.

30. The proposed project is consistent with and aligned to two pillars of the Growth and Employment Strategy (Document de Stratégie pour la Croissance et l'Emploi, DSCE): (a) macroeconomic and budgetary management and (b) state governance and strategic management. These pillars acknowledge that sound PFM is crucial to achieve the objective of rapid, inclusive, and sustainable growth. The DSCE also puts a strong emphasis on capacity building in strategic planning, regulation of the economy, and PFM as presented in the PFMP. The proposed project is in line with the governance and service delivery pillars of the Country Partnership Framework22 for the period FY17-FY21 as well as with the new PFM Reform Action Plan issued by the PM (pillars 2 and 3 on the reinforcement of the links between sector policies and budget and the improvement of budget procedures).23

31. The project will reinforce ongoing sector operations. Specific support to line ministries in public investment management or program budgeting will create synergies with ongoing sector operations (that is, health, education) and overall with procurement processes in the portfolio. Also, strengthening the statistic system will enhance the quality of macroeconomic and poverty analysis and allow better design and monitoring indicators associated with program budgets, ultimately contributing to improving the impact of public spending. Finally, the project is built in synergy with the budget support operation in preparation (World Bank, IMF, French Agency for Development [AFD], AfDB, and EU), especially with regard to public investment management, public procurement reforms, civil service reform, and public finance modernization.

II. PROJECT DEVELOPMENT OBJECTIVES

22

Report No 107896-CM approved on FY17. 23

Annex 9 presents a detailed reconciliation between the project components and the new PFM Reform Action Plan.


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A. PDO

32. The Project Development Objective (PDO) is to improve the effectiveness24 of public spending in selected sectors and strengthen statistics system for evidence-based decision making.

33. The project will specifically target (a) public investment management in the context of the implementation of the 2007 PFM Act and the procurement reform and (b) the national statistical system. In addition to MINFI, the MINEPAT, and the MINMAP, the project will focus on implementation with line ministries of Basic Education and Health. The focus on these two sectoral ministries results from (a) quality of the policy dialogue with the World Bank sectoral team, (b) the division of labor with AfDB PFM operations that mainly target the energy and transport sectors, and (c) the need to pilot the project activities in less complex sectors before scaling up in capital intensive sectors. The project is designed to be flexible and responsive to emerging opportunities to support public sector management effectiveness by applying an agile approach in the management of the project and setting up just-in-time technical assistance (TA) financing of unplanned activities relevant to the PDO.

34. The project will benefit the Government officials, the policy makers, and the citizens of Cameroon who will gain in the quality of services and access to information on national statistics and public finances (budget, spending, and investment budget execution). More specifically, MINFI, Technical Committee Supervising the State Own Entreprises (Comité Technique de Rehabilitation des Entreprises du secteur public), Ministry of Civil Service (MINFOPRA) MINEPAT, PIB Execution Monitoring Committees (CLS), MINMAP, ARMP, MINEDUB, MINSANTE, INS, and BUCREP will be directly targeted by the project.

B. PDO-Level Results Indicators

35. The PDO-level results indicators are as follows:

(a) Average variance by economic classification between annual budget allocation and MTEF projection in selected sectors

(b) Public investment projects in selected sectors included in the national budget that fully complied with the new selection manual

(c) Decentralized Public investment execution rate by December 31 in selected sectors

(d) Average time for procurement process of public investment project for MINMAP contracts

(e) Satisfaction of public statistics users from public administration

C. Project Components

36. The project has five strategically linked mutually reinforcing components in three selected areas: Component 1: Consolidating the program budgeting reform in selected sectors; Component 2: Improving quality of public investment in selected sectors; Component 3: Strengthening the

24

Effectiveness is defined as the actual implementation of process related to public spending for the purpose it was intended for. Related to PIM, increased effectiveness means that investment budget is actually prepared in line with the sector strategy and MTEF and executed within a reasonable time frame to achieve the intended objective.


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performance of the public procurement system and developing capacity for better service delivery; Component 4: Enhancing the use of statistics for policy making; and Component 5: Project coordination.

37. The program budgeting component (Component 1) will be supported by increased statistics capacity (Component 4) while supporting improved public investment preparation (Component 2). The procurement component (Component 3) will directly support public investment management (Component 2), the latter contributing to enhancing both the preparation process and execution. The statistics component (Component 4) will indirectly support overall planning (Component 1) by enhancing the quality of basic population, macroeconomic, and socioeconomic data and directly supporting program budgeting by improving program indicators and M&E system. The components are building synergies with the AfDB’s and French Development Agency’s PFM projects and IDA operations in Health (Health System Performance Reinforcement Project 2016–2021, P156679).

Component 1: Consolidating the program budgeting reform in selected sectors (US$6 million)

38. This component aims to translate program budgeting into reality in some selected sectors, all the way from planning to oversight under the leadership of MINFI. To this end, the component will first consolidate the budget reform process at the two leading ministries (MINFI and MINEPAT) and second solve public financial management issues that impede adequate implementation of program budgets in MINEDUB and MINSANTE.

Subcomponent 1.1: Strengthening program budgeting. This subcomponent will provide support to (a) ensure strategic allocation of resources to the critical needs in the selected sectors (revision of the sectoral strategies and MTEFs and alignment of the sectoral strategies/MBTF/MTEFs/program budgets); (b) define and enforce a more transparent and credible budget circular; (c) redesign programs (budget/activities classifications, scope of the program, program indicators, management accounting, inclusion of payroll management in programs, and so on); (d) ensure harmonization of multiyear management of investment projects (including management of recurrent costs) and three-year program budgeting; (e) provide hands-on support to program managers/Directors of Financial Affairs and other staff involved in the design and the implementation of the programs (potentially using the rapid results approach (RRA) to facilitate change management); and (f) adopt and implement a ministerial management charter.

Subcomponent 1.2: Enhancing programs’ execution and monitoring system. This subcomponent will be implemented at the MINFI level and will support the (a) redesign and implementation of PFM year-end processes (format of reporting, FM closing process activities, procedures for unused budget allocations for investment projects); (b) development of procedures for the management of fixed assets financed through public investment; (c) revision of execution reporting to adapt it to multiyear execution; (d) definition and implementation of processes consolidating information collection, clarifying roles and responsibility with regard to field M&E of program budget (MINSANTE, MINEDUB) from the local to the central level; and (e) definition of the calendar for official


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publication of public finance data and the setup of the BOOST25 database on public budget and spending recently developed with World Bank support to ensure it is updated and published.

Subcomponent 1.3: Deploying new payroll management. This subcomponent will support the deployment of the recently developed integrated HR/payroll management system (SIGIPES II) in MINEDUB and MINSANTE. This will require the completion of the ongoing update of the HR database for the selected ministries, acquisition of additional IT equipment, and training of the respective units in charge of HR/payroll in these ministries including change management support (possibly using the RRA). Finally, the project will support the use of SIGIPES II for HR analysis, the update of the Organizational Framework (cadres organiques), and strategic staffing planning for MINEDUB and MINSANTE.

Subcomponent 1.4: Strengthening SOE portfolio management. This subcomponent will support the Government’s efforts to strengthen the corporate governance framework and Government oversight of the public enterprise sector. It includes support to (a) develop a Government policy for the public enterprise sector, (b) prepare implementing legislation for the recently passed SOE framework laws and prepare a reform plan, (c) develop manuals and tools to strengthen board and management performance, including a possible targeting of five strategic SOEs where an RRA will be applied, and (d) prepare instruments and strengthen the capacity for Government monitoring and oversight of the SOE portfolio.

Component 2: Improving quality of public investment in selected sectors (US$5.5 million)

39. This component aims to address some key bottlenecks in the maturation, programming, budgeting, and execution monitoring processes of public investment activities. MINEDUB and MINSANTE will be major beneficiaries of this component to be implemented under the leadership of MINEPAT. This component will consist of the following subcomponents:

Subcomponent 2.1: Strengthening public investment budget programming and budgeting. The subcomponent will provide support to enhance the PIB preparation process by (a) defining and implementing public investment management, in particular investment project programming, preparation and selection (policy note/decree/order on

a new Project Investment Management (PIM) cycle26 and stocktaking of existing investment projects to identify projects to be supported from appraisal to selection or to be cancelled); (b) defining and establishing ICT-based solution for the management of information of public investment project preparation and piloting performance contracting for the Cellules PBBS of MINEDUB and MINSANTE and for the MINEPAT/Direction de la

25

BOOST is a Bank-wide collaborative effort launched in 2010 to facilitate access to budget data and promote effective use for improved decision-making processes, transparency and accountability, deployed in about 40 countries so far. It provides user-friendly platforms where all expenditures data can be easily accessed and used by researchers, government officials and citizens. 26

Strategic guidance, programming, appraisal, project selection in program budgets preparation, implementation, and evaluation and audit.


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Programmation to gain in effectiveness in preparation processes; and (c) providing additional resources to the Preparation Fund (Fonds de Maturation) to strengthen project appraisal capacity (for MINEDUB/MINSANTE specifically).

Subcomponent 2.2: Enhancing public investment budget execution monitoring. This subcomponent will include support to (a) pilot enhanced data consolidation by the MINEPAT’s division in charge of PIB monitoring from district and regional levels and MINFI’s Directorate of Treasury through web-based solutions and performance contracting of deconcentrated levels (regional and district levels); (b) enhance data dissemination on PIB by providing regular (that is, trimestral) online further details than mere Journal des Projets (contract details, geo localization, levels of physical and financial execution on a trimestral basis, and so on); and (c) stimulate direct citizens’ PIB execution monitoring by (i) building the capacities of existing village development committees (comités de concertation or comités de développement) in monitoring public works and accessing key information and CLS meetings and (ii) developing an application based on information and communication technology (ICT) to enable citizens feedback.27 A mechanism will be included to ensure those feedbacks are fed into monthly and trimestral PIB execution monitoring meetings (CLS). Also, the Cellules PBBS of MINSANTE and MINEDUB will benefit from tailored capacity building to use those innovative tools for their own PIB monitoring.

Subcomponent 2.3: Strengthening the management of public investment projects financed by international and bilateral donors. This subcomponent will support (a) development of regulations and guidelines describing the processes for compensation/resettlement including processing lead time at each step and (b) capacity building of the MINEPAT in project management (including FM, tax issues, M&E, and procurement) including the setting up of a monitoring software (donors funded projects’ dashboard) and related manuals—piloted with the World Bank portfolio.

Component 3: Strengthening the performance of the public procurement system and developing capacity for better service delivery (US$7 million)

40. The purpose of this component is to improve the performance of the public procurement system by improving the efficiency, effectiveness, and value for money. The component will be jointly implemented by the ARMP and MINMAP. It is structured around four interlinked subcomponents that will enhance the competency of procurement staff, expand the capacity of core institutions to carry out their functions, and enable officials to monitor and improve key performance indicators. Work undertaken within the component will complement and inform ongoing efforts, supported by the AfDB, developing comprehensive strategies for improving the procurement system.

Subcomponent 3.1: Strengthening the competencies of public officials responsible for public procurement. This subcomponent will include training of procurement staff in MINMAP, ARMP, up to two pilot ministries, and the private sectors. Training will be complemented by the creation of a system for tracking staff learning and expertise and the

27

Including pictures, through SMS or Internet, and following good practices in terms of Grievance Redress Mechanism such as anonymity.


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development of competency requirements for officials involved in procurement transactions. A strategy will be produced for eventual professionalization of the procurement function. The project will support the implementation of a national capacity-building strategy for public procurement upon its adoption. Also, the institutionalization of a training capacity will be explored including the massive open online courses (MOOC) option.

Subcomponent 3.2: Enhancing the capacity of organizations in the procurement system to carry out their functions. This subcomponent will support enhanced clarity in the rules regarding procurement processes used in MINMAP and other executing agencies through a business process review and the creation of materials to guide staff in following the required procedures. The extent of compliance with rules will be monitored through the creation of processes and platforms, including electronic tracking systems as part of the e-procurement system under development, and the analysis of the collected data. This will include acquisition of IT equipment and some logistics goods.

Subcomponent 3.3: Streamlining the procurement regulatory framework. This subcomponent will support the review and the implementation of a new procurement code and/or Central Purchasing Unit upon adoption by the Government.

Subcomponent 3.4: Improving the management and monitoring of procurement performance. This subcomponent will define public procurement performance indicators and a mechanism for gathering and analyzing performance data. It will introduce mechanisms to orient the system toward better performance, including, but not limited to, performance contracts within the process chain, with the aim to reduce the procurement time lines. To this end, a ‘project team’ will be put in place to oversee this innovative approach. This team will be hosted in MINMAP and will comprise the various procurement committees and the MINMAP Directorates.

Component 4: Enhancing the use of statistics for policy making (US$9 million)

41. The purpose of this component is to improve the national statistical system to produce regular and reliable economic and social population statistics and in-depth analysis. Robust statistics are a prerequisite to evidence-based policy making and policy results’ monitoring. This component will consist of three subcomponents:

Subcomponent 4.1: Improvement of poverty-related data by providing TA and financing to (a) the design, data collection, and analysis of ECAM 5 with a particular focus on northern regions’ rural areas and gender issues (agricultural income, shocks, and vulnerability, gender, and so on); (b) data collection and analysis of the fourth population census;28 (c) analysis of the complementary household survey (ECAM 4); (d) design a system of labor statistics by improving LFS and enterprises and informal sector surveys;

28

This activity budgeted for US$1 million will complement the resources (US$4 million) provided by another World Bank financed project in the health sector. In total the World Bank contribution in the financing of the population will amount to US$5 million.


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and (e) design a high-frequency survey to monitor poverty and vulnerability in regions in conflict.

Subcomponent 4.2: Strengthening the national accounts production by (a) providing TA to improve the quarterly national accounts methodology, (b) establishing a methodology and baseline to better reflect the regional cross-border trade, and (c) creating an economic simulation tool for MINEPAT/Direction Générale de l’Economie.

Subcomponent 4.3: Enhancing statistical data dissemination and use by the Government to improve policy making and implementation by (a) providing TA and financing to improve archiving procedures and build the capacity of the INS archiving department and setting up the IT network and equipment in the new INS headquarters and the 10 regional agencies to facilitate data treatment, sharing, archiving, and public dissemination; (b) providing TA to INS to train and assist targeted ministries in integrating an M&E system in the design and implementation of their strategies and programs and public investment projects; and (c) supporting proactive dissemination of statistics to external audience (academia, media, civil society, business associations, and so on).

Component 5: Project coordination (US$3.5 million)

42. The purpose of this component is to support the Project Coordination Unit (PCU) in coordinating and managing the implementation of the project. Activities will include the following:

Subcomponent 5.1: Management support will support project implementation management by (a) developing annual work programs and procurement plans, (b) ensuring proper fiduciary management and monitoring, (c) coordinating technical work and support to the technical units within the relevant ministries, (d) monitoring and reporting on the project’s implementation, and (e) implementing the agile approach to project management. The agile approach will be implemented by the PCU to detect as soon as possible technical and nontechnical challenges in project implementation and provide adequate and tailor-made support to solve problems and adapt the project’s activities. The agile approach will help the team identify obstacles, shift priorities as needed, and foster credible commitment from leaders and coordination and collaboration between departments and ministries.29 Concretely, (a) the institutional arrangements will be set up to secure and facilitate authorizing environment when needed with the Permanent Secretaries of the MINFI, MINEPAT, and MINMAP involved in project implementation and components’ leaders embedded in their relevant ministries empowered and accountable for activity implementation with short feedback loops to the PCU oriented on results; (b) for activity implementation that are likely to face nontechnical challenges, the relevant middle management and technical civil servants will be heavily involved in the design and implementation of pilots to ensure learning by doing before scaling up; (c) nontechnical rapid results coaches on a need-basis will be provided to components’ leaders to facilitate the pilot’s design, collective action, result-based monitoring, and authorizing environment.

29

See World Development Report 2017 notions of Credible Commitment, Coordination and Cooperation to ensure policy implementation and fostering behavior change.


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Finally, a system of team incentives and performance-based management for the PCU will be designed to foster motivation.

Subcomponent 5.2: Just-in-time technical assistance will enable the PCU to be flexible and highly responsive to emerging opportunities to support initiatives increasing public sector management effectiveness on a ‘first-come, first-served’ basis. The component may finance scale-up of existing activities, pilots, TA, or cross-cutting analytical studies. The use of the just-in-time TA financing will be subject to prior validation by the World Bank and the coordinator to ensure that the funded activities directly contribute to the PDO.

