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FINAL EVALUATION REPORT

SURINAME

DECENTRALIZATION AND LOCAL GOVERNMENT

STRENGTHENING PROGRAM II

(LOAN 2087/OC-SU)

Consultant

Hernan Aspiazu, MBA; CPA

November 2014

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Table of Contents

Glossary........................................................................................................................ 3

Basic Data..................................................................................................................... 4

I. Executive Summary............................................................................................. 5

A. Program description………………………………………………………….. 5

B. Findings……………………………………………………………………...... 5

C. Risks and sustainability………………………………………………………. 8

D. Lessons learned and recommendations………………………………………. 9

II. Introduction......................................................................................................... 11

A. Background and purpose of final evaluation…………………………………. 11

B. Evaluation methodology……………………………………………………… 12

III. Program Description............................................................................................ 12

A. Program’s overview…………………………………………………………... 12

IV. Findings................................................................................................................. 16

A. Effectiveness………………………………………………………………….. 16

1. Results for milestones, outputs and outcomes………………………….. 16

2. Achievements by component for milestones and outputs………………... 18

3. Achievements for outcomes……………………………………………… 28

4. Program budget and projected costs……………………………………… 29

B. Efficiency……………………………………………………………………... 30

1. Organizational structure………………………………………………….. 30

2. Project inputs……………………………………………………………... 34

C. Design and relevance…………………………………………………………. 35

D. Monitoring and evaluation systems…………………………………………… 36

V. Risks and sustainability....................................................................................... 36

VI. Lessons learned and recommendations............................................................. 39

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Glossary

BFM Budget and Financial Management

CBO Community Based Organization

CIC Citizen Information Center

CLAD Government Accounting Office

CPC Citizen Participation Committee

CPP Citizen Participation Plans

DA District Administrator

DC District Commissioner

DEF District Equalization Fund

DLGPI Decentralization and Local Government Strengthening Program I

DLGPII Decentralization and Local Government Strengthening Program II

DMT District Management Team

DNA Suriname National Assembly

DSP District Strategic Development Plan

FDIL Financial Decentralization Interim Law

GLIS Ground Land Information System

GOS Government of Suriname

IAO Internal Audit Office

ICT Information and Communication Technology

IDB Inter-American Development Bank

MD Managing Director

MOF Ministry of Finance

MRD Ministry of Regional Development

NC Neighborhood Committee

NGO Non Governmental Organization

NIMOS National Institute for Environment and Development

ORG Operating Regulations and Guidelines

OTA Tax Directorate of the Ministry of Finance

PCR Project Completion Report

PET Public Entertainment Tax

PIU Program Implementation Unit

POP Promotion and Outreach Plan

RVT Rental Value Tax

SDP District Strategic Development Plan

TMRD Task Force of the Ministry of Regional Development

TMOF Task Force of the Ministry of Finance

WAN Wide Area Network

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Basic Data

Country Suriname

Project Name Decentralization and Local Government

Strengthening Program (DLGP II)

Loan No. 2087/OC-SU (SU-L1011)

Date of Board Approval 10 December 2008

Date of Contract 20 March 2009

Eligibility Date 9 June 2009

Date of First Disbursement 17 June 2009

Borrower Republic of Suriname

Executing Agency Ministry of Regional Development

Minister Mr. Stanley Betterson

Permanent Secretary Mrs. Drs. Genia Corinde

Approved Amount US$ 13,500,000

Source OC

Project Team Rafael de la Cruz (ICF/FMM), Project Team Leader;

Karen Astudillo (ICF/FMM); Gilberto Chona

(ICF.FMM); Gasbriel Nagy (FMM/CSU); Carlos

Pineda (ICF/FMM); Eduardo Rodal (FMM/CTT);

Rinia Terborg (CCB/CSU); Diego Buchara

(LEG/SGO); and Cecilia Bernedo (ICF/FMM)

DLGP Project Team:

Basharat Ahmadali Managing Director

Mahender Pershad Task Manage, Administration, Finance and Planning

(Moved)

Martin Blenman Task Manager, Civil Works & Capital Investment

Iris Gilliad Task Manager, Citizen Participation

Riaz Ahmadali Task Manager ICT/WAN

Xaviera Souprayen Assitant Financial Officer

Marlon Wamenie Assistance Procurement Officer

Clareca Sajat Office Manger-(Moved)

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I. EXECUTIVE SUMMARY

A. Program description

DLGP-II is a five year, US$ 15 million program, whose objective was to continue supporting

Suriname’s local government decentralization e f f o r t s . The Program aimed to

contribute to the attainment of a core legal framework, and to assist the new pilot districts of

Paramaribo, Sipaliwini, Saramacca, Coronie, and Brokopondo to obtain adequate institutional

capacity for fiscal self-management and for managing capital investment. Furthermore, DLGP-

II also a i m ed t o assist t he certified districts of Wanica, Para, Nickerie, Commewijne, and

Marowijne in the implementation of community-based basic infrastructure investment projects

and local services. The Program is financed by an IDB loan of US$13.5 million, and a GOS

counterpart contribution of US$ 1.5 million.