D. Project Cost and Financing (US$, millions)

Project Components Project Cost IDA Financing

Consolidating the program budgeting reform in selected sectors 6.0 6.0

Improving quality of public investment in selected sectors 5.5 5.5

Strengthening the performance of the public procurement system and developing capacity for better service delivery

7.0 7.0

Enhancing the use of statistics for policy making 9.0 9.0

Project coordination 3.5 3.5

Total costs 31.0 31.0

E. Lessons Learned and Reflected in the Project Design

43. Lessons from the previous World Bank engagement in PFM reform (TACD) have informed the design of this project. TACD implementation issues were mostly due to (a) the definition of effectiveness conditions hard to reach as it implied the creation of a high-level PFM Steering Committee; (b) lack of consensus and policy dialogue through analytical work to identify operational alternatives; (c) lack of project management training for the PCU; and (d) complexity of PFM reform given the plethora of beneficiaries,30 low authorizing environment, the political economy of reform implementation, and administrative inertia. The project design has integrated those lessons: (a) the project emphasizes de facto behavior change and shies away from de jure regulatory changes that tend to delay implementation; (b) most activities were proposed by the beneficiary institutions and ultimately selected based on either their technical feasibilities (that is, low-hanging fruits such as the population census, enhancing PIB monitoring, and training program managers) or high political attention (for example, solving PIB execution bottlenecks, consolidating PFM reforms as per PM 2016 Directive, implementing 2017 SOE laws); (c) the number of beneficiaries has been limited to the extent possible31 and most importantly activities and institutional design mitigates beneficiaries’ dispersion by having the

30

13 beneficiary institutions: 8 ministries, INS, ARMP, National Assembly, and Yaounde and Douala municipalities. 31

9 beneficiary institutions: 6 ministries (MINFI, MINEPAT, MINMAP, MINEDUB, MINSANTE, and MINFOPRA), INS and BUCREP (both under MINEPAT authority), and ARMP.


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line ministry with the right institutional mandate and convening power to implement each component (MINFI, MINEPAT, MINMAP); (d) a rapid political economy assessment informed preparation32 by flagging ahead potential contentious issues and key actors to build consensus with; and (e) adaptiveness is built in the project by planning for a PCU to be skilled in project management and an adaptive approach (such as agile and rapid results approaches) combined with a just-in-time TA financing to be responsive to emerging needs and opportunity.

44. The project also learned from the implementation path of the performance contract in customs and health PBF projects. In both cases, the introduction of performance-based management was piloted and then scaled up, driving behavior change. Related regulatory changes followed ex post to act changes rather than defining them ex ante. Also, the definition of the pilot (indicators, mechanism, and incentives) heavily involved the beneficiaries in the design, to ensure realism, fairness, and ownership, hence enabling actual implementation. Pilots enabled the initiatives to follow a trial-and-error approach and refine the system.

45. Therefore, the project combines classic TA activities, activities focusing on behavior change, and institutional arrangements geared toward results and problem resolution. First, classic TA activities range from the revision of processes for public investment preparation and monitoring and procurement to the improvement of budget programs’ indicators and multiyear spending management. Second, the system of performance contracts for civil servants involved in public investment preparation, procurement, and public investment execution monitoring, supported by rapid results coaching will focus on behavior change related to the classic TA. Third, the institutional arrangements are designed to have a PCU implementing the agile approach in both day-to-day implementation management (that is, from the perspective of outputs and disbursement) and at the strategic level (that is, from the perspective of outcomes), to ensure pro activeness in identifying bottlenecks as soon as possible, solutions, and accountability.

32

Applying Netmap methodology with key counterparts for each component separately, to identify the key actors and their positioning with regard to planned support to institutional changes.


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Figure 1. Doing Development Differently

46. The project design was also built on the TA activities and policy dialogue achieved over the past few years by the World Bank team on PFM and procurement reforms (table 1). In addition, the project will leverage past investments from other donors, which followed classic TA, leading to de jure change with little, delayed, or partial enforcement, by focusing on behavior change.

Table 1. List of World Bank TA Activities Completed in the Last Three Years

Key TA Activities/Policy Dialogue Incorporated in the Current Project

Review of the design and the content of the program budget including the result indicators in 8 line ministries

Subcomponent 1.1 activities designed to support redesign of the programs’ scope and the indicators with the involvement of INS

Introduction of the management control to support the program budgeting approach

Subcomponent 1.1 activities designed to embed the management control function as advisory services for the program managers

Joint IMF-World Bank PIM assessment Component 2 designed to reflect the recommendation of the PIM assessment such as (a) strengthening the link between the sectoral strategies, the MTEF, program, and PIP, (c) establishing the Maturation Funds, and (c) supporting PPBS

Setting up of an initial BOOST database Subcomponent 2.2 includes activities aiming to support the regular update of the BOOST database and the online dissemination of the budget execution report

Rapid Result Initiative in the procurement system / value chain analysis in the procurement system

Performance contracts activities under Component 3 will be implemented based on the preliminary lessons learned from the RRI approach and value chain analysis

Feasibility study of the Purchasing Central Unit

Subcomponent 3.3 includes support to the implementation of the Purchasing Central Unit once the final decision will be made by GoC

III. IMPLEMENTATION

Classic TA

•Defining new processes

•Improving process chains

•Building technical capacities

Behavior Change

•Addressing the incentives issue through performance contracts

•Fostering team work and result-oriented action through rapid results coaching

Agile Project Management

•Short frequent action-oriented meetings at three levels of management to identify obstacles

•PCU incentivized

•Pool of rapid results coaches

Addressing technical challenges Addressing adaptive challenges (non-technical)


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A. Institutional and Implementation Arrangements

47. The project will be implemented under the overall leadership of MINEPAT. The PCU under the leadership of the project coordinator will be in charge of fiduciary activities and overall project management and leadership. With regard to fiduciary activities, a dedicated FM officer and a procurement specialist will be recruited. To ensure adequate project management and leadership, (a) the project coordinator and his/her assistants will be recruited to combine both seniority and experience in PFM, (b) a dedicated M&E specialist will be recruited, and (c) TA and training will be provided to the PCU as needed, for example, to support the implementation of RRIs or apply the agile approach to project management.

48. Components’ managers will be selected in the key ministries to lead the technical implementation of activities, such as drafting terms of reference, participating in the consultant selection, monitoring implementation, and validating outputs: MINFI (Component 1); MINEPAT (Component 2); MINMAP (Component 3); and INS system (Component 4). The components’ managers will be civil servants with the relevant technical knowledge and the institutional convening power, potentially assisted by junior civil servants. Civil servants in the implementation team will benefit from incentives attached to their performance in implementing their activities.

49. The project Orientation and Monitoring Committee will be chaired by the SG MINEPAT and comprise the SG MINFI, SG MINMAP, SG MINEDUB, and SG MINSANTE as well as the Director General (DG) ARMP, DG INS, and DG BUCREP. The Committee will meet at least every three months to monitor implementation and address early any institutional bottlenecks.

B. Results Monitoring and Evaluation

50. The project’s M&E framework relies on the ‘Guide On Operational-Level Public Financial Management Reform Indicator’. The M&E framework will be a key instrument to monitor progress toward achieving the PDOs and providing reports on performance including potential bottlenecks as they arise. The M&E framework presented in section VII captures the high- and medium-level results that are expected to be achieved. MINEPAT will be in charge of assessing and reviewing the projects’ result indicators data. A midterm review (2019) will be carried out to ensure the project is on track and will recommend any needed actions or adaptations to address challenges and improve implementation toward achievement of the PDO. During implementation, the team will revisit the currently agreed indicators to make adjustments as required in consultation with the Government and other partners.

C. Sustainability

51. The sustainability of the project is underscored by the results-driven approach adopted. The project draws on diagnostics and recommendations for improving procurement and program budget processes. The introduction of public sector performance-based management and results and the development of robust systems and tools will provide a sound basis for ensuring Government effectiveness. The project’s design also includes activities shifting the incentives of key targeted civil servants in the Public Investment Management chain toward performance, using existing available budget as much as possible (for example, per diem budgeted for the Procurement Committee). The


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package of training and change management activities included in the design of the project for all stakeholders will also help ensure that adequate capacity is retained after project closure.

52. In addition to the local expertise within the civil service to deliver on the reforms under the project, recruitment for TA/consultancy expertise is planned under the project. Their role will include advisory and direct capacity building of counterparts on the job to ensure that competence in managing economic governance activities remains. Complementary institutional capacity-building activities supported by a number of development partners will also help enhance Government effectiveness.

D. Role of Partners

53. Strong donor coordination for PFM reform has been a key result of the World Bank-funded TACD. Recent major partners supporting the PFM reforms have been the German Cooperation with ongoing operations focusing on the integration of taxes and treasury systems, and small and just-in-time TA from France, with IMF/AFRITAC focusing on accounting and revenue collection. The EU, AfDB, and World Bank operations supporting PFM reforms closed recently and new operations are under preparation. While the EU support has yet to be determined, the AfDB intends to focus on the preparation of investment projects in the transport and energy sectors and on the public procurement system. The French Development Agency’s PFM project will focus on basic education and health sectors and will complement the World Bank efforts planned under this project (annex 7 provides detailed information on donors’ intervention in the PFM reform agenda). The donor coordination group, which is one the most active donor groups in Cameroon, works closely with the PFM Technical Secretariat established in 2010 and under the Directorate of Budget (MINFI) to oversee the reform. Donor coordination has also been effective in harmonizing the response to procurement reforms, with regard to policy dialogue and analytical work with MINMAP. The interministerial group established at the request of the Presidency to draft an amended procurement code addressing inconsistencies and conflict of interest in 2015–2016 was also a positive sign of the reform momentum.

IV. KEY RISKS

A. Overall Risk Rating and Explanation of Key Risks

54. The overall risk is rated High. Overall the institutional fragmentation of the PFM reform, combined with an election year in 2018, may affect the policy dialogue needed to achieve the necessary consensus to project implementation. Also, innovative activities such as performance contracting of civil servants may suffer from the overall inertia in public sector reform in general.

55. Macroeconomic risk is Substantial. The continued deterioration of the CEMAC foreign exchange reserves and worsened economic prospects create significant challenges for fiscal adjustment and structural reforms in the region and consequently for growth and macro stability in Cameroon. The official foreign exchange reserves for the CEMAC region is estimated at two months, well below what may be considered adequate for resource-rich countries facing significant terms of trade volatility. Also, the hope that oil prices may rise could increase the risk of muddling through and delay long-needed structural reforms. Mitigation measures are as follows:

(a) Activities will contribute to enhancing the fiscal space by


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Reducing the payment of debt arrears for project investment not yet executed ;

Decreasing unit costs owing to procurement reform, and;

Mitigating leakages owing to enhanced public investment monitoring.

(b) Improved PIM will support public investment impact on growth and poverty; and

(c) An improved public procurement system should also promote competition.

56. Political and governance risks are High. Cameroon is characterized by a dominant party system and weak governance. The 2013 legislative and local elections did not change the power balance even though election organization has improved. Uncertainties remain given the context of ageing political elites, large youth population, war efforts against Boko Haram, and social movements in Anglophone regions since 2016. While perceptions with regard to the Presidency improved since the war started (Afrobarometer), civil liberties have been affected by the Anti-Terrorist Law, in a context where political parties and CSOs prepare the 2018 series of elections (local, legislative, and presidential). However, until the 2018 elections, the executive will probably remain stable and focused on public investment execution. Also, the fiscal crunch is an incentive for more efficiency in public expenditures. Increased execution of public investment contributing to creating employment may mitigate social instability. A stronger statistics system would inform strategic policy planning to boost growth and fight poverty. Also, increased access to statistics and budget information would feed policy dialogue and enable public scrutiny.

57. The risk related to the technical design of the project is Substantial. While most of the PFM-related activities comprise traditional TA, the main risk is the inertia in project implementation exacerbated by the multiplicity of stakeholders and the lack of enforcement of new processes and guidelines due to the lack of accountability in public sector management in general. Mitigation measures are as follow: (a) possible inertia in project implementation would be mitigated by the implementation of the agile approach by the PCU to ensure close monitoring and adaptation; (b) the RRA will support the implementation of key activities, by providing hands-on TA to clarify issues, solutions, responsibilities, target, and implementation in short cycles; (c) piloting performance contracting will foster behavior change by aligning incentives of civil servants involved in key process chains in procurement and public investment management, and simple performance incentives will also be applied to the PCU; (d) TA activities will be grouped in clusters to enable bulk contracting and simplify project procurement and reduce transaction cost. The project’s contribution in the population census is quite modest, which reduced the risk associated with lack of disbursement as a result of delay and/or cost overrun of this critical activity.

58. Fiduciary risk is Substantial. The PCU that will be responsible to manage financials and procurement is not yet set up and hence not yet equipped with appropriate FM arrangements, for example, a seasoned FM and procurement team and customized accounting system. This puts at risk the day-to-day accounting and reporting needs under the project. Moreover, the involvement of several autonomous entities (MINFI, MINEPAT, MINMAP, INS) in charge of specific components might hamper the sound coordination of the project activities especially in terms of budgeting and reporting. Training on the New Procurement Framework (NPF) would be carried out for the World Bank and for the PCU and the members of MINMAP central tender boards. A project special tender board will be created. A Project Procurement Strategy of Development (PPSD) and the Procurement Plan for the first 18 months


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of project implementation were prepared during appraisal and finalized and approved during negotiations. The PCU will be staffed with seasoned FM officer, accountant, and procurement specialist competitively recruited and equipped with an appropriate information system. The World Bank fiduciary team will ensure that the implementation arrangement is maintained for the project throughout its duration through regular supervisions. The coordination mechanism will be reinforced with an Orientation and Monitoring Committee in charge of overseeing and controlling the project activities and said coordination mechanism will be described in the Implementation Manual with clear description of roles and responsibilities.

59. Institutional capacity for implementation and sustainability risks and stakeholders’ risks are Substantial. Reform implementation is affected by severe institutional fragmentation: between the MINEPAT and MINFI, MINMAP and ARMP, and INS and BUCREP. Effective public investment management and procurement requires close collaboration between line ministries and MINEPAT, MINMAP, and MINFI. Weak interministerial coordination in general may affect project implementation. Lastly, insufficient funds to finance ECAM 5 and the population census may jeopardize the process down the line. Mitigation measures are as follows: (a) active policy dialogue would be maintained at each stage to sustain the momentum for reform not only with the Orientation and Monitoring Committee but also at the PM Office level (leading the PROMAGAR), and the project focuses on areas where there is a clear interest and political will; (b) the agile approach and the RRA would also foster flexibility and adaptation of activities through short cycles of pilots, learning, and scaling up, and bottlenecks in implementation would be detected and addressed quickly; (c) performance contracting should align stakeholders’ interest and facilitate interministerial coordination on specific issues; (d) the PCU will devolve the technical implementation of each component to the main stakeholder, while monitoring overall implementation and facilitating coordination; and finally (e) the Development Policy Loan (DPL) operations under preparation will pave the way for stronger policy dialogue in the medium and long terms that will contribute to maintaining the GoC’s political commitment and reform coordination at the high level.

V. APPRAISAL SUMMARY

A. Economic and Financial (if applicable) Analysis

60. Given the extent of the deficiencies currently highlighted in the management of Cameroonian public investments, the project is likely to generate gains. The financial assessment/evaluation of these gains focuses on the three main consequences of weak public investment management: low execution, cost overruns, and inefficiency in the use of resources. The cost-benefit analysis reveals an overall net present value (NPV) of US$564 million (approximately). This amount represents the lower assessment of the expected net profits of the project as not all the gains could be financially assessed (annex 10).

World Bank Support and Value Added

61. First, the proposed areas of intervention and activities were designed through active dialogue with the authorities during project preparation. Thus, the project has been designed according to the perception of the GoC of the greatest value added of World Bank involvement. The World Bank is well


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placed to provide support on various public sector-related issues, including budget programming, public investment management, civil service management, SOE management, and statistics.

62. Second, the project has been designed to be complementary to other partners’ support. The World Bank co-leads the donors’ coordination group owing to its convening power. Recent major partners supporting the PFM reforms have been the Deutsche Gesellshaft fur International Zusammenarbeit (GIZ, German Cooperation) with ongoing operations focusing on the integration of taxes and treasury systems, and small and just-in-time TA from France, with IMF/AFRITAC focusing on accounting and revenue collection. The EU, AfDB, and World Bank operations supporting PFM reforms closed recently and new operations are under preparation. While EU support has yet to be determined, the AfDB intends to focus on the preparation of investment projects in the transport and energy sectors and on the public procurement system. Finally, the project is built in synergy with the budget support in preparation (World Bank, IMF, French Agency for Development [AFD], AfDB, and EU).33

B. Technical

63. The project design is technically viable and sound; it is aligned with the 2016 PM Circular, the 2014 Procurement Sectorial Strategy, and the 2014, 2015, and 2016 reports on the interministerial committee in charge of reviewing the programs budget (Comité Interministériel d’Examen des Programmes, CIEP). It has also been influenced by lessons from World Bank TA activities completed over the last few years in Cameroon and around the world on governance and public sector management (Table 1). The project builds on the achievements, and draws from the shortcomings, of existing vertical World Bank support to the sectors in Cameroon. Project preparation has relied heavily upon the active engagement of expertise both within the World Bank and the beneficiaries through the technical working group put in place. Development partners engaged in Cameroon have also positively reviewed the project from a technical perspective. The technical merits of the project design have been examined by World Bank staff over the course of project preparation and are considered sound. Lastly, preliminary results of the 2017 PEFA and DPL are reflected in the project design.

C. Financial Management

64. The FM assessment in line with the World Bank’s OP/BP 10.00 noted that in compliance with the current use of the country national system in Cameroon, the project FM arrangement is foreseen to rely on the existing country FM arrangements put in place to manage donor-funded projects. These arrangements are centered on two main institutions. First, the Autonomous Sinking Funds (Caisse Autonome d’Amortissement, CAA) equipped with dedicated tools developed by the World Bank Institutional Development Fund (IDF). These tools include (a) a standardized FM Manual and (b) an integrated FM system for donor-funded projects (namely, Système Intégré de Gestion des Décaissements [SIGED]), which includes modules on (a) project cycle, (b) budgeting and accounting, (c) automated payments, and (d) electronic archive. Second, MINMAP, in charge of ex ante control of all suppliers’ invoices associated with a contract before any payment by CAA.

33

annex 7 provides detailed information on donors’ intervention in the PFM reform agenda


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65. Hence, the following measures are set as dated covenants: (a) the standardized FM Manual of procedures developed by CAA with World Bank IDF support will be customized to reflect the project specificities, (b) an accounting software integrated in the budget and accounting modules of the SIGED will be purchased and installed at the PCU to handle accounting and reporting needs under the project, and (c) the CAA and MINMAP internal control mechanisms will be applied. Lastly, an FM officer will be recruited to ensure proper carrying out of FM responsibility, and an accountant will be recruited not later than six months after effectiveness.

66. With regards to the external audit, the new centralized recruitment approach by which MINEPAT leads the process with MINMAP through a single process for the entire portfolio may apply.

D. Procurement

67. Procurement for goods, non-consulting, and consulting services for the project will be carried out in accordance with the procedures specified in the ‘World Bank Procurement Regulations for IPF Borrowers’ dated July 1, 2016 (Procurement Regulations), the World Bank’s Anti-Corruption Guidelines: ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’ (revised as of July 1, 2016), and the provisions stipulated in the Financing Agreement.

68. The assessment reviewed the organizational structure for the implementation of the project, the procurement capacities of the PCU, and the interaction between the different agencies involved in the project. The assessment revealed that (a) the beneficiary agencies have the technical expertise to prepare the technical documents (ToRs, bidding documents, technical specification) that may be reinforced for specific activities by consultants to be recruited and (b) the procurement capacity, especially in IDA financing, is acceptable at the level of MINMAP and limited in the other beneficiary agencies and the coordinating ministry.

69. The key risks identified for procurement under the project are as follows: (a) staff involved in the project may not have sufficient knowledge on the NPF and/or there is a risk of confusion with the former guidelines, (b) there is lack of proficient procurement staff to implement procurement actions on time and in line with World Bank procurement procedures, (c) inadequate communication and interaction between the beneficiaries and the PCU may lead to delays in procurement processes and poor costs estimation, (d) administrative routines may increase delays in the procurement processes and affect project implementation, and (e) poor filing may lead to loss of documents.

70. The following mitigation measures are proposed: (a) hire on a competitive basis a procurement specialist, to be located at the PCU, experienced and familiar with World Bank procurement procedures and policies, and; (b) organize at the beginning of the project workshop sessions to train on the NPF all staff involved in the procurement of the project; and (c) develop a manual of administrative, financial, and accounting procedures to clarify the role of each team member involved in the procurement process of the project and the maximum delay for each procurement stage, specifically with regard to the review, approval system, and signature of contracts.

71. A PPSD and the Procurement Plan for the first 18 months of project implementation have been prepared. Major procurements will include the following:


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Recruitment of local individual consultants to support project implementation and trainings through comparison of curriculum vitae (CVs) collected following request of expressions of interests advertised in local press for permanent tasks (Open Competitive Selection of Individual Consultants), Qualified CVs collected directly from the best knowledge of the client (Limited Competitive Selection of Individual Consultants), or Direct Selection of Individual Consultants in line with the provisions of 7.39 of the Guidelines

Recruitment of individual consultants and firms to carry out specialized studies, training of trainers, or TA for reforms—taking into account the specificity, these will involve consultants with proven international experience: advertising through international press including the United Nations Development Business (UNDB) (Open Competitive selection of Individual Consultants) or through a long list of qualified individual consultants established if needed with the support of the World Bank (Limited Competitive Selection of Individual Consultants); in very specific cases, direct selection will be used in compliance with the provisions of the Borrower Regulations

Procurement of vehicles. Package of vehicles to be procured by the project with a Request for Bids through Open International Competitive Procurement or with Direct Selection through the United Nations Office for Project Services (UNOPS)

Computer and information systems will be procured with a Request for Bids through Open International Competitive Procurement.

72. During implementation, the Procurement Plan will be updated with all the program donors as required, at least annually, to reflect actual program implementation needs and improvements in institutional capacity.

E. Social (including Safeguards)

73. The proposed project is limited to the provision of training and TA and is not expected to result in any direct negative social impacts. The project will assist the Government in improving PFM, especially public investment management, and enhance the quality of the statistics system, especially poverty statistics. It is hence expected to contribute to improved delivery of basic social services and reduced poverty.

74. Citizens engagement. The project will contribute to increased citizens’ engagement through not only increased transparency and access to information on policy impact (statistics) and public finance data but also by stimulating direct participation in PIB monitoring. First, the project will support the publication of public budget and spending in a user-friendly and reusable format through online BOOST and ensure the publication of key financial and performance data of SOEs. Second, the project will enhance the level of details of public information related to budgeted PIBs and improve the delays and frequency of information related to PIB execution. Third, the project will stimulate citizens’ scrutiny on PIB execution monitoring through existing village development committees as well as an ICT-based feedback mechanism. Finally, access to national statistics data will be strengthened through regular and frequent publication and dissemination in a reusable format and shorter analysis for wider audience.


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75. Gender. Gender aspects are integrated in the project where possible by ensuring (a) the professional training in procurement delivered in the project will include women and hence enhance women professionalization in procurement, (b) the support to citizens’ monitoring of investment projects’ execution will pay particular attention to empowering women in local committee’s contributing to the CLS, and (c) the statistics TA will support INS in building in gender sensitivity in ECAM 4 poverty notes; in ECAM 5, the questionnaire design will be in line with latest international standards.

F. Environment (including Safeguards)

76. The activities supported by the proposed project are likely to have no adverse environmental impacts. The project is therefore classified as Environmental Category C. No specific environmental safeguard instrument will be required. Consequently, the World Bank’s policies in this area are not triggered.

G. Other Safeguard Policies (if applicable)

77. None.

H. World Bank Grievance Redress

78. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

.

http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service

http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service

http://www.inspectionpanel.org/

The World Bank Strengthening Public Sector Efficiency and Statistical Capacity Project (P151155)

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VI. RESULTS FRAMEWORK AND MONITORING

Results Framework

COUNTRY : Cameroon CAMEROON - Strengthening Public Sector Effectiveness and Statistical Capacity Project

Project Development Objectives

The project development objective is to improve the effectiveness of public spending in selected sectors and strengthen the statistics system for evidence-based decision making. Project Development Objective Indicators

Indicator Name Core Unit of Measure

Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection

Name: Average variance by economic classification between annual budget allocation and MTEF projection in selected sectors

Percentage 50.00 20.00 Annual

MINFI

MINEPAT

Description: Component 1 and 4 PDO indicator Please note that improved national accounts statistics under comp 4 will improve MTEF. Economic classification (grandes masses in French) are Investment, Wage Bill, other recurrent spend

Name: Public investment projects in selected sectors included in the national


MINEPAT

MINEPAT


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budget that fully complied with the new selection manual

Description: Component 2 and 4 PDO Indicator Please note that improved production and dissemination of Poverty Statistics (comp 4) will be taken into account in PIP selection

Name: Average time for procurement process of public investment project for MINMAP contracts

Days 255.00 180.00 Annual

ARMP and MINMAP reporting

MINEPAT

Description: Component 2 and 3 PDO Indicator

Name: Satisfaction of public statistics users from public administration

Percentage 0.00 70.00 As needed

Exit surveys of beneficiaries at each INS-organized workshops to validate the questionnaire and to disseminate the findings with sector ministries

INS

Description: Component 4.3 Satisfaction of users with regards to the outputs from INS will be collected through exit survey at the related workshops. The objective is to ensure that public statistics and report produced by INS are relevant for the ministries, and ultimately inform policy-making and policy-monitoring.


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Name: Decentralized Public investment execution rate by December 31 in selected sectors (MINEDUB)


MINEPAT annual reporting on investment projects execution.

MINEPAT

Description: To determine the execution rate, we take into account the "Ordonnancement" steps. Decentralized public investment budget is defined as the BIP managed at deconcentrated and decentralized levels. Execution rate here is at the stage of “ordonnancement” and Decentralized investment budget is defined as the BIP managed at deconcentrated and decentralized levels

Name: Decentralized Public investment execution rate by December 31 in selected sectors (MINSANTE)


MINEPAT annual reporting on investment projects execution.

MINEPAT

Description: To determine the execution rate, we take into account the “Ordonnancement” steps. Decentralized public investment budget is defined as the BIP managed at deconcentrated and decentralized levels. Execution rate here is at the stage of “ordonnancement” and Decentralized investment budget is defined as the BIP managed at deconcentrated and decentralized levels

Intermediate Results Indicators



Name: Number of program budget and associated result indicators redesigned (based

Percentage 0.00 6.00 Once

PIU M&E

MINEPAT


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on the new budget classification) revised

Description: Component 1.1. This concerns the program-budgets from MINSANTE and MINEDUB, which will be revised with TA from the project.

Name: Validation of Public Investment Selection Manual that include Poverty in selection criteria

Yes/No N Y Once

MINEPAT

MINEPAT

Description: Component 2 and 4 IRI

Name: Comprehensive budgeted Investment Projects database available online and updated quarterly within 4 weeks after the end of each quarter

Yes/No N Y Quarterly

MINEPAT

MINEPAT

Description: Component 2 and Citizen Engagement IRI Comprehensive means: project name, budget, technical specifications, localization, responsible, physical execution, financial execution, quarterly CLS reports

Name: Publication of annual budget and spending through on-line BOOST database by January 30

Yes/No N Y Annual

MINFI

MINEPAT


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Description: Component 1 and Citizen Engagement IRI

Name: Procurement staff trained with demonstrated competency in procurement


MINMAP

MINMAP

Description: Component and Gender IRI Demonstrated competency will be evidenced by test at the end of the trainings delivered to measure learning achievements

Name: ECAM 5 survey revised methodology is aligned with new international standards on Poverty surveys

Yes/No N Y Once

INS

MINEPAT

Description: Component 4 major IRI

Name: Interval between two Population Census reduced

Years 17.00 12.00 Once

INS

MINEPAT


Name: Regions for which cross border trade statistics are produced and taken into

Number 0.00 4.00 Annual

INS

MINEPAT


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account in National accounts


Name: Average for procurement process of public investment projects of MINEDUB


ARMP annual report

MINEPAT

Description: Component 3 IRI

Name: Average for procurement process of public investment projects of MINSANTE


ARMP annual report

MINEPAT

Description: Component 3 IRI

Name: Publication of key annual financial and performance data of the 10 largest SOEs

Number 0.00 10.00 Annual

MINFI website

MINEPAT

Description: Component 1.3 SOEs encompasses EPA, SCP and SEM. Key financial and performance data include audited financial statement and operational performance report


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Name: Female beneficiary of procurement training

Percentage 0.00 50.00

Description:


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Target Values Project Development Objective Indicators FY

Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 YR6 End Target

Average variance by economic classification between annual budget allocation and MTEF projection in selected sectors

50.00 50.00 40.00 30.00 20.00 20.00 20.00 20.00

Public investment projects in selected sectors included in the national budget that fully complied with the new selection manual

0.00 0.00 10.00 20.00 40.00 50.00 50.00 50.00

Average time for procurement process of public investment project for MINMAP contracts

255.00 230.00 210.00 190.00 180.00 180.00 180.00 180.00

Satisfaction of public statistics users from public administration

0.00 50.00 60.00 70.00 70.00 70.00 70.00 70.00

Decentralized Public investment execution rate by December 31 in selected sectors (MINEDUB)

73.13 75.00 75.00 80.00 80.00 85.00 85.00 85.00

Decentralized Public investment execution rate by December 31 in selected sectors (MINSANTE)

52.60 55.00 60.00 65.00 70.00 75.00 75.00 75.00


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Intermediate Results Indicators FY


Number of program budget and associated result indicators redesigned (based on the new budget classification) revised

0.00 0.00 6.00 6.00 6.00 6.00 6.00 6.00

Validation of Public Investment Selection Manual that include Poverty in selection criteria

N Y Y Y Y Y Y Y

Comprehensive budgeted Investment Projects database available online and updated quarterly within 4 weeks after the end of each quarter

N N N Y Y Y Y Y

Publication of annual budget and spending through on-line BOOST database by January 30

N N Y Y Y Y Y Y

Procurement staff trained with demonstrated competency in procurement

0.00 0.00 70.00 70.00 70.00 70.00 70.00 70.00

ECAM 5 survey revised methodology is aligned with new international standards on Poverty surveys

N N Y Y Y Y Y Y

Interval between two Population Census reduced

17.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00


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Regions for which cross border trade statistics are produced and taken into account in National accounts

0.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00

Average for procurement process of public investment projects of MINEDUB

128.00 120.00 110.00 100.00 100.00 90.00 90.00 90.00

Average for procurement process of public investment projects of MINSANTE

128.00 120.00 110.00 100.00 100.00 90.00 90.00 90.00

Publication of key annual financial and performance data of the 10 largest SOEs

0.00 0.00 5.00 7.00 10.00 10.00 10.00 10.00

Female beneficiary of procurement training

0.00 0.00 30.00 40.00 40.00 50.00 50.00 50.00


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ANNEX 1: DETAILED PROJECT DESCRIPTION

Component 1: Consolidating the program budgeting reform in selected sectors

1. This component aims to translate program budgeting into reality in some selected sectors, all the way from planning to oversight under the leadership of MINFI. To this end, the component will first consolidate the budget reform process at the two leading ministries (MINFI and MINEPAT) and second solve public financial management issues that impede the adequate implementation of program budgets of MINEDUB and MINSANTE.

Subcomponent 1.1: Strengthening program budgeting

2. Objective. The objective of this subcomponent is to improve the capacity of the selected sectors to implement the program-based approach.

3. Current status. The 2014, 2015, and 2016 CIEP reports identified several weaknesses that are affecting the implementation of the program budgeting approach at the line ministries level (Box 1). As a result, the program budgeting reform is not translating into better programing. This is mainly due to the insufficiencies in the change management process, the weaknesses in the design and the scope of the programs which do not include the payroll and are not articulated with the sectoral METF and the global MBTF, the insufficiencies in the design of the programs’ indicators, and the lack of several tools (ministerial managerial chart clarifying the role of the players, management account, and so on) to assist the program managers and the Directors of Financial Affairs to execute their duties.

4. Proposed activities. The subcomponent will provide support to (a) ensure strategic allocation of resources to critical needs in the selected sectors (revision of the sectoral strategies and MTEFs and alignment of the sectoral strategies/MBTF/MTEFs/program budgets); (b) define and enforce a more transparent and credible budget circular; (c) redesign programs, especially with regard to budget/activities classifications to ease the reconciliation with the chart of account and determine the activity cost and scope of the program to correct the existing overlap in the program design that affects implementation, program indicators with support from INS so that indicators are outcome oriented, management accounting to inform program managers with quantitative information in their timely decision-making process, and the inclusion of payroll management in programs; (d) ensure harmonization of multiyear management of investment projects (including management of recurrent costs) and three-year program budgeting; (e) provide hands-on support to program managers/Directors of Financial Affairs and other staff involved in the design and the implementation of the programs (potentially using the RRA to facilitate change management); and (f) adopt and implement a ministerial management charter to ensure program managers have the management autonomy and institutional authority to play their manager roles.


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Subcomponent 1.2: Enhancing programs’ execution and monitoring system

5. Objective. The objective of this subcomponent is to improve the capacity of the selected sectors to execute and monitor their programs.