The Program had four components: (i) legal framework; (ii) financial, planning, and

administrative capacity; (iii) citizen participation and program outreach; and (iv) capital

investment capacity building and investment program.

B. Findings

Overall the program was well designed to support decentralization: its first component aimed to

provide the districts with the required laws for their financial support; the second contained the

activities to strengthen the administrative and managerial capacity of the districts; the third was

geared to make citizens active participants in the plans and in the work of their local government,

and the fourth aimed to consolidate the districts managerial capacity in basic infrastructure work.

All components are important, but the legal component is of fundamental importance to the

program because it deals directly with the districts’ financial sustainability. In this respect, three

laws represent the backbone to a future financial support and feasibility of the districts, namely:

(i) The District Tax Law, aimed at strengthening own-source revenues for the Districts; (ii) the

Law on Financial Relations between the Central Government and the Districts, aimed at creating

a reliable and predictable source of revenue sharing between central and local governments,

through a District Equalization Fund (DEF); and (iii) the update of Article IV of the framework

Fiscal Decentralization Interim Law (FDIL), also aimed at strengthening own-source revenue

sources in the Districts. Complements to these laws are the legal agreements between the

districts and the GLIS, aimed at strengthening the cadastral system in each District. The approval

of the first two laws, prepared during DLGPI, has been pending since year 2008. The update of

Article IV of the FDIL has been in Cabinet since 2012. And the approval of the GLIS

agreements has been pending in MRD for several years. The lack of action toward the approval

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of these laws poses a serious risk to the sustainability of the program - that if not mitigated or

controlled could seriously hamper future progress in the decentralization process.

By contrast, the other 3 components of the program have performed with noteworthy success:

achieving a total of 18 milestones (activities), and 4 output indicators1. Except for 2 milestones,

the achievements in comparison to plans go from good to excellent. Some of those milestones

were remarkably well done and could be used as showcases to replicate in similar programs in

the Region. For instance, the Neighborhood Committees (NC) became an exemplary form of

citizen participation, not only monitoring the quality and timing of the work being carried out in

the neighborhood, but also improving business relations with contractors by collaborating with

them in ensuring the overnight safety of their equipment. The capital investment component was

highly productive in the number of infrastructure projects implemented as a result of involving

the communities in the selection and monitoring of the projects. In contrast, there was also a lack

of accomplishments in a few milestones: the internal audit office for the districts was not

organized. The WAN was not connected to the MOF due to larger connectivity issues that still

need to be dealt with.

Were the program’s outcomes2 achieved? In summary form, the program’s achievement - in

terms of outcome indicators – is as follows:

1. Legislation favoring decentralization passed: Not achieved -- as explained above and in the

body of this report.

2. All Districts certified for autonomous financial capacity and systems: Achieved from the

point of view of being now certified. However, the Districts are not financially autonomous

yet.

3. All Districts certified for enhanced management capacity of capital investment projects:

Achieved.

4. Projects executed by certified districts: Partially Achieved.

From the institutional point of view, the program organized a Program Implementation Unit

(PIU) headed by a Managing Director and comprising professional task managers- for three of

the components, plus an ICT manager. The Managing Director, in addition to his normal duties,

also had an operational role with the activities in the legal component. This structure was

reproduced at the MRD and at the District levels -- as TMRD (DLGP Task Force in MRD) and

DMTs (District Management Team) in each District. This overall structure was to be supported

by a task force in the MOF - the TMOF -, to provide assistance in the quality control of financial

activities for the districts Level 1 certification, and to review the districts fulfillment of financial

1 An output is what is expected to be delivered by the project. The execution unit is responsible for the generation

of the outputs. Output indicators describe the outputs to be generated through the implementation of the project. 2 Outcomes are the immediate effects expected to be achieved as a result of the project. Generally these

immediate effects are achieved in the last stages or immediately after the project implementation.