6. Current status. While the program budget approach has introduced changes in the budget preparation, the execution and monitoring continue to suffer from several insufficiencies. The collection of the results indicators to link the financial execution and the physical execution from the decentralized to the central level remains a concern due to lack of an adequate reporting format clarifying the roles and responsibilities. Also, the delay in preparing the Procurement Plan, commitment plan, and cash flow forecast affects the budget execution, resulting in late start of the investment projects.34 Lastly, the FM year-end processes were not revised to consider the new requirements (format of the reporting, early production of the financial statements, management of unused budget allocations, management of the fixed assets, and management of the multiyear execution).

7. Proposed activities. This subcomponent will support the (a) definition and implementation of processes consolidating information collection, clarifying roles and responsibility with regard to field M&E of program budget (MINSANTE, MINEDUB) from the local to the central level with TA from INS; (b) redesign and implementation of PFM year-end processes (consistent format of reporting, FM closing

34

This weakness will be addressed by the French Development Agency’s PFM project.

Box 1. Key Recommendation from the CIEP Reports

MINEDUB

Formalize the chain of responsibility within MINEDUB to embed the monitoring of the program budget

Revise the sectoral strategy of MINEDUB as to ensure alignment with the new emerging challenges in the sector with regard to access, quality, and governance

MINSANTE

Finalize the sector strategy and align the scope/design of the line ministries’ program budget as to improve the GoC interventions in the sector and increase effectiveness of the programs

Include in the budget the donor financings in the sector

Provide a dedicated hands-on support to the MINSANTE program managers to embed the program budgeting approach in the sector

Cross-cutting Recommendations

Support the deployment of the management account as a tool to support the consolidation of the program budget approach among the players (program managers, Director of Financial Affairs, Secretary General)

Align the civil service reform with the program budgeting reform

Update the MTEF and use MTEFs’ data for the program budgets

Include in the MTEF only mature projects


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process activities on time, procedures for unused budget allocations for investment projects to prevent shifting spending to the next fiscal year); (c) development of procedures for the management of fixed assets financed through public investment; (d) revision of execution reporting to adapt it to multiyear execution as per the program periodicity; and (e) the definition of the calendar for official publication of public finance data and the setup of the BOOST database recently developed with World Bank support to ensure it is updated and published.

Subcomponent 1.3: Deploying new payroll management

8. Objective. The objective of this subcomponent is to improve the management of the payroll.

9. Current status. To improve the management of the payroll, the GoC with support from the donors (World Bank and EU) decided to procure an integrated HR/payroll management system (SIGIPES II) using an SAP solution. The development of this system is completed and deployment should occur after the testing phase. However, this deployment is constrained by insufficient financial resources to procure the IT equipment and provide the change management support. In addition, the deployment will imply a cleanup of the HR/payroll existing files and additional data collection.

10. Proposed activities. This subcomponent will support the deployment of the recently developed integrated HR/payroll management system (SIGIPES II) in MINEDUB and MINSANTE. This will require the completion of the ongoing update of the HR database for the selected ministries, acquisition and installation of additional IT equipment, and training of the respective units in charge of HR/payroll in these ministries including change management support (possibly using the RRA), and the use of SIGIPES II beyond managing payroll, for example, the update of the Organizational Framework (cadres organiques) and strategic staffing planning for MINEDUB and MINSANTE according to program needs and so on.

Subcomponent 1.4: Strengthening SOE portfolio management

11. Objective. The objective of this subcomponent is to improve the oversight and management of SOE portfolio.

12. Current status. SOEs and public agencies represent a significant share of the economy as well as in the state budget. Performance varies greatly from one to another; however, data indicate that SOEs finance themselves through debt rather than earning. Also, SOEs’ portfolio management is very weak. Consequently, not only are SOEs a significant fiscal risk, but also their performance can have an impact on the productive sector by crowding out private sector investment, on prices to consumers, as well as service delivery. The GoC promulgated the laws 2017/010 and 2017/011 on July 12, 2017, to improve SOE management and portfolio oversight, complying with CEMAC Directives. Additional texts are necessary to fully apply and enforce those laws and SOEs have been given one year to comply.

13. Proposed activities. This subcomponent will support the Government’s efforts to strengthen the corporate governance framework and Government oversight of the public enterprise sector. It includes support to (a) develop a Government policy for the public enterprise sector, (b) prepare implementing legislation for the recently passed SOE framework laws, including a reform plan, (c) develop manuals and tools to strengthen board and management performance, including a possible targeting of five


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strategic SOEs where the RRA will be applied, and (d) prepare instruments and strengthen the capacity for Government monitoring and oversight of the SOE portfolio.

Component 2: Improving quality of public investment in selected sectors

14. This component aims to address some key bottlenecks in the maturation, programming, budgeting, and execution monitoring processes of public investment activities. MINEDUB and MINSANTE will be major beneficiaries of this component to be implemented under the leadership of MINEPAT. This component will likely consist of three subcomponents.

Subcomponent 2.1: Strengthening public investment budget programming and budgeting

15. Objective. The objective of the subcomponent is to improve the programming and budgeting of public investment.

16. Current status. PIPs and the MTEF include many investment projects that lack the necessary technical preparation. Indeed, the review of a portfolio of 165 investment projects comprising 792 activities, compiled from the Government MTEF 2013–2015, shows an overall state of maturity of 21.97 percent. A more comprehensive review of investment projects of 2014–2016 and further sectoral MTEF technical documents reveals 51.5 percent of projects meet the criteria of maturity with a strong sectoral dispersion (95.7 percent for the Ministry of Public Works and 6.3 percent for the Supreme Court). Clearly, the maturation of investment projects is one of the weakest links in the sectoral ministries. The nonsystematic appraisal of the investment projects is, to a large extent, the source of unwise expenditure choices; under these conditions, the projects to be implemented are poorly designed, poorly mastered, and/or reduced to project ideas, exacerbating the underutilization of funds and poor execution. The main reason for this situation is the lack of operational capacity of institutions responsible for presenting projects. As of the end of December 2016, the PIP portfolio comprised about US$5.4 million of projects for which financing agreements were signed with no disbursement.

17. During the last five years, the MINSANTE and MINEDUB PIB mainly consisted of construction/rehabilitation of classrooms and health centers (Figure 1-1) with an execution rate of about 70 percent on average with the extension by three months of the closing date of the fiscal year. This is mainly due to the poor appraisal of the investment projects and weaknesses in the project management.

18. Proposed activities. The subcomponent will provide support to enhance the PIB preparation process by (a) defining and implementing public investment management, in particular investment project programming, preparation and selection (policy note/decree/order on a new PIM cycle35 and stocktaking of existing investment projects to identify projects to cancel or be supported from appraisal to selection); (b) defining and establishing ICT-based solution for the management of information of public investment project preparation and piloting performance contracting for the Cellules PBBS of MINEDUB and MINSANTE and for MINEPAT/Direction de la Programmation to gain in effectiveness and

35

Strategic guidance and appraisal, project selection in program budget preparation, implementation, and evaluation and audit.


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efficiency in preparation processes; and (c) providing additional resources to the Preparation Fund (Fonds de Maturation) to strengthen project appraisal capacity (for MINEDUB/MINSANTE specifically).

Subcomponent 2.2: Enhancing public investment budget execution monitoring

19. Objective. The objective of the subcomponent is to improve the quality of the public investment by better execution and monitoring.

Figure 1-1. MINEDUB and MINSANTE Public Investments 2010–2016

20. Current status. The monitoring of the PIB is performed on a monthly, quarterly, and annually basis by the several actors in the chain: MINEPAT/Sous Direction du Suivi du BIP, MINEPAT/Brigade de controle, CONSUPE, CONAC, MINMAP, and CSOs through the Comité locaux de Suivi du BIP (CLS). However, the role and responsibilities are not defined, which creates duplicate control and inefficiencies in the control and the monitoring. Also, the monitoring process is affected by the lack of consolidation of the data collected by these actors. Lastly, innovative monitoring methods such as SMS-based feedback and geo-tagged pictures emerge as an effective/efficient solution.

21. Proposed activities. The subcomponent will include support to (a) pilot enhanced data consolidation by the MINEPAT/Sous-Direction du Suivi du BIP from district and regional levels and MINFI/DGT through web-based solutions and performance contracting of deconcentrated levels (regional and district levels); (b) enhance data dissemination on PIB by providing regular (that is, trimestral) online further details than mere Journal des Projets (contract details, geo localization, levels of physical and financial execution on a trimestral basis, and so on); and (c) stimulate direct citizens’ PIB execution monitoring by (i) building the capacities of existing village development committees (comités de concertation or comités de développement) in monitoring public works and accessing key information and CLS meetings and (ii) developing a ICT-based application to enable citizens feedback.36 A mechanism will be included to ensure those feedbacks are fed into monthly and trimestral PIB execution monitoring meetings (CLS). Also, the Cellules PBBS of the MINSANTE and MINEDUB will benefit from tailored capacity building to use those innovative tools for their own PIB monitoring.

36

Including pictures, through SMS or Internet, and following good practices in terms of Grievance Redress Mechanism such as anonymity.

0% 20% 40% 60% 80% 100%

2010

2011

2012

2013

2014

2015

2016

MINEDUB public investment 2010-2016

Classroom Construction and Equipemen Teaching material

Purchase of vehicles fixed assets, transfers


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Subcomponent 2.3: Strengthening the management of public investment projects financed by international and bilateral donors

22. Objective. The objective of the subcomponent is to improve the management of the public investment financed by the donors.

23. Current status. The management of the donor-financed investment projects in the infrastructure sector is affected by several issues such as the lack of a compensation/resettlement process (which is supposed to occur before the start of the civil works), the delay in mobilizing the counterpart funds, and the complexities on the tax and customs systems.

24. Proposed activities. This subcomponent will support (a) development of regulations and guidelines describing the processes for compensation/resettlement including processing lead time at each step to proactively prepare all requirements for the smooth execution of the investment projects and (b) capacity building of the MINEPAT in project management (including FM, taxation, M&E, and procurement, other TA activities).

Component 3. Strengthening the performance of the public procurement system and developing capacity for better service delivery

25. The public procurement system has a strategic role to play in translating public spending into public services and public infrastructure. Currently, the procurement system often constrains the performance of the public sector, due to a combination of regulatory, procedural, and behavioral obstacles. Establishing a system that meets the needs of the people of Cameroon requires targeted work to address performance constraints within key organizations and to orient the system toward achieving desired outcomes. Given the urgent demand for better outcomes in the short to medium term, the component will focus on supporting improved efficiency, effectiveness, and value for money. Specific actions to enhance competencies and capacity will be combined with broader efforts to orient staff, management, and institutions to achieving the best results, under the overall leadership of MINMAP and ARMP. The ground-up, learning-by-doing approach adopted in the project will complement the ongoing efforts to develop unified regulations and a system-wide capacity-building program. The four subcomponents are as follows:

Subcomponent 3.1. Strengthening the competencies of public officials responsible for public procurement

26. Objective. The objective of this subcomponent is to create a critical mass of well-trained public officials in public procurement.

27. Current status. MINMAP was created in December 2011 with the objective to improve the performance of the procurement system. To this end, MINMAP has been staffed with about 2,500 officials responsible for public procurement. However, with no coherent capacity-building strategy to reinforce the competencies of these staff, the impact of the reform is diluted. So far only some ad hoc trainings have been organized focusing on MINMAP’s staff with no involvement of the line ministries. This situation continues to adversely affect the execution of the program budgeting approach.


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28. Proposed activities. This subcomponent will include (a) intensive training of MINMAP staff, as well as staff in selected ministries and private sectors, in essential procurement skills, as well as training of trainers; (b) development of mechanisms and processes to track the training received by individual staff and the knowledge acquired in training programs; (c) support for the creation of specialized training for ARMP staff in the skills required for successful regulating and monitoring procurement performance; and (d) creation of rules regarding training and certification requirements of staff responsible for public procurement and a strategy for eventual professionalization. Also, the institutionalization of a training capacity will be explored, including the MOOC option.

Subcomponent 3.2. Enhancing the capacity of organizations in the procurement system to carry out their functions

29. Objective. The objective of the subcomponent is to equip the procurement system with adequate tools to improve effectiveness.

30. Current status. The procurement system continues to suffer from the lack of tools to standardize the practices such as manuals, forms, checklists, updated standard bidding documents, and an e-tracking system as to improve effectiveness. This situation led to a long delay in the processing time, an average of 167 days and 28 administrative stages.

31. Proposed activities. This subcomponent will include (a) creation of manuals, forms, checklists, and other materials to guide staff in executing public procurement in MINMAP and training of MINMAP staff in compliance with procedural requirements; (b) creation of manuals, forms, checklists, and other materials to guide staff in one or two pilot ministries for executing public procurement in accordance with ministerial requirements; and (c) implementation of a mechanism, including possible electronic tracking systems, for organizations to receive information on procurement processing and to analyze and report on performance. IT equipment and cars will be included to support the implementation of this subcomponent.

Subcomponent 3.3. Streamlining the procurement regulatory framework

32. Objective. The objective of this subcomponent is to endow the procurement system with a clarified regulatory framework to improve the performance of the system.

33. Current status. In 2014, the diagnostic section of the Procurement Sector Strategy identified one key systemic procurement challenge: the conflicts of interest in the legislative and regulatory framework, including in the resolution of appeals and oversight between the ARMP and MINMAP. In March 2015, an interministerial working group was put in place at the behest of the Presidency to develop an amended draft public procurement code that addresses the fundamental conflicts of interest and inconsistencies in the present framework and includes the creation of a Central Purchasing Unit. The need to finalize the revision the procurement code to clarify the role and responsibility of the actors emerges as an urgent issue.

34. Proposed activities. Upon the decisions of the Government to adopt a new procurement code and/or the Central Purchasing Unit, this subcomponent will support (a) the finalization of the regulation, its dissemination, and related implementation tools (standards bidding documents and so on) and (b)


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drafting of scope, guidelines, processes, regulations, and procurement manuals, including those required for the possible implementation of the Central Purchasing Unit (Centrale d’Achat).

Subcomponent 3.4. Improving the management and monitoring of procurement performance

35. Objective. The objective of this subcomponent is to introduce the performance contract approach to improve overall efficiency of the procurement system.

36. Current status. The procurement process up to the signature of a contract includes about 28 administrative stages involving the CSPM, MINMAP, and the line ministries. There are no procedures or tools to track the procurement processes and identify bottlenecks. Also, the performance of the CSPM and MINMAP’s staff is assessed against any standards, which led to repetitive meetings to (a) analyze the bidding documents, (b) finalize the evaluation reports, and (c) sign the contracts. Overall, the lack of tracking of the performance of the actors of the procurement chain affects the entire system.

37. Proposed activities. This subcomponent will include (a) defining indicators to monitor the efficiency, effectiveness, and value for money obtained through public procurement spending and a mechanism for collecting the required data from MINMAP and one or two pilot ministries; (b) establishing a performance baseline and creating an annual review process to determine changes in performance; (c) introducing performance management, including, but not limited to, professional awards, performance contracts, and incentives for staff involved in procurement processes, and staff in one or more pilot agencies; and (d) introducing, where appropriate, mechanisms to enhance oversight and monitoring of procurement, including the participation of communities and nongovernmental bodies, to enhance performance.

Component 4. Enhancing the use of statistics for policy making

38. The end goal of any statistical system is to produce high-quality data to inform policies and make them publicly available. Achieving this goal requires an investment not only in the production of micro-data (censuses and surveys) and routine statistics (prices, national account, external trade, and so on) but also in data processing, analyzing, archiving, and dissemination. Given the large demand of the national statistical system, the choice is made to focus either on the areas where the World Bank clearly has a comparative advantage among the donors or areas not supported by the other donors, namely, household survey, population census, national account, and archiving and dissemination. At the core of all this are two aspects: data collection and capacity building. The philosophy underlying data collection is to improve the design of the surveys to take into account the most recent methodological approaches. As for capacity building, the preference is given either to train staff locally or to use the learning-by-doing approach. Three subcomponents are distinguished as follows:

Subcomponent 4.1. Improving poverty-related data

39. Objective. The objective of this subcomponent is to improve the poverty related data production and analysis.

40. Current status. INS has implemented living conditions surveys in 1996, 2001, 2007, and 2014. The last three surveys have used very close methodologies and poverty indicators are comparable over


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time. The last survey has introduced the use of tablets, accelerating data processing and the publication of the main results. However, the time span between two surveys has been too long, for example, seven years between the two last surveys (while the national plan was to conduct a survey every five years), making it difficult to monitor poverty. Moreover, the ECAMs have not fully taken into account some important dimensions of well-being (rural income, shocks, social programs, and so on). In addition, a big amount of work has been done at the international level during the last two years to improve the household survey methodology, and it is important for INS to align with the more recent international standards (for example, gender sensitivity). The project will provide TA on the design of the new survey, particularly the questionnaires. Special attention will be given to include in the questionnaires relevant modules for regions with a high level of poverty. The project will also contribute to financing the survey. Considering the methodological change, the sample will be designed to include an experiment to continue to get comparability with the old poverty indicators. TA will be provided on data analysis.