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conditions required for Level 2 certification. TMRD, headed by an Assistant PS, was designed to

work actively and jointly with the PIU, so as to develop within the permanent staff of MRD

knowledge and experience in program execution with an IDB program. The details on the

strengths and limitations of this structure are presented in the body of the report, with the main

aspects summarized below.

PIU developed high quality systems and efficient internal operations: PIU’s operations are based

on a well prepared operating manual (ORG) -- supported, in turn, by planning and monitoring

systems, as well as administrative, accounting and contracting systems. A capable director which

has served continuously DLGPI and DLGPII was able to build a professional and cohesive team

highly identified with the program and with its success.

Coordination with TMRD not entirely satisfactory: TMRD has developed into a current structure

with a staff of around 27 persons, the majority of them university trained. The level of

coordination and joint working with PIU has been mixed: It has generally been very effective in

the citizen participation and ICT components; and poor in the legal component and the

financial/administration component. In the civil work area the level of joint work participation

was not consistent, being good to very good in some projects (for instance the current project in

Sipalawini) and absent in others.

The Program Advisory Council (PAC) was never implemented: The organizational structure for

execution included an Advisory Council comprised of representatives of MRD, MOF,

Directorate of OTA, Ministry of Home Affairs, and the Ministry of Public Works. This Council

was to provide a consultative and problem solving forum to the PIU. While the decree formally

organizing the PAC was prepared this advisory unit was never implemented.

MOF’s unilateral decision to terminate the TMOF team: In the first quarter 2011, the PS of the

Ministry of Finance decided to stop the activities of the team created in MOF (TMOF) to support

DLGPII - under the logic that the functions assigned to this team were the normal functions of

the Ministry, and that consequently there was no need for a special team. There were two aspects

not considered in this decision: (i) the participation of TMOF is established in the ORG and is

part of the contract with the IDB. Thus, any changes in the ORG must have the prior approval of

the Bank; (ii) eliminating TMOF cut off the direct work link that had existed between technical

staff of the MOF and PIU, forcing the PIU to have to go through the MOF upper management

(the PS) to obtain collaboration from TMOF technical staff. One practical result was that TMOF

never participated again after 2011 in the process of District certification.

Level of autonomy and placement of the executing unit: PIU had some level of operating

autonomy, but very little managerial power to have influence with the parallel teams. It also had

negligible or no political clout to influence in the approval of strategic laws necessary to advance

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the legislative reform agenda required to advance the decentralization process. Considering the

alternative of TMRD as a potential executing unit in the future, there are already signs that it

could have less operating autonomy than PIU - based, for example, on the way the TMRD

capital investment projects are currently being selected – without any reliance on formula-driven

selection criteria (as is the case in DLGP). Furthermore, it’s not likely that TMRD, as an

executing unit, would have any more success than the PIU in promoting pending legislative

reforms in decentralization - judging from the difficulty MRD itself has had in advancing the

program’s strategic laws in the past 8 years.

When DLGPI was designed there were few proactive stakeholders and a more unified central

government political support to enhance and amend the enabling legislation for decentralization.

The context has changed significantly since then, now facing what appears to be more diffuse

central political support and yet, at the same time, a considerably more proactive set of

stakeholders: (i) the districts are active participants; (ii) the public is more informed on the basics

of decentralization; (iii) the ministries involved remain the same, but they are at present more

informed about the needs and solutions; (iv) there are government agencies more actively

involved, CLAD and NIMOS, for instance; (v) non-profit agencies – NGOs - have been

participating and their role is bound to grow in the future; and (vi) the general assembly has to

some degree been involved with the program in the last ten years.

Given this wealth of official and non- official stakeholders, apart from the necessary technical

qualifications, a careful analysis will have to be made on the leadership and placement required

for the future executing unit. From the point of view of leadership the unit should be able to

amalgamate and negotiate among different participants with their own specific goals. From the

point of view of placement, the unit will have to be located at a place high enough to have the

political muscle to contend with political opponents.

C. Risks and sustainability

The main risks attempting against the financial feasibility of the program are legal and political

in nature.

Legal risk - deriving from the lack of approval of the three previously mentioned financial laws

and the 10 GLIS agreements. This is a serious risk that if not mitigated or controlled could very

well affect the future of the decentralization process.

Political risk: The fact that the laws have not been approved in several years brings an analytical

observer to the conclusion that the delay may not be caused by an opposition to the laws, in and

of themselves, but by an opposition to the broader strategic goal of decentralization. If this is

true, however, this constitutes an opposition to the Constitutional mandate of 1987 which

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stipulates decentralization – through a “Decentralized Monocratic State”- as the model of

organization for Suriname’s political and governmental system. It follows that there is a need for

a common effort, among all stakeholders, to comply with the Constitution and to push Suriname

into a modern, developed country.