41. The population census is the most important data collection activity in developing countries for at least two reasons. First, it provides spatial distribution of the population that cannot be obtained with demographic projections. Second, the cartography of the census provides the sampling framework of all other statistical operations (household surveys, agricultural censuses, enterprise censuses, and so on). In addition, population census data are used to construct poverty maps, a powerful tool for targeting social programs. Since the census is planned for 2017, the project will contribute to the analysis phase of the population census.

42. The subcomponent will support poverty analysis. As stated, INS conducted its fourth living conditions survey in 2014 (ECAM 4) and a complementary survey financed by the Government early 2017; the first results are expected by end of 2017. The objective of the complementary survey is to update the Cameroon poverty map, probably at the commune level. The survey collects some data at the household level as well as at the community level. Information is also collected on school and health facilities.

43. Finally, the LFS methodology needs to be upgraded and updated, and data collection frequency improved to be relevant for policy making.

44. Proposed activities: Four main activities will be undertaken under this subcomponent: (a) improvement of the methodology and support to data collection of ECAM 5 planned for 2018 or 2019; (b) analysis of the fourth population census in 2017;37 (c) poverty mapping owing to the ongoing complementary ECAM 4; and (d) the design of a system of labor statistics by improving LFS and enterprises and informal sector surveys. The project will finance trainings on poverty mapping and workshops to produce regional monography of poverty. The project will also provide TA to INS to train and assist targeted ministries in integrating national statistics in the definition of sector strategies, programs, and public investment projects.

37

This activity budgeted for US$1 million will complement the resources (US$4 million) provided by another World Bank-financed project in the health sector. In total, the World Bank contribution in the financing of the population will amount to US$5 million.


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Subcomponent 4.2. Strengthening the national accounts production

45. Objective. The objective of this subcomponent is to improve the production of the national accounts.

46. Current status. Building reliable national accounts requires an important amount of basic data on enterprises including the informal sector, agricultural production, public finance (Central Government and communes), balance of payment and external trade, and so on. All those data are not always available and if they are, the coverage might not be complete. A statistician has to develop different strategies to get the work done, for example, by organizing light surveys to derive structural parameters that might help complete some estimations.

47. Annual national accounts will be improved with better external trade statistics. External trade statistics suffer from an incomplete coverage and the magnitude of the underestimation that results from this situation is unknown. External trade statistics are produced using information from the customs administration (Direction Générale des Douanes). Clearly, merchandises that cross the borders without going through the customs are not captured by the external trade statistics. INS has identified eight main sites of these activities all along the borders with Nigeria and other neighboring countries.

48. In addition to classic national accounts, INS produces quarterly national accounts since 2015. The methodology of building infra-annual accounts is different because basic annual data are not available for each quarter. INS uses a series of indicators taken from quarterly enterprise surveys (financed from an ad hoc grant of MINFI) and some other sources to produce quarterly national accounts.

49. Proposed activities. The project will finance data collection for a baseline year and the development of a methodology of collecting those data for the subsequent years. The idea is to develop a light methodology making it possible to collect those data annually with a limited budget affordable by INS. The project will also finance the enterprise survey for 2017 and the development of a methodology to merge the quarterly national account survey and the former ‘enquête trimestrielle de conjoncture’. Therefore, by 2019, the two surveys will be merged and the budget falls in the normal INS budget. The subcomponent will also provide TA to INS and MINEPAT/Direction Generale de l’Economie to design a tool enabling economic simulation.

Subcomponent 4.3. Enhancing statistical data dissemination and use by the Government to improve policy making and implementation

50. Objective. The objective of this subcomponent is to strengthen the archiving system and data dissemination.

51. Current status. A modern archiving system valorizes the investment made in data collection. Indeed, well-archived data can be used years after data collection is done by others (ministers, researchers, international organizations, students, and so on) without relying on those who were involved. On the other hand, if data are not archived, the investment might be totally lost. As for data dissemination, it makes results available to a large public. INS has worked on these areas by using a system developed by the World Bank to archive micro-data and by adhering to the Open Data Initiative


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by the AfDB and developing a specific database for data dissemination. However, there is still important room for improvement. First, the 10 regional agencies are not connected to the Internet and some databases that are keyed in Doula cannot be sent easily to the headquarter in Yaoundé. Second, INS can develop some interactive tools for disseminating long series of economic statistics (national accounts, external trade, prices, and so on). Third, INS will move to a new headquarter in 2018 and there is a need to provide some minimum equipment for better access to the Internet and also data processing.

52. Proposed activities. The project will provide TA and financing to improve archiving procedures and build the capacity of the INS archiving department. The project will also set up the IT network and equipment in the new INS headquarters and the 10 regional agencies to facilitate data treatment, sharing, archiving, and public dissemination. The project will also support the proactive dissemination of statistics to external audience, from academia to journalists, civil society, and business associations.

Component 5: Project coordination

53. This purpose of this component is to support the PCU in coordinating and managing the implementation of the project. Activities will include the following:

54. Subcomponent 5.1: Management support will support project implementation management by (a) developing annual work programs and procurement plans, (b) ensuring proper fiduciary management and monitoring, (c) coordinating technical work and support to the technical units within the relevant ministries, (d) monitoring and reporting on the project’s implementation, (e) implementing the agile approach to project management. The agile approach will be implemented by the PCU to detect as soon as possible technical and non-technical challenges in project implementation and provide adequate and tailor-made support to solve problems and adapt the project’s activities. By creating short, frequent, and action-oriented meetings (called ‘huddles’), the agile approach will help the team identify obstacles, shift priorities as needed, and foster credible commitment from leaders and coordination and collaboration between departments and ministries.38 The PCU will apply the agile approach at three levels to structure reporting and meetings: (a) within the core team of the PCU, (b) between the PCU and beneficiaries (that is, the focal points), and (c) between the PCU and the Orientation and Monitoring Committee. Concretely, (a) the institutional arrangements will be set up to secure and facilitate an authorizing environment when needed with SGs of MINFI, MINEPAT, and MINMAP involved in project implementation and components’ leaders embedded in their relevant ministries empowered and accountable for activity implementation with short feedback loops to the PCU oriented on results; (b) for activity implementations that are likely to face nontechnical challenges (for example, applying new procedures for public investment preparation, applying innovations in line with program budgeting, performance contract for procurement, and so on), the relevant middle management and technical civil servants will be heavily involved in the design and implementations of pilots to ensure learning by doing before scaling up; (c) nontechnical rapid results coaches on a need basis will be provided to components’ leaders to facilitate the pilot’s design, collective action, result-

38

See World Development Report 2017 notions of Credible Commitment, Coordination, and Cooperation to ensure policy implementation and fostering behavior change.


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based monitoring, and authorizing environment. Finally, a system of team incentives and performance-based management for the PCU will be designed to foster motivation.

55. Subcomponent 5.2: Just-in-time technical assistance will enable the PCU to be flexible and

highly responsive to emerging opportunities to support initiatives increasing public sector management

effectiveness on a ‘first-come, first-served’ basis. The component may finance scale-up of existing

activities, pilots, TA, or cross-cutting analytical studies, for example, related to (a) a study on the unit

cost of infrastructures (for example, schools blocks, hospital, roads, and small infrastructures) that could

be used in the tendering and budgeting process to establish a price reference database; (b) the

development of a strategy for the capacity building of the Taxation Directorate staff and the

implementation of the key component of this strategy; (c) the integration of CEMAC PFM Directives into

Cameroon law; (d) a new PFM modernization plan; and (e) the technical specifications of the IFMIS. The

use of the just-in-time TA financing will be subject to prior validation by the World Bank and the

coordinator to ensure that the funded activities directly contribute to the PDO.


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ANNEX 2: IMPLEMENTATION ARRANGEMENTS

Project Institutional and Implementation Arrangements

1. The project will be implemented under the overall leadership of MINEPAT. The PCU under the leadership of the project coordinator will be in charge of fiduciary activities and overall project management and leadership. With regard to fiduciary activities, a dedicated FM officer and a procurement specialist will be recruited. To ensure adequate project management and leadership, (a) the project coordinator and his/her assistant will be recruited to combine both seniority and experience in PFM, (b) a dedicated M&E specialist will be recruited, and (c) TA and training will be provided to the PCU as needed, for example, to support the implementation of RRIs or apply the agile approach to project management. The project coordinator and his/her assistant, the FM specialist, and the procurement specialist will be recruited before effectiveness under the Project Advance.

2. Components’ managers will be selected in the key ministries to lead the technical implementation of activities, from drafting ToR, participating in the consultant selection, monitoring implementation, and validating outputs: MINFI (Component 1); MINEPAT (Component 2); MINMAP (Component 3); INS/coordinator of the national statistical system (Component 4). The components’ managers will be civil servants with adequate and relevant technical knowledge and institutional convening power, potentially assisted by junior civil servants. Civil servants in the implementation team will benefit from financial top-up attached to their performance in implementing their activities, in addition to their regular civil servants’ benefits.

3. The PCU will report regularly to the project Orientation and Monitoring Committee. The Orientation and Monitoring Committee will be chaired by the SG MINEPAT and comprise the SG MINFI, SG MINMAP, SG MINSANTE, and SG MINEDUB, as well as the DG ARMP, DG INS, and DG BUCREP. The Committee will meet at least every trimester to ensure smooth implementation and identify early in the process any institutional bottlenecks.

Figure 2-1.: Project organigram

Orientation and Monitoring Committee

PCU / MINEPAT

MINFI MINMAP MINEDUB MINSANTE INS/BUCREP ARMP


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Financial Management and Disbursements

4. In line with the use of the country national system, the project FM arrangement will rely on the existing country FM arrangements put in place to manage donor-funded projects. These arrangements are centered on two main institutions, CAA equipped with dedicated tools developed by the World Bank IDF and the MINMAP in charge of ex ante control of all suppliers’ invoices associated with a contract before any payment by CAA.

5. Staffing. The PCU that will be responsible for the day-to-day implementation will be staffed with a seasoned FM team comprising an FM officer and an accountant.

6. Budgeting. The overall responsibility for preparing an annual work plan and related budget will lie with the PCU. The different steps of budget elaboration and management (preparation, revision, adoption, and execution) will be detailed in the FM section of the Project Implementation Manual. The annual work plan and budget will be prepared yearly, approved by the Orientation and Monitoring Committee, and submitted to the World Bank early enough to receive a ‘no objection’ before the end of January (or one month after the effective date for the first year of the project). A budget execution report will be included in the reporting scheme to enable the monitoring of the project implementation.

7. Accounting policies and procedures. The PCU through its accounting team will have the overall responsibility for maintaining the accounts of the project activities and ensuring that the annual financial statements are produced on time and in accordance with the accounting standards that are in effect in Cameroon.39 The budget and accounting modules of the integrated FM system for donors-funded projects (SIGED) will be installed and customized to fit the project accounting needs. Therefore, it will be used to record the project’s transactions and to produce the required periodic reports not later than three months after the effectiveness date. Furthermore, when the current CAA reporting system, developed with the software provider Tomate, permits, a dedicated window will be opened for the project’s users by CAA on the module of accounting and reporting of the said CAA information system. Owing to the interface that is being developed between the SIGED and the existing systems in the Directorate of Public Treasury and the Directorate of Investment Projects, the project transactions will be easily incorporated into the national financial statements.

8. Internal control and internal auditing. The administrative, financial, and accounting procedures will be part of the Project Implementation Manual. The manual will include a clear description of the initiation and approval processes with respect to segregation of duties. In that regard, the standardized FM Manual of Procedures developed by CAA with World Bank IDF support will be customized to reflect the project specificities. The PCUs will make use of the computerized accounting system to capture all project-related transactions. The FM officers will be responsible for maintaining all necessary controls to ensure (a) the project funds are used only for the intended purposes in an efficient and economical way;

39

The accounting principles set out by L’Organisation pour l’Harmonisation en Afrique du Droit des Affaires–OHADA.


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(b) accurate, reliable, and timely periodic consolidated financial reports are prepared; and (c) the project’s assets are adequately safeguarded. These are reinforced by the Government’s internal control arrangements, such as the prior visa payment by the MINMAP that will apply to the project’s invoices and the control by CAA over withdrawal applications and payments requests. To sustain the capacity-building initiatives of the project team, the World Bank disbursement and FM units will provide adequate training in disbursement and FM procedures to the project FM team. All of these measures aim at further enhancing the internal control system.

9. Financial reporting and monitoring. Quarterly interim financial reports (IFRs) to be generated from the computerized FM system will be presented by the PCU in accordance with the format agreed with the World Bank. The IFRs will be prepared and submitted to the World Bank within 45 days of the end of each calendar quarter. The content of the IFR will normally include (a) sources and uses of funds by the classifications of project expenditures (detailed by components and activities); (b) a comparison of budgeted and actual project expenditures (commitment and disbursement) to date and for the quarter; (c) a statement of the use of funds by component or activity; (d) the Designated Account (DA) activity; and (e) a physical progress report on the implementation of the project. At the end of each fiscal year, the project will prepare annual financial statements.

10. External auditing. The annual financial statements prepared by the PCUs as well as the internal control system will be subject to an annual audit by a reputable and independent auditing firm based on ToRs that are satisfactory to IDA.

11. The scope of the audit will be tailored to the project’s specific risks in accordance with World Bank requirements and will be agreed upon with the Government. In particular, the independent auditor will audit the use of all funds flowing from the DAs to the ultimate beneficiaries. The project will comply with the World Bank’s access to information and disclosure policies by making all disclosable audit reports (opinion report only) publicly available promptly after receiving them. The project’s external auditor will be hired within nine months of effectiveness. A single audit opinion, in compliance with International Standards on Auditing, will be issued and will cover all project receipts, payments, and accounts. The audited financial statements, along with the auditor’s report and Management Letter (incorporating management’s comments) covering any identified internal control and accounting system weaknesses, will be submitted to IDA within six months of the end of each financial year. If their availability and capacity permit, involving the Chamber of Account (Supreme Audit Institution) in the auditor recruitment process will be considered.

12. Funds flow and disbursement arrangements. Funds flow will rely on the Government’s banking arrangements through CAA. In this regard, CAA’s managing director will continue to act as the public accountant which includes the signing authorization on all payment means using the automated payments module of CAA information system for donor financing.

13. Funds will flow from the IDA Account to one DA denominated in CFA franc and opened in a reputable commercial bank in Cameroon that is acceptable to the World Bank. The DA will be managed by CAA according to the disbursement procedures described in the administrative, accounting, and financial procedures manual as part of section of the PIM and the Disbursement Letter.


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14. Upon effectiveness, this operation will follow transaction-based disbursement. The DA will receive an initial advance up to the DA ceiling amount (CFA franc) equivalent to four months’ expenditures forecast and will be replenished regularly through monthly withdrawal applications. Direct payment, reimbursement, and special commitment methods will be available to the project and might apply as appropriate. Disbursements may become report based eventually when the PCU has the capacity to produce reliable and acceptable IFRs. The minimum value of the direct payments, reimbursements, and special commitments will be 20 percent of the DA ceiling.

Figure 2-2. Disbursement Channel

15. Implementation Support Plan for FM. FM implementation support intensity and frequency will be in line with the risk-based approach and will involve a collaborative approach with the entire task team. A first implementation support mission will be performed three months after the project effectiveness. Afterward, the missions will be scheduled by using the risk-based approach model and will include the following diligences: (a) monitoring of the FM arrangements during the supervision process at intervals determined by the risk rating assigned to the overall FM assessment at entry and subsequently during implementation (Implementation Status and Results Report); (b) integrated fiduciary review on key contracts, (c) review of the IFRs; (d) review of the audit reports and Management Letters from the external auditors and follow-up on material accountability issues by engaging with the Task Team Leader, client, and/or auditors, and the quality of the audit (internal and external) also is to be

IDA

DA (XAF) Commercial Bank

Direct payment

Flow of documents (invoices, documentations, and so on)

Flow of funds

Suppliers and Services Providers

PCU

(MINEPAT)

CAA


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monitored closely to ensure that it covers all relevant aspects and provide enough confidence on the appropriate use of funds by recipients; (e) physical supervision on the ground specially; and (f) assistance to build or maintain appropriate FM capacity and efficient internal control system.

16. Conclusions of the FM assessment. The overall FM residual risk at preparation is considered Substantial. The proposed FM arrangements—considering the mitigation measures (see table)—for this project are considered adequate and meet the World Bank’s minimum fiduciary requirements under OP/BP 10.00.

Table 1. FM Action Plan

Weaknesses Action to Be Taken Time Frame Responsible Body

A new PCU within MINEPAT to be set up with capacity to be built might jeopardize the project readiness for implementation, and the quite large number of entities involved in the implementation process may lead to glitches in the coordination of the project activities and subsequent delay in the implementation progress

Recruit an FM officer based on ToR acceptable to the World Bank

effectiveness condition

MINEPAT

Recruit an accountant based on ToR acceptable to the World Bank

not later than 6 months after effectiveness

PCU

Customize the standardized project manual of procedures to reflect the project specifics and provide clear time line, roles, and responsibilities in the implementation scheme and clarity on the reporting lines to the Orientation and Monitoring Committee


PCU

Delays on the submission of agreed consolidated IFRs and annual project financial statements as the reporting scheme is not yet set up and operationalized

Procure and install the budgeting and accounting module of SIGED to handle accounting and reporting needs under the project

Not later than 6 months after effectiveness

PCU

The project financial statements and internal control arrangements might not be audited, as the current national audit arrangements are not yet appropriate (no clarity on the external audit arrangement between the Chamber of Account and CONSUPE)

Recruit an external auditor to conduct annual financial audit of the financial statements of the project along with the review of the internal control system

Within 9 months of effectiveness

PCU


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Procurement

17. Applicable policies and procedures. Procurement for the proposed project will be carried out in accordance with the requirements set forth or referred to in the ‘World Bank Procurement Regulations for IPF Borrowers’ issued on July 1, 2016 (Procurement Regulations), and the provisions of the Procurement Plan. The project’s procurement activities will be carried out in accordance with the World Bank’s ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’ (revised as of July 1, 2016).

18. Procurement documents. For international competitive procurement of goods, works, non-consulting services, and consulting services, the borrower shall use the applicable World Bank standard procurement documents with minimum changes, acceptable to the World Bank, as necessary to address any project-specific conditions.

19. Requirement for national competitive procurement. As a result of the national procurement procedure assessment, the following requirements should be added to the provisions of the national regulations:

On the eligibility of firms, include requirement for international competition.

In the Request for Bids/Request for Proposals acceptance at the time of bidding, to be incorporated in any resulting contracts, confirming application of, and compliance with, the World Bank’s Anti-Corruption Guidelines, including without limitation the World Bank’s right to sanction and the World Bank’s inspection and audit rights.

Ensure that contracts include appropriate allocation of responsibilities, risks, and liabilities.

Insert in the bidding documents rights for the World Bank to review procurement documentation and activities.

All complaints resolutions shall follow the complaints mechanism detailed in the Procurement Regulations.

Ensure that maintenance of records of the procurement process follow the World Bank requirements for procurement filing summarized in the following paragraph.

20. Procurement information and documentation—filing and database. Procurement information will be recorded and reported as follows:

Complete procurement documentation for each contract, including bidding documents, advertisements, bids received, bid evaluations, letters of acceptance, contract agreements, securities, related correspondence, and so on, will be maintained at the level of respective ministries in an orderly manner, readily available for audit.

Contract award information will be promptly recorded and contract rosters as agreed will be maintained.

Comprehensive quarterly reports indicating (a) revised cost estimates, where applicable, for each contract; (b) status of ongoing procurement, including a comparison of originally planned and actual dates of the procurement actions, preparation of bidding documents,


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advertising, bidding, evaluation, contract award, and completion time for each contract; and (c) updated Procurement Plans, including revised dates, where applicable, for all procurement actions.

21. Advertising procedures will include the following:

General Procurement Notice, Specific Procurement Notices, Requests for Expression of Interest, and results of the evaluation and contracts award should be published in accordance with advertising provisions in the Procurement Regulations.

For Request for Bids and Request for Proposals that involve international consultants and the contract awards shall be published in UNDB in line with the provisions of the Procurement Regulations. For goods and works, the information to be published shall specify (a) name of each bidder who submitted a bid; (b) bid prices as read out at bid opening; (c) name and evaluated prices of each bid that was evaluated; (d) name of bidders whose bids were rejected and the reasons for their rejection; and (e) name of the winning bidder, and the price it offered, as well as the duration and summary scope of the contract awarded. For consultants, the following information must be published: (a) names of all consultants who submitted proposals; (b) technical points assigned to each consultant; (c) evaluated prices of each consultant; (d) final point ranking of the consultants; and (e) name of the winning consultant and the price, duration, and summary scope of the contract. The same information will be sent to all consultants who submitted proposals. For other contracts, the information should be published in the national gazette periodically (at least quarterly) and in the format of a summarized table covering the previous period with the following information: (a) name of the consultant to whom the contract was awarded, (b) price, (c) duration, and (d) scope of the contract.

22. PPSD and Procurement Plan

The different approaches, the selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the recipient and the World Bank in the Procurement Plan.

A PPSD and a derived Procurement Plan for the first 18 months of program implementation was prepared. Major procurements will include the following:

o Recruitment of local individual consultants to support project implementation and trainings through comparison of CVs collected following request of expressions of interests advertised in local press for permanent tasks (Open Competitive Selection of Individual Consultants), qualified CVs collected directly from the best knowledge of the client ( Limited Competitive Selection of Individual Consultants), or Direct Selection of Individual Consultants in line with the provisions of 7.39 of the guidelines.

o Recruitment of individual consultants and firms to carry out specialized studies, training of trainers, or TA for reforms—taking into account the specificity, these will involve consultants with proven international experience: advertising through international press including UNDB (Open Competitive selection of Individual


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Consultants) or through a long list of qualified individual consultants established if needed with the support of the World Bank (Limited Competitive Selection of Individual Consultants); in very specific cases, direct selection will be used in compliance with the provisions of the Borrower Regulations

o Procurement of vehicles. Package of vehicles to be procured by the project with a Request for Bids through Open International Competitive Procurement or with Direct Selection through UNOPS

o Computer and information systems will be procured with a Request for Bids through Open International Competitive Procurement

During implementation, the Procurement Plan will be updated as required—at least annually—to reflect actual program implementation needs and improvements in institutional capacity.

23. Training, workshops, and conferences. The training (including training material and support), workshops, and conference attendance will be carried out on the basis of approved annual training and workshop/conference plan. A detailed plan giving the nature of training/workshop, number of trainees/participants, duration, staff months, timing, and estimated cost will be submitted to IDA for review and approval before initiating the process. The appropriate methods of selection will be derived from the detailed schedule. After the training, the beneficiaries will be requested to submit a brief report indicating which skills have been acquired and how these skills will contribute to enhance his/her performance and contribute to the attainment of the project objective.

24. Operational costs. Operating costs financed by the project are incremental expenses, including office supplies, vehicles operation and maintenance, maintenance of equipment, communication costs, supervision costs (that is, transport, accommodation, and per diem), and salaries of locally contracted staff. They will be procured using the procurement procedures specified in the Project Financial and Accounting Manual.

Assessment of the Capacity of the Agency to Implement Procurement

25. Procurement activities for the project will be executed by a newly created PCU reporting to MINEPAT. The PCU will carry out the following activities: (a) managing the overall procurement activities and ensuring compliance with the procurement process described in the relevant manuals; (b) ensuring compliance of bidding documents, draft Requests For Proposals, evaluation reports, and contracts with World Bank procedures; (c) preparation and updating of the Procurement Plan in relation to the beneficiaries; (d) monitoring the implementation of procurement activities; (e) development of procurement reports; and (f) seeking and obtaining approval of national entities and then of IDA on procurement documents as required.

26. The beneficiary agencies will participate in the process of all procurement activities and will notably support the following activities: (a) preparation of ToRs and the bidding documents, (b) preparation of evaluation reports and contracts related to World Bank procedures, and (c) participation in procurement commission activities and in all related meetings.

27. An assessment of the capacity of the PCU to implement procurement activities of the project


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was carried out during the project preparation and finalized during the pre-appraisal. The assessment reviewed the organizational structure for the implementing of the project, the procurement capacities of the PCU, and the interaction between the different agencies involved in the project.

28. The assessment revealed that (a) the beneficiaries’ agencies have the technical expertise to prepare the technical documents (ToRs, bidding documents, technical specification) that may be reinforced for specific activities by consultants to be recruited and (b) the procurement capacity, especially in IDA financing, is acceptable at the level of MINMAP and limited in the other beneficiary’s agencies and the coordinating ministry.

29. The key risks identified for procurement under the project are as follows: (a) staff involved in the project may not have sufficient knowledge on the NPF and/or there is a risk of confusion with the former guidelines, (b) there is lack of proficient procurement staff to implement procurement actions on time and in line with World Bank procurement procedures, (c) inadequate communication and interaction between the beneficiaries and the PCU may lead to delays in procurement processes and poor costs estimation, (d) administrative routines may increase delays in the procurement processes and affect project implementation, and (e) poor filing may lead to loss of documents.

30. The overall procurement risk for the project is rated Substantial. The residual risk will be Moderate after adopting the agreed action plan summarized in table 2.2.


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Table 2.2. Action Plan Mitigation Measures

Risk Action Responsibility Date

1. Staff involved in the project who may not have sufficient knowledge on the NPF and/or risk of confusion with the former guidelines

Hire on a competitive basis a qualified procurement specialist to be located at the PCU and experienced with World Bank procurement procedures and policies

MINEPAT effectiveness condition

2. The lack of proficient procurement staff to implement procurement actions on time and in line with World Bank procurement procedures

Organize workshop sessions to train on the NPF all staff involved in the procurement of the project

MINEPAT/PCU/World Bank

2 months after effectiveness

Continuous hands-on trainings on the NPF of identified key staff

World Bank Procurement Specialist

During the life of the project

3. Inadequate communication and interaction between the beneficiaries and the PCU, which may lead to delays in procurement processes and poor estimation of the costs

Develop a Project Manual to clarify the role of each team member involved in the procurement process of the project and the maximum delay for each procurement stage, specifically with regard to the review, approval system, and signature of contracts

MINEPAT/PCU


4. Administrative routines may increase delays in the procurement processes and affect project implementation

Exercise quality control on all aspects of the procurement process, including developing ToRs, technical specifications, bidding documents, proposals, request for quotations, evaluation, and award

PCU During the life of the project

Monitor on a regular basis the Procurement Plan implementation and set up a close follow-up in relations with beneficiaries and official bodies involved (MINMAP, CAA) to ensure that appropriate actions are taken on time

MINEPAT/PCU During the life of the project

5. Poor filing, which can lead to loss of documents

Improve the filing system at the level of PCU to ensure compliance with the World Bank procurement filing manual

PCU / Procurement specialist

During the life of the project

31. Frequency of procurement reviews and supervision. Bank’s prior and post reviews will be carried out on the basis of thresholds indicated in the following table. The IDA will conduct six-monthly supervision missions and annual Post Procurement Reviews (PPR); the standard post-procurement reviews by Bank staff should cover at least 15 percent of contracts subject to post-review. Post-reviews consist of reviewing technical, financial and procurement reports on Project procurement actions by Bank staff or consultants selected and hired by the Bank according to procedures acceptable to the Bank. Project supervision missions shall include a Bank Procurement Specialist or a specialized consultant. IDA may also conduct an Independent Procurement Review at any time until two years after


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the closing date of the project.

32. Procurement prior review. The procurement risk is rated Substantial. Table 2.3 summarizes the procurement prior review for ‘Substantial risk’. These prior review thresholds can evolve according to the variation of procurement risk during the life of the project.

Table 2.3. Procurement Prior Review Thresholds (US$, millions)

Type of Procurement Thresholds

Goods, Information technology and non - consulting services 2

Consulting firms 1

Individual Consultants 0.3

Environmental and Social (including safeguards)

33. The activities supported by the proposed project are likely to have no adverse environmental impacts. The project is therefore classified as Environmental Category C. No specific environmental safeguard instrument will be required. Consequently, the World Bank’s policies in this area are not triggered.

34. The proposed project is limited to the provision of training and TA and is not expected to result in any direct negative social impacts. The project will assist the Government in improving PFM, especially public investment management, and enhancing the quality of the statistics system, especially poverty statistics. It is hence expected to contribute to improved delivery of basic social services and reduced poverty.

35. Citizens’ engagement. The project will contribute to increased citizens’ engagement not only through increased transparency and access to information on policy impact (statistics) and public finance data but also by stimulating direct participation in PIB monitoring. First, the project will support the publication of public budget and spending in a user-friendly and reusable format through online BOOST and ensure the publication of key financial and performance data of SOEs. Second, the project will enhance the level of details of public information related to budgeted PIB and reduce the delays and frequency of information related to PIB execution. Third, the project will stimulate citizens’ scrutiny on PIB execution monitoring through existing village development committees as well as an ICT-based feedback mechanism. Finally, access to national statistics data will be strengthened through regular and frequent publication and dissemination in a reusable format and shorter analysis for wider audience.

36. Gender. Gender aspects are integrated in the project where possible by ensuring (a) the professional training in procurement delivered in the project will include women and hence enhance women professionalization in procurement, (b) the support to citizens’ monitoring of investment projects’ execution will pay particular attention to empowering women in local committee’s contributing to CLS, and (c) the statistics TA will support INS in building in gender sensitivity in ECAM 4 poverty notes; in ECAM 5, questionnaire design will be in line with latest international standards.


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Monitoring and Evaluation

37. The project’s M&E framework relies on the ‘Guide On Operational-Level Public Financial Management Reform Indicator’. The M&E framework will be a key instrument to monitor progress toward achieving the PDOs and providing reports on performance including potential bottlenecks as they arise. The M&E framework presented in the result framework captures the high- and medium-level results that are expected to be achieved. MINEPAT will be in charge of assessing and reviewing the projects’ result indicators data. A midterm review (2019) will be carried out to ensure the project is on track and will recommend any needed actions or adaptations to address challenges and improve implementation toward achievement of the PDO. During implementation, the team will revisit the currently agreed indicators to make adjustments as required in consultation with the Government and other partners.

Role of Partners (if applicable)

38. Annex 7 provides detailed information on donors’ intervention in the PFM reform agenda.


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ANNEX 3: IMPLEMENTATION SUPPORT PLAN

Strategy and Approach for Implementation Support

1. The strategy for implementation support has been developed based on the nature of the program and its risk profile. The task team will aim at making implementation support to the client flexible and efficient by focusing on monitoring of the risk mitigation measures identified.

2. Formal implementation support missions will be carried out at least at six months and will focus on the following:

(a) Client relations. The Task Team Leaders will coordinate the World Bank team to ensure project implementation is consistent with World Bank requirements, as specified in the legal documents. They will meet with senior officials on a regular basis to keep them acquainted of project progress and issues requiring resolution by the Orientation and Monitoring Committee.

(b) Technical inputs. Members of the task team with various skills sets will review ToR and bid documents prepared by the client and during implementation support will review outputs to ensure that they meet the required technical specifications.

(c) Fiduciary requirements and inputs. Hands-on support will be provided to the PCU to ensure compliance with the fiduciary covenants.

Implementation Support Plan and Resource Requirements

3. The main focus with regard to support for implementation will be as follows.


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Table 3.1. Implementation Support Strategy

Time Focus Skills Needed Resource Estimate (Staff

Weeks/Year)

First 12 months

Team leadership Management, supervision, coordination Task Team Leaders 12

Technical PFM Specialist, Change Management Specialist, ICT specialist, SOE management, civil service, statistics

Component Subject Experts

12

Procurement Procurement experience, World Bank procurement norms knowledge, training

Procurement Specialists

4

FM FM experience, knowledge of World Bank FM norms, training

FM Specialists 6

12–48 months

Team leadership Project management, supervision, coordination

Task Team Leaders 12

Technical

PFM Specialist, Change Management Specialist, ICT Specialist, SOE management, Civil Service, Statistics

Component Subject Experts

10

Procurement

Procurement reviews and supervision, training as needed

Procurement Specialists

4

FM

FM reviews and supervision, training, and monitoring

FM Specialists

Table 3.2. Skills for Implementation Support

Skills Needed Number of Staff

Weeks/Year Number of Trips/Year

Comments

Sr. Financial Management Specialist (Task Team Leader)

6 — Rabat based

Governance Specialist (Task Team Leader) 6 4 HQ based

Senior Economist/Statistician 3 2 HQ based

IFMIS Specialist 2 2 Dakar based

Change Management Specialist 4 2 HQ based

Public Sector Specialist 2 1 HQ based

SOE Management Specialist 2 1 HQ based

Sr. Financial Management Specialist 2 — Yaoundé based

Sr. Procurement Specialist 4 — Yaoundé based

Sr. Finance Officer 1 — HQ based

Operation Officer 2 — HQ based

Sr. Counsel 2 — HQ based

Team Assistant 2 1 Yaounde based

Note: HQ = headquarters.