Institutional risks are associated with institutional capacity risks at three levels: (i) the

institutional capacity to execute any new follow-up program contemplated after DLGPII ; (ii) the

central institutional capacity to continue supporting the districts – irrespective of a new program;

and (iii) the institutional capacity of the districts to sustain themselves.

The institutional risk related to execution of a new program is twofold. The first has to do with

the placement of the executing unit, a topic already mentioned. The second is of operational

capacity to carry out execution. There are some key functions and systems necessary for

effective execution, regardless of the type of project, namely: planning; procurement; financial

budgeting, accounting and reporting; monitoring; internal controls; and management. An

unusually well-honed capacity was created in all these functional areas through the current

executing mechanism of DLGPII. The risk is that the capacity and systems for these functions

may be lost and will have to be rebuilt after the termination of the current program.

As regards the question of central capacity to continue supporting the districts, in the short to

middle term the districts will require support to maintain proficiency, especially in the areas of

financial administration, taxes, the WAN, and the implementation of new financial software

mandated by Government. Without a thorough institutional analysis it is not possible to

determine fully whether TMRD has developed the required capacity for continuous support to

the districts, but observations based on short interviews indicate this unit will need strengthening

in the areas of planning and financial systems to take on this function.

Financial risk: The central government covers 100% of the districts’ salaries and around 75% to

80% of actual non-salary current and capital expenditures. Furthermore, actual non-salary

expenditures are only a fraction (around 12%, for example in the case of District of Para for year

2013), of the budgetary needs derived and approved by the district councils. Thus, there is a

significant financial risk of non-sustainability at the District level. There is an urgent need for

own-source revenues by the districts and for a systematic, predictable way of allocating central

government transfers to the district. These actions will go a long way toward mitigating the

existing financial gaps and risks.

D. Lessons learned and recommendations

Political support and mitigating measures: Decentralization programs, like the one under review,

require legal reforms in an environment with a wealth of local and national stakeholders with

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different perceptions on decentralization and its processes, and with different political views.

This makes the approval of the legal reforms risky. To mitigate this risk, the following measures

should be considered: (i) placing the executing unit at upper levels of political power to permit a

negotiated consensus between political equals; (ii) information campaigns directed to the public,

and to government officials on decentralization - its basis, benefits and needs. (PIU ran a very

limited information campaign in support of legal reforms,, as part of its POP activity; it should

have been more ample.); (iii) consensus/lobbying efforts directed to gain support from ministers

and the General Assembly. (The activity included in the program for this consensus building was

unfortunately eliminated by MRD during the execution of the program.); (iv) milestones and

contractual clauses requiring the approval and implementation of laws - not only the drafting of

such laws; and (v) more support from IDB experts to assess achievements of key milestones or

contractual agreements - and require timely adjustments. Alternatively, the IDB may consider the

granting of different type of credits or programs in which disbursements are conditioned to legal

reforms.

Institutional analysis and organizational development: During project preparation there should

be an institutional analysis of the unit to be organizationally developed, so as to have a base line

and monitor its development progress. The program included the organizational development of

TMRD by way of transfer of capacities from PIU, while also participating as a parallel team in

the execution of the program. Unfortunately, there was no institutional analysis of TMRD during

program preparation, so as to know its institutional capacity, its needs and its potential. As a

result, TMRD has developed into a unit with apparently a double function as parallel execution

unit and central support to the districts. However at the present time it is unknown what has been

the degree of organizational development accomplished and what are TMRD’s true capacities,

needs and potential.

Strong direction and coordination: Clear supervisory directions and objectives should be defined

for independent units sharing execution responsibility, while at the same time performing

dissimilar roles. PIU and MRD had the same supervisor and shared responsibility for some

execution activities, but the latter had a role of beneficiary of the know-how to be transferred

from the former. To promote coordination, and avoid subjective interpretations among members

of the units, clear directions should have emanated from the PS in this regard, from the inception

of the program.

Continuity of executing unit: Units with continuous strong leadership create cohesive teams with

members highly identified with the accomplishment of the program’s goals. In spite of many

problems and delays suffered, PIU was able to maintain a good to excellent level of performance

thanks to continuity of a strong, capable leadership.