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ANNEX 4: CAMEROON GOVERNANCE REFORMS SINCE HIPC (2006)

Topic Announced In Implementation Comments

PFM modernization

2006 PNG II

2007 PFM organic law

Partial (>10 years)

2012 PFMP midterm review indicates that 18% of actions were implemented, 37% ongoing, and 45% lagging (more details below).

Civil service (performance management)

2006 PNG II

2007 PFM organic law

Very limited (>10 years)

Introduction of Services Standards in Cameroon Public Administration Project from 2008 to 2012: (Projet d’introduction de normes de rendements dans l’administration camerounaise) under supervision of Ministry of Civil Service and PM Office: implementation of norms for service delivery (adopted in September 2015), individual job description (drafted in 2012), and revised civil servant’s evaluation process (drafted in 2012) in six pilot ministries still not implemented.

Anti-corruption 2006 PNG II

2005 decree creating National Agency for Money Laundering (ANIF)

2006 decree creating CONAC

2011 law creating Tribunal criminel spécial (TCS)

Partial (>10 years)

TCS, ANIF, CONAC, respectively, are fully functional in 2012, 2006, and 2008.

A revised anti-corruption law was drafted in 2008 but not passed.

ANIF and CONAC investigation reports are communicated to the Presidency and the Ministry of Justice, but no information on the follow-up is available.

Public officials’ assets declaration

1996 revised constitution None (>20 years)

2006 law passed but no implementing Presidential decree.

Extractive Industries Transparency Initiative (EITI)

2005 adherence

2007 EITI member

Achieved/At risk (8 years)

Cameroon declared EITI compliant in 2013— last report published in December 2016: Open Data Policy (06/2017); Cameroon 2015 annual progress report (12/2016); Cameroon 2014 EITI report (11/2016).Next EITI report due by October 2018.

Decentralization 1996 revised constitution

2004 law on decentralization

2009 law on local PFM

Partial (>20 years)

18 ministries have devolved competences to local councils as of 2015 as well as budget (estimated average of 18% of PIB in 2015).

PM Office announced the deadline of September 2016 to finalize transfers of competences from line ministries to local councils.


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ANNEX 5: KEY DATA ON GOVERNANCE AND PUBLIC INVESTMENT MANAGEMENT

Figure 5.1. Evolution of Cameroon Governance Indicators (maximum = 100)

Source: www.govindicators.org.

Figure 5.2. Cameroon Governance Compared to Peers in 2014 (maximum = 100)

Source: www.govindicators.org

0

20

40

60

80

1996 2000 2003 2005 2007 2009 2011 2013 2015

Voice and Accountability

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

Political Stability and Absence of Violence/Terrorism

0

10

20

30

40

50

Voice andAccountability

PoliticalStability &Absence of

Violence/Terr…

GovernmentEffectiveness

RegulatoryQuality

Rule of Law

Control ofCorruption

Cameroon

Sub-Saharan Africa

Lower Middle Income Countries

http://www.govindicators.org/

http://www.govindicators.org/


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Figure 5.3. Public Investment in Comparison with Sub-Saharan Africa (2005 purchasing power parity US$-adjusted, % GDP)

Source: Joint IMF/World Bank report on Public Investment Management Assessment (January 2016).

Figure 5.4. Evolution of Cameroon Public Investment Execution (2008–2015)

Source: Diagnosis of the bottlenecks in the public procurement systems, EU (May 2014), Capital Budget Execution Report, MINEPAT (December 2015).

Figure 5.5. Perception of the Quality of Public Investment



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Figure 5.6. Measures of Access to Infrastructures



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ANNEX 6: PROJECT LOGIC FRAMEWORK

The Project Development Objective is to improve the effectiveness of public spending in selected sectors and strengthen statistics system for evidence-based decision making.

Medium-Term Outcomes

Short-Term Outcomes Key Outputs by Subcomponent Input (US$)

Enhanced coherence between policy, budgeting, and actual expenditures


Budget allocations (including wage bill) reflect more closely policy priorities

Difference between annual budget and medium-term projection for that year is reduced

Variance between actual aggregate expenditure outturn and composition of expenditure outturn compared to original approved budget is reduced

SOE financial and performance reporting is effective and key data published

Subcomponent 1.1: Strengthening program budgeting

Clarity and orderliness of fixed budget calendar

Tools for multiyear management of investment programs

Revised sectoral strategies and MTEF for MINEDUB and MINSANTE

Aligned sectoral strategies/MBTF/MTEF/program budgets for MINEDUB and MINSANTE

Revised program budgets (scope of the programs to include payroll, programs indicators, budget classification) for MINEDUB and MINSANTE

2.3m

Subcomponent 1.2: Enhancing programs’ execution and monitoring system

Revised procedures for in-year/year-end financial reports

Publication of improved information on the financial execution of the budget

Clarified M&E arrangements from the local to the central level for MINEDUB and MINSANTE

RRI to support the execution of the programs for MINEDUB and MINSANTE

1.4m

Subcomponent 1.3: Deploying new payroll management

Update of the HR file and SIGIPES II in MINEDUB and MINSANTE

Acquisition of IT equipment for the deployment of SIGIPES II for MINEDUB and MINSANTE and supporting change management, including RRI

Organizational framework and staffing plan for MINEDUB and MINEPAT

1.3m


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Subcomponent 1.4: Strengthening SOE portfolio management

Decrees and enabling SOE-related laws 2017/010 and 2017/011 enforcement

Templates and manuals for SOEs management and monitoring

Training Control institution and five key SOEs in the new tools

1.0m

Improved design, appraisal, execution, and value for money of public investment projects in selected sectors

Component 2: Improving quality of public investment in selected sectors

Improved decision making and selection of projects

Reduced number and value of projects entering budget without required screening and selection

Improved implementation performance and project completion, improved execution rates, lower variance in budget composition, lower cost and time overruns, and lower capital expenditure arrears

Subcomponent 2.1: Strengthening public investment budget programming and budgeting

Clarified public investment preparation procedures backed by an e-tracking system

Creation of a Preparation Fund for financing public investment feasibility studies

Rationalization of the existing projects in the PIP portfolio

3.0m

Subcomponent 2.2: Enhancing public investment budget execution monitoring

RRI to support the management of a sample of investment projects in MINEDUB and MINSANTE

Creation of a web-based application to enable citizens’ feedback on public investment execution

Training village development committee on public investment monitoring

Dissemination of data on PIB execution

1.5m

Subcomponent 2.3: Strengthening the management of public investment projects financed by international and bilateral donors

Streamlined procedures for the management of donor-financed investment projects by MINEPAT

ICT-based monitoring dashboard of international and bilateral projects

1.0m

Component 3: Strengthening the performance of the public procurement system and developing capacity for better service delivery

Increased number of contracts awarded within the services standards

Subcomponent 3.1: Strengthening the competencies of public officials responsible for public procurement

Training the public officials responsible for the execution of the Procurement Plan in pilot ministries

Setting a system to track learning and expertise

2.5m


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Increased share of competitive procurement methods

Increase value for money for public contract

Operationalization of MOOC

Subcomponent 3.2: Enhancing the capacity of organizations in the procurement system to carry out their functions

Clarified procurement rules, guidelines, and procedures

Setting an e-tracking system for the procurement chain

0.5m

Subcomponent 3.3: Streamlining the procurement regulatory framework

Revised procurement code and related instruments

0.7m

Subcomponent 3.4: Improving the management and monitoring of procurement performance:

Piloting individual performance contract approach in the procurement system

RRI to support procurement process performance in the pilot

3.3m

Improved decision-making process based on reliable statistical data

Component 4: Enhancing the use of statistics for policy making

Timely production of reliable statistical data

Statistics widely disseminated

Subcomponent 4.1: Improvement of poverty-related data

Production of a series of Poverty Notes (based on ECAM 4 and high-frequency surveys)

Production of ECAM 5

Analysis of the population census

Production of the LFS

5.4m

Subcomponent 4.2: Strengthening the national accounts production

Quarterly production of improved national accounts (including revised methodology for cross-border trade statistics)

Creation of an economic simulation tool for MINEPAT simulation

2.5m

Subcomponent 4.3: Enhancing statistical data dissemination and use by the Government to improve policy making and implementation:

Training of M&E team in targeted ministries on available statistics

Outreach to academia and opinion leaders on available statistics

Improved online publication of country statistical data

Setting up of IT network and equipment in INS headquarters and 10 agencies

Training of MINEDUB and MINSANTE PBBS cell in using statistics for policy making and monitoring

1.1m


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Enhanced public scrutiny on policy implementation

Scattered in Components:

Enhanced transparency of PFM

Enhanced citizens monitoring of public investment projects’ execution

Scattered in Components:

Publication of improved information on public budget and spending (Subcomponent 1.2)

Dissemination of data on PIB execution (Subcomponent 2.2)

Training village development committee on public investment monitoring (Subcomponent 2.2)

ICT-based feedback mechanism enabling on citizens monitoring of public investment projects’ execution (Subcomponent 2.2)

Improved online publication of country statistical data (Subcomponent 4.3)

Outreach to academia and opinion leaders on available statistics (Subcomponent 4.3)


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ANNEX 7: Mapping of Donors’ Interventions in the PFM Reform Agenda

Reform Area Donor Area of Intervention Amount (million US$)

Period

Planning/ programming

AfDBa

Analytical works on PIB (review of guidelines, automation of MTEF, Annual Performance Plan, setting up of investment projects database)

9 2017–2021 Setting up Maturation Funds

Support in PIB planning and execution in energy and transport sectors

14

World Bank

Definition and implementation of public investment activities, in particular project preparation and selection

31 2017–2022

Additional resources to the Maturation Funds

Setting up tracking and result-based management at the PBBS level to ensure compliance and low delays

TA and capacity building for donor-financed projects

Budget execution and monitoring

World Bank

Redesign programs in selected ministries (budget/activities classifications, scope of the program, program indicators, management accounting, inclusion of payroll management in programs)/ support to the program managers and finance directors

— 2017–2022

Definition and implementation of processes consolidating information collection, clarifying roles and responsibility with regard to field monitoring from the local to the central level

Setting up a BOOST with data on physical/financial execution of PIB and recurrent

EUb Support the PFM reform to be defined 4 —

France/AFDb

Support the PFM reform in sectors (health and basic education)

5 2017–2022

Accounting and reporting

World Bank

Redesign and implementation of PFM year-end processes (format of reporting, FM closing process activities)

— 2017–2022

Development of procedures for the management of fixed assets financed through public investment

IMF/AFRITAC Improvement of the financial statements — —

France/AFD Support to the accounting reform

2017–2022

Public procurement

World Bank

Streamlining regulatory framework

— 2017–2022

Capacity building and professionalization

E-tracking for procurement process

RBM within MINMAP and line ministries

AfDB

Capacity-building strategy on public procurement

3 2017–2021

Update of the study on the integrated public procurement system

Studies on the electronic archive system and the


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performance of independent observers

Printing and dissemination of procurement regulations

Ex post audit of the public procurement system

External Audit — No direct intervention — —

Revenue

German Cooperation

Setting up of an integrated taxation information management system

20 2016–2019

IMF/AFRITAC Follow up of previous recommendations — —

Statistics

EU Under discussion — 2017

UNFPA TA for population census — —

FAO TA for agriculture census — —

Notes: UNFPA = United Nations Population Fund; FAO = Food and Agriculture Organization of the United Nations. a. The AfBD may prepare a second operation in the governance sector (support the setting up of an integrate taxation information management system could be considered if there is a funding gap). b. TA that will support budget support operation c. Little support is provided to statistics. The largest support was from the EU, supporting sector statistics (education, health, justice, and so on) and closed in 2015. The United Nations Economic Commission in Africa (Commission Economique pour l’Afrique) is supporting the Price Index modernization. The UNFPA and FAO are providing TA to the population and agriculture censuses but do not support data collection. The biggest gap in the Cameroon statistical system is on the production of micro-data (household surveys and censuses). The funding requirements for the population census is estimated at US$55 million (CFAF 30 billion) according to BUCREP and the requirements for the agriculture census is estimated at US$51 million (CFAF 28 billion). In addition, there is no commitment for the next ECAM. The proposed project intends to increase the frequency of the production of micro-data for a close poverty monitoring (by complementing resources for the population census and securing resources for the next living conditions survey), strengthen the national accounts, and enhance access to statistics to strengthen both policy making and monitoring.


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ANNEX 8: Cameroon’s Rapid Result Initiative (RRI)

RRI Was Initiated in Cameroon for Achieving the Government Anti-corruption Agenda

The RRI was introduced in Cameroon by 2012 during the second phase of the multi donor program CHOC that focused on supporting key institutions addressing corruption challenges, especially CONAC.

Since then seven cycles of RRIs have been conducted involving 30 ministries and public agencies.

Among key deliverables are the setting of deadlines for the processing of cases, the establishment of standards of behavior to be respected by public officials, or the setting up of recourse mechanisms for the use of abused users.

However, despite this consistency in the adoption of the method, the extent of those results stays limited because of a weak application of the RRA key principles by teams in general. This can be illustrated by, among others, a low commitment of leaders, no institutionalization of effective practices tested during the short-term initiatives, and hence no sustainable impact.

The World Bank Group/Collaborative Leadership for Development Brought Some Support on the RRA in Different Sectors in Cameroon

Anti-corruption. The World Bank Group/Collaborative Leadership for Development (CL4D) team supported the CHOC program in training the first cohort of local RRI coaches and supporting the launching of one cycle of anti-corruption-related RRIs within eight ministries in 2012. From there CHOC and CONAC took over.

Education. In support to the World Bank Group-funded education project, the World Bank Group/CL4D team trained and mentored 11 coaches who themselves coached teams at different levels that were able to deliver more than 1 million text books to more than 98 percent of schools throughout the 10 regions within 90 days from March to June 2016 (only 11 percent of students had access to textbooks in 2009/10).

Public procurement. The World Bank Group tested the feasibility of a results-oriented accompaniment likely to give impetus to a new dynamic in improving results in the public procurement system. That was carried out through significantly advancing the treatment of five targeted public contracts so that they have a good chance of being spent in FY2015. Concrete results were fairly limited as the RRI method has only been applied very partially. Despite that, the direct communication space fostered between the three institutions concerned—for the first time ever—had greatly improved.

RRI coach regional network. The World Bank Group/CL4D kept on inviting two to three Cameroonian coaches per year to the annual RRI peer exchanges (Kigali 2014, Dakar 2015, Nairobi 2016), which helped them increase their knowledge and skills as well as develop their professional network in the global world of RRI practitioners.

Factors of Success from Lessons Learned

Ensure an enabling environment to be set up by the leadership before any implementation.


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Identify key stakeholders concerned by the goals, facilitate development of coalition between them, and catalyze their collaboration toward results through change coaching.

Align short-term initiatives to broader longer-term development goals.

Sustain changes by capitalizing on experiences and institutionalizing effective practices.

Maintain a sufficient level of skillfulness and knowledge for national capacity in RRI coaching.

Coordinate with other donors, some of whom are already supporting the approach (UNDP, GIZ).

What Is the RRA?

The RRA is a structured process that mobilizes teams to achieve tangible results within 100 days or less. This approach is used when change efforts need to get unstuck, accelerated, and injected with a sense of urgency. The RRA is particularly useful when bringing together disparate stakeholders that need to perform as high-functioning teams.

The RRA focuses on tackling adaptive challenges through disciplined experimentation and learning, allowing teams to develop the skills and confidence needed to achieve ‘stretch’ results. Specifically, the RRA is structured into a series of projects known as RRIs that help teams make progress toward their goals. These projects can be launched one at a time or in waves of projects for larger-scale change efforts.

RRIs have the following set of key attributes:

Results oriented: The work is focused on achieving tangible, measurable, bottom-line results (instead of activities, preparations, or recommendations).

Fast: Project duration is 100 days or less.

Experimental: The approach fosters innovation and learning, allowing teams to test large-scale change in low-risk ways.

Stimulating: Teams gain new insights on implementation challenges and risks, increasing a sense of purpose, urgency, collaboration, and accountability.

Empowering: Teams set their own goals and are expected to actively pursue it, building capacity and confidence.

Cross-functional: Teams bring together individuals who have frontline knowledge of the challenge at hand.

Visible: Projects are actively supported and valued by a sponsor, which typically comes from a senior-level manager supported by coaches – teams are provided with a trained RRI coach to guide the process and to ensure that progress is being made in a disciplined way.

Why Rapid Results?

Rapid results offer teams an approach for advancing long-term goals through short-term results. This provides project planners and implementers with a mechanism for creating a results-based feedback loop that can be leveraged to advance complex projects iteratively or simply to improve the quality of their project design.