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Institutional strengthening in a future program: The following institutional strengthening should

be included in a future DLGP program:

(a) Implementation of the GOS newly mandated “Free Balance” financial software at the

districts’ level. This task to include the preparation of system documentation, users’

manuals and training.

(b) Training on the new decentralization and financial laws, once they have been approved.

(c) Development and implementation of a tax accounting system for the districts.

(d) The prompt signing of the 10 agreements of the districts with GLIS and the

implementation of a system to transfer data from GLIS to the districts tax accounting

system.

(e) A subcomponent for dissemination of information on decentralization and for the

consensus building with ministers and the general assembly.

(f) A joint effort with OTA to resolve the connectivity issues between this office and the

financial district offices.

(g) Development of an Internal Audit Office (IAO) for the districts. The MRD office of

Internal Control could be the basis for organizing the IAO. However the Internal Control

office very possibly would have to be reorganized and strengthened.

(h) Development of a salary classification system for District personnel.

(i) A subcomponent to finance, as needed, expert support to the legislative reform process –

including technical promotion and negotiation with legislative staff, as well as in

mounting public communication and education campaigns, .

(j) Certification processes must be thoroughly spelled out in terms of procedures and

responsibilities - and must be accompanied by the systems needed to measure

benchmarks required as part of the certification.

II. INTRODUCTION

A. Background and purpose of final evaluation

Section 4.09 of Annex A of the Loan Agreement between IDB and the Government of Suriname

for the DLGPII program requires that a consulting firm or an individual consultant be hired to

prepare and submit a final evaluation report on the execution of the Program. In compliance with

this requirement and the Terms of Reference this report presents an independent final evaluation

of the Program focused on: (i) the level of achievements of results; (ii) the level of compliance

by the program with its performance indicators; (iii) the positive and negative aspects of the

program’s design and execution; and (iv) lessons learned and the recommendations of corrective

or monitoring measures for similar programs.

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B. Evaluation methodology

To evaluation work was carried out in accordance with the work plan agreed and included: (i) the

review of basic documents-IDB Loan proposal, IDB PMR, Program Financial Statements, Work

Plans, Operating Regulations; (ii) gathering of data and information on actual results vs. planned

for activities (milestones) and outputs and reasons for variances; (iii) review of the work of

consultants; (iv) interviews with IDB personnel at the country office in Paramaribo; (v)

interviews at MRD with the PS, the TMRD, and the internal Control Unit; (vi) at MOF interview

with the Minister and with the Director of the TAO and his executive staff; and (vii) a visit and

interview with the Commissioner of Para and his executive staff. In addition, a stakeholder

questionnaire was prepared, distributed and collected. This work was performed in Paramaribo

during the period 9 to 23 September. The consultant thanks the PIU’s Managing Director and his

staff for their invaluable help.

III. PROGRAM DESCRIPTION

A. Program’s overview

DLGP-II is a five year, US$ 15 million program, whose objective is to continue supporting

Suriname’s local government decentralization e f f o r t s . The Program aimed to

contribute to the attainment of a core legal framework, and to assist the new pilot districts of

Paramaribo, Sipaliwini, Saramacca, Coronie, and Brokopondo to obtain adequate institutional

capacity for fiscal self-management and for managing capital investment. Furthermore, DLGP-

II also a i m ed t o assist t he certified districts of Wanica, Para, Nickerie, Commewijne, and

Marowijne in the implementation of community-based basic infrastructure investment projects

and local services. The Program is financed by an IDB loan of US$13.5 million, and a GOS

counterpart contribution of US$ 1.5 million.

The Program had four components: (i) legal framework; (ii) financial, planning, and

administrative capacity; (iii) citizen participation and program outreach; and (iv) capital

investment capacity building and investment program.

Component 1-Legal Framework: The purpose of this component was to continue supporting

changes in legislation that are necessary to improve fiscal relations between central and

local governments, including: (i) preparation of draft laws on Traditional Authority; and

District Cadastre; (ii) design of District Ordinances regulating financial accounting standards

and procedures; and (iii) update laws included in Article 4 of the FDIL, dealing with transfer of

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revenues to the districts. The Program provided consultancy services and training at the local

level on decentralization-related laws.

Component 2-Financial, planning and administrative capacity: The objective of this

component was to develop a core capacity in the new pilot districts to manage their own budget

and financial systems. Specifically, the Program aimed to assist these districts in: (i) creating

a District Administrator position; (ii) installing core financial and tax systems; (iii)

providing human resources training; (iv) providing appropriate software and hardware; and

(v) providing equipment and rehabilitating district offices, which are necessary to install new

financial systems.