Each RRI delivers the following:


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Hard results and outcomes that matter

Development of implementation capacity

Customized processes that work


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ANNEX 9: Project Aligned with the GoC’s Latest Orientations on PFM Reform

Axis Corresponding Activities in the World Bank Project

Axis 1: Transcription of the CEMAC PFM Directives in the national laws

Component 5: Just-in-time TA subcomponent

Axis 2: Improvement of the link between the public policies and the budget

Component 1 - Alignment of the sectoral strategies/MBTF/MTEF/program budget

Axis 3: Optimization of the budget programming

Component 1 - Introduction of multiyear management, improvement in the substance and timely preparation of the budget programming tools, improvement in the FM year end processes and in year reporting format

Axis 4: Improvement of the cash management Component 1 - Improvement in the substance and timely preparation of the budget programming tools (Procurement Plan, Commitment Plan, and Treasury Plan)

Axis 5: Improvement of the accounting framework

Component 1 - Introduction of management account and fixed assets management

Axis 6: Modernization of the information management system

Component 1 - Deployment of SIGIPES II Component 2 - Introduction of e-tracking tools in PIM cycle and the procurement processes Component 5 - Study for the technical specifications of the IFMIS

Axis 7: Alignment of the organigrams of the administrations with the program budgeting approach

Component 1 - TA to MINEDUB and MINESANTE to enforce the program budgeting approach

Axis 8: Intensification of the training Component 1) - TA to the MINEDUB and MINESANTE to enforce the program budgeting approach Component 3 - Training to the procurement officers, MOOC

Axis 9: Increase communication on the PFM reform

Component 5 - just-in-time TA subcomponent


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ANNEX 10: Cost-Benefit Analysis

Background and Rationale for the Project

1. To achieve its development goals as set out in the DSCE, Cameroon has substantially increased its public investments. As a result, the ratio of public investment to GDP, which was only 2 percent on average between 1990 and 2010, has increased to an annual average of approximately 6 percent since 2011. However, the management of these public investments generates deficiencies that must be mitigated for fear of jeopardizing the economic growth objectives assigned to these investments. These deficiencies relate to the programming, procurement, and execution phases of the contracts and to the monitoring and facilitation of the system. Several identifiable causes have been associated with these deficiencies including (a) the budgeting of immature projects, (b) inclusion in the budget of projects outside the budgetary framework and medium-term expenditure, and (c) the inadequacy of technical reviews in the sectoral (line) ministries that propose investment projects. The IDA project aims to correct these deficiencies by addressing the causes of the aforementioned dysfunctions.


2. The consolidation of budgetary programs will lead to greater coherence between policies, budgets, and actual expenditure. This means an improvement in the chain of preparation and implementation of the budget, resulting in a more realistic budget. A more realistic budget is one where the gap between projections and actual achievements is negligible. In 2013, for example, the Head of State in his year-end speech had deplored the fact that the rate of consumption of credits of the PIB was only 50 percent. It is difficult to quantify gains, but narrowing this gap over time will contribute to increased domestic consumption, economic growth, and human development as this can be understood as additional public investment or resource saving.

3. A subcomponent of the budgetary reforms component includes activities related to the improvement of the personnel management of the MINSANTE and MINEDUB through the deployment of the SIGIPES II, merging HR and payroll management databases. The deployment will translate into (a) payroll clean up (b) better payroll/HR control and strategic HR allocation and planning, and (c) increased efficiency for HR and payroll processing tasks. However, it is difficult to quantify the savings incurred or the impact on service delivery. It should be noted, however, that the payroll of both MINSANTE and MINEDUB personnel is large since together these two ministries are the largest public sector employer in Cameroon (combining civil servants and temporary).

Components 2 and 3. Improving quality of public investment in selected sectors (MINSANTE and MINEDUB) and strengthening the performance of the public procurement system and developing capacity for better service delivery

4. One of the objectives of the PIM is to increase the impact of budgeted investment projects by improving the preparation procedures. Political interference in investment project budgeting will hence be mitigated, greater coherence between policy objectives and budgets ensured, and higher impact achieved. In such a context, the Cameroonian PIB will be able to target projects with high potential for economic growth and poverty reduction. It should be noted that in relation to these two indicators, the Government aspires to maintain an annual growth rate of 5.5 percent between 2010 and 2020 and to reduce the poverty rate from 39.9 percent in 2007 to 28.7 percent in 2020. Ultimately, there will be a clear improvement in the value of the Human Development Index, which was only 0.512 in 2015 for


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Cameroon and places the country at the 153rd position out of 185 countries.

5. The PIM will translate into better preparation combined with better procurement, resulting in a clear improvement in PIB implementation rates. Several official sources estimate the execution rate of the Cameroonian PIB at 70 percent in recent years. The 30 percent of non-execution is therefore considered to be an additional GDP that the PIM will achieve. Most of the theoretical solutions that would have helped evaluate the gains from additional public investment assume that public investment is first expressed in terms of the stock of public capital or public infrastructure, which influences economic growth (Presbitero and Zanna 2015).40 This is why the relationship between public investment and economic growth is given by: productivity of public investment = rate of change of the capital stock / GDP variation rate.41 Such a formula is difficult to apply in poor countries (Pritchett 1999),42 where the level of conversion of public investment into public capital stock is low.

6. Taking into account these difficulties, the estimate of the gains is based on the marginal productivity of capital ratio or incremental output ratio (ICOR) in English. ICOR = I percent GDP / ΔPIB where ΔPIB is the rate of economic growth. Therefore, if the ICOR is known over a given period and the additional investment expressed as a percentage of GDP, the loss of growth due to non-execution that corresponds to the gains of the reforms can be calculated.

7. To apply this approach, a 2015 GDP of US$28,415,950.98 in thousands is considered (World Bank). Economic growth rates are predicted and derived from an activity report on Cameroon (World Bank 2017).43 The PIB forecasts for MINSANTE and MINEDUB are drawn from the public investment programming document for the 2017–2019 triennium, and the conversion rate of US$1 = CFAF 565. Rather than considering 2017–2019, the same PIB data are transposed on to 2019–2021. According to the public investment review of 2015, the PIB of the same year was CFAF 1,150 billion. For 2015, therefore, PIB is 6.5 percent of GDP, the economic growth rate is 5.8 percent, and ICOR is 1.16. This means that to produce a unit of output, 1.16 units of public investment are needed. It is assumed to be constant in time. Table 10.1 illustrates the gains from reduction in the non-execution rate of PIB.

8. The programming of public investments for 2017–2019 includes PIBs from MINSANTE of CFAF 469,291,456 thousand and CFAF 67,508,156 thousand from MINEDUB. That is a total of CFAF 536,799,612 thousand. We assume that the annual amounts of the PIB are equal to CFAF 178,933,204 thousand.

40

Andrea, Presbitero, and Luis-Felipe Zanna. 2015."Some Misconceptions about Public Investment Efficiency and Growth." IMF Working Paper, WP/15/272. 41

IMF (International Monetary Fund). 2015. Making Public Investment More Efficient. Staff report. 42

Pritchett, lant. 1999. "The Cost of Public Investment Is Not the Value of Public Capital." Policy Research Working Paper. 43

World Bank. 2017. Document of the World Bank Group Report No. 107896-CM.


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Table 10.1. Improvements in the Execution Rate of the PIB’s of MINSANTE and MINEDUB (CFAF, millions)

Captions 2015 2016 2017 2018 2019 2020 2021

(Economic) growth rate

5,8 4,8 4,8 4 4,6 4,6

PIB (CFAF, millions)

17,674,721.51 18,699,855.36 19,597,448.41 20,538,125.94 21,359,650.98 22,342,194.92 23,369,935.89

ICOR 1,16 1,16 1,16 1,16 1,16 1,16 1,16

PIB MINESANTE - MINEDUB (CFAF, millions)

178,933.204 178,933.204 178,933.204

Non-executed PIB of MINSANTE - MINEDUB

17,893.320 35,786.641 53,679.961

Non-executed PIB of MINSANTE - MINEDUB % PIB

0.084 0.160 0.230

Loss in growth rate %

0.072 0.138 0.198

(Economic) growth rate with project %

4,072 4,738 4,798

PIB (CFAF, millions) with project

21,374,438.426

22,387,159.319

23,461,295.223

Gains (CFAF, millions)

14,787.451 44,964.398 91,359.336

9. These results show that the non-execution of the PIB’s of MINSANTE and MINEDUB of 10% in 2019, of 20% in 2020 and 30% in 2021, there will be gains of CFAF 14,787,451 million, CFAF 44,964.398 million, and CFAF 91,359.336 million in 2019, 2020, and 2021, respectively.

10. The implementation of the PIM will result in better preparation combined with better procurement, with a consequent reduction in PIB costs for the same investments. To better understand the incidence of the cost overruns of the Cameroonian PIB, the costs of what the PNDP 2 (Cameroon – Community Development Support Program phase II, IDA) achieved were compared with the costs of the same achievements in the PIB. Table 10.2 illustrates the analysis.44 It appears that the PNDP costs represent 69.19 percent of the PIB costs.

44

A large number of projects should probably be compared to draw a more representative conclusion. A good quality indicator was also required to compare cost-quality ratios. This was not possible


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Table 10.2. Comparative Analysis of Some PNDP and PIB Costs and Achievements (CFAF)

Achievements Average Costs PNDP Average Costs PIB

Bore hole construction 7,857,612 8,245,000

Latrine block constructions blocks 1,527,809 4,333,333

Equipped Classroom Blocks 17,045,417 17,000,000

Supplies 60 tables and benches and 2 offices 2,018,071 1,800,000

Classroom equipment with 30 tables and benches 618,018 900,000

Electrification 19,559,644 38,000,889

Average totals 48,627,571 70,279,222

Source: PNDP 2014.

11. In this section, the 30.81 percent of the cost overruns of the PIB is considered as an additional PIB that should have been realized. The calculation of earnings is based on the methodological developments described above, notably the use of the ICOR, and the results of the calculation of earnings are presented in table 10.3.

Table 10.3. Gains in the Reduction of the Extra Costs of the PIBs of MINSANTE and MINEDUB

Captions 2015 2016 2017 2018 2019 2020 2021

(Economic) growth rate

5.8 4.8 4.8 4 4.6 4.6

PIB (CFAF, millions)

17,674,721.51 18,699,855.36 19,597,448.41 20,538,125.94 21,359,650.98 22,342,194.92 23,369,935.89

ICOR 1.16 1.16 1.16 1.16 1.16 1.16 1.16

PIB MINESANTE and MINEDUB (CFAF, millions)

178,933.204 178,933.204 178,933.204

Non-executed PIB of MINSANTE and MINEDUB

17,893.32 35,786.64 55,129.32

Non-executed PIB of MINSANTE and MINEDUB %PIB

0.08 0.16 0.24

Loss in (economic) growth rate %

0.07 0.14 0.20

(Economic) growth rate with project %

4.07 4.74 4.80


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PIB (CFAF, millions) with project

21,374,027.66 22,387,156.58 23,461,740.09

Gains (CFAF, millions)

14,376.69 44,961.65 91,804.20

12. The results are very similar to those in table 10.1 because the cost overruns and non-executions have almost the same magnitude compared to the PIB, 30 percent and 30.8 percent.

13. We can also consider the 30.81 percent cost reduction as savings in the budget deficit to be financed. Indeed, Cameroon is increasingly using domestic debt to finance its budget deficit, in view of its major structural and infrastructure works program. Thus, in 2015, the country's domestic debt stock stood at CFAF 1,239 billion, or about 7 percent of its GDP. In the same year, the state incurred and bore a domestic debt service of CFAF 155 billion. This means that despite the importance of domestic indebtedness, the service of this domestic debt is a heavy burden for the Government and any measure that can help reduce the stock of this debt will represent savings for the state.

Financial Analysis

14. PIM efficiency score (IMF 2015) is the measure that best accounts for the ability of a PIM to maximize the use of resources devoted to public investment. The cost-benefit analysis by these scores takes into account all the components of the reforms.

15. By definition, the efficiency score is the measure of the relationship between the value of the stock of public capital and quantity plus the quality of infrastructure. To this end, it takes into account an essential input that is the value of the stock of public capital and three main dimensions of outputs: (a) the quantitative dimension that measures the volume of road infrastructure, electric power generation, access to safe drinking water, and social infrastructure related to health and education; (b) the qualitative dimension obtained from interviews with leaders on their perceptions of the quality of the above infrastructure; and (c) a synthetic dimension that combines quantitative and qualitative dimensions.

16. The data analysis model was used to calculate the efficiency boundary that defines the maximum output (the most efficient country output) and the efficiency score of each country that is the output level that it reaches for the same level of inputs for the countries. On this basis, the efficiency of Cameroon's PIM is very low. Its efficiency score is 50 percent, while the average for all sub-Saharan African countries is 60 percent. We use this information because it served as the basis for the IMF to assess the Cameroonian PIM system.

17. To quantify the gain that would result from improving the efficiency score in the Cameroonian context, we are still using the results of IMF (2015), which, based on a sample of 113 countries around the world, indicates that the efficiency scores of the complementary first quartile 1 percent of GDP induces an additional growth rate of 0.3 percent. This effect is 0.4 percent for the second quartile, 0.5 percent for the third quartile and 0.6 percent for the fourth quartile. Our hypothesis is that the PIM will improve the efficiency score of the second quartile where it currently stands (50 percent), the third (75


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percent) and towards the efficiency frontier. Considering a GDP of US$28 415 950.98 thousand (2015), the annual growth rates of GDP are those identified since section 5.

Table 10.4. Gains in the Reduction of Inefficiencies in the PIM

Years 2019 2020 2021

Values of the efficiency score 0.5 0.75 1

GDP growth rate without the project 4.00 4.60 4.60

GDP growth rate with project 4.00 4.65 4.66

Provisional GDP without project (CFAF, millions) 21,359,650.98 22,342,194.92 23,369,935.89

Projected GDP with project 21,359,650.98 22,352,874.75 23,394,518.71

Earnings (CFAF, millions) 0.00 10,679.83 24,582.82

Economic Analysis

18. Increased efficiency of the PIM has other effects on economic growth that are difficult to quantify: (i) reduced transaction costs for the private sector, (ii) increasing the marginal productivity of human and physical capital; and (iii) reduction of the cost of public investment with a quantitative increase in investments.

Component 4: Enhancing the use of statistics for policy making

19. The IDA project aims to strengthen the data production system currently being piloted by INS. These data relate to the living conditions of the population, the national accounts, and the dissemination of information. Estimating the gains from data production in a country is difficult. However, the example of the United Kingdom suggests a methodology. The value of public information was estimated at US$6.5 billion in this country in 2011–12, which was 1.65 percent of GDP.45 It is a country where a wide variety of quality information is produced and consumed. Since Cameroon is not yet at this level, and as has been done on previous work in Guinea, the value of public information can be estimated at 0.08 percent of GDP. The IDA project intends to increase this percentage considerably.

20. The publication of quality information on budget execution and the dissemination of GDP data as well as other national statistics will contribute to enhancing transparency in the management of public finance and PIM in particular. The expected financial benefits are enormous because the effects of the lack of transparency use several channels: (a) the lack of transparency in the PIM increases the costs of the PIBs but undermines their effects on growth through inefficiency and by discouraging private investment (see, for example, Haque and Kneller 2008 [Sections 6 and 7 evaluate incremental and inefficient gains]) and (b) Glennester and Shinn (2008) within the framework of the IMF's46 work show that transparency measured by the accuracy and frequency of macroeconomic information disseminated to the public reduces the borrowing costs of state sovereign debt. The public debt of Cameroon was estimated at 28 percent of GDP in 2015, with an interest rate of about 9 percent. The

45

Cameroonian researchers, for example, cannot apply for the majority of externally financed research tenders due to lack of data, and yet international research is an undeniable source of foreign currency. 46

Glennerster, Rachel, and Yongseok Shin. 2008. “Does Transparency pay?” Staff Papers, 55 (1). IMF.


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PIM will allow the market to have the country's exact macroeconomic situation in real time and the country will benefit from favorable borrowing rates and substantial savings for the Government.

21. To conclude, the cost of the project is US$30 million, that is, CFAF 18,660 million (rate of CFAF 565 per US$). The NPV is CFAF 337,516.38 million – CFAF 18,660 million = CFAF 318,856.38 million, that is, US$564,347 million.

Table 10.5. Summary of Project Gains (million CFAF)

Years 2017 2018 2019 2020 2021 Total

Earnings of non-executions 14,787.45 44,964.40 91,359.34 151,111.19

Cost overrun cost savings 14, 376.69 44,961.65 91,804.20 151,142.55

Earnings from inefficiency 0 10,679.83 24,582.82 35,262.65

Total gains 29,164.14 100,605.88 207,746.36 337,516.38

Documents

World Bank Documentdocuments.worldbank.org/curated/en/305621511406035802/pdf/CAMEROON-P… · ICOR Incremental Output Ratio ICT Information and Communication Technology IDF Institutional