The set of core financial systems for the new pilot districts included: (i) administration and

planning; (ii) budget and financial management; and (iii) local revenue generation. For all

districts the Program viewed to assist in: (i) creating an internal auditing capacity; (ii)

installing an information and communication technology network to connect the districts with

both the MOF and MRD, via a wide area network (WAN) to facilitate cost-effective

harmonization of financial systems and data transfer, as well as to facilitate taxpayers to pay in

any location; and (iii) providing training, equipment, furniture, and remodeling of facilities to

manage the WAN, supporting coordination, and technical cooperation activities of districts.

This component also undertook to assist in the implementation of a simplified tax

administration system in certified districts to manage the registration and collection process for

all local taxes and fees. Activities supported by the Program included: (i) training of tax

administration personnel at the local and central level; (ii) revising and developing procedures

for identifying and alerting reluctant tax payers; (iii) improving methods to ensure compliance

of non-tax payers, including administration of fines for reducing evasion; and (iv) converting

manual taxpayer’s registry into an electronic form that will feed into the Financial

Administration System.

Upon approval of the District Tax Law, the Program aimed to support the creation of

methodologies and correspondent training for the districts to: (i) audit taxpayers records; (ii)

adopt warrant measures in order to ensure the collection of tax and non-tax revenues; (iii) keep

updated records; (iv) identify and define taxpayer’s violations (arrears, fraud, evasion); and (v)

apply interests, fines and other penalties. The approval of the District Tax Law was a

condition prior to the disbursement to finance the activities referred to in this paragraph.

Upon approval the State-Districts Financial Coordination Law, the Program also aimed to

support the Government in: (i) collecting information needed to define the distribution

parameters of DEF and ensure sustainability of data collection; (ii) creating a

methodology and corresponding training for calculating the transfers of DEF to each

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District in the MOF and MRD; (iii) installing hardware and software needed to perform this

task; and (iv) training personnel. The approval of the State-District Financial

Coordination Law was a condition prior to the disbursement to finance the activities

referred to in this paragraph.

The Program also supported the creation of an internal auditing capacity in the districts by: (i)

supporting District Councils to approve appropriate regulations; (ii) training district

personnel and the District Council; (iii) providing consultancies to define appropriate

audit methodologies and procedures in accordance with the existing legal regulations; and (iv)

providing appropriate hardware and software. The program pursued the creation of the

districts’ capacity to have their own internal auditors, or to pull resources so that they can create

an audit office serving all or part of the districts.

The Program supported the implementation of the WAN in all the districts and in the MOF and

MRD by providing: (i) infrastructure; (ii) hardware and software; and (iii) training.

Component III- Citizen participation and program outreach: The p u r p o s e o f t h i s

component was to engage citizens and stakeholders in the decision making process to achieve

greater transparency and accountability in the districts. Therefore, this component supported: (i)

creation of the citizen participation committees (CPC) at the district level in the new pilot

districts and also the strengthening of those existing in the certified districts; (ii) creation

and training of neighborhood committees at the community level to monitor and report

progress of capital investment projects; (iii) creation and operation of the Citizens

Information Centers (CIC) in all the Ressorts; (iv) provision of training to district trainers;

(v) implementation of a promotion and outreach action plan by the CICs; and (vi)

development and implementation of a strategy for consensus building of all central

government stakeholders by the Program Implementation Unit (PIU) regarding the legal

framework.

Under DLGP-I, a CPC committee was created in each of the certified districts to engage

citizens in the selection and monitoring of district projects. The Program aimed to continue this

effort by creating a committee in each of the new pilot districts and by strengthening the

existing committees. As visualized the CPC comprised of representatives of non-governmental

organizations and community based organizations operating on a voluntary basis.

Furthermore, DLGP-I fostered the creation of five CICs at the district level. CIC is a local

government institution that provides information and fosters citizen mobilization through various

communication and dissemination activities. DLGP-II supported the creation of another five CICs

in the remaining districts. The recurrent costs of CICs are financed by the districts with their

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general budget. After project termination, the districts will assume the recurrent as well as

the future capital costs of CICs.

DLGP-I supported the development of Promotion and Outreach Plans (POP) to: (i) raise

awareness and obtain active citizen participation for identification of project development; and

(ii) identify issues during project execution. DLGP-II supports the implementation of POP in

the new pilot districts and further implementation of POP in certified districts. POP includes

awareness campaigns on the setting of new laws, taxation and auditing functions.

The Program supported the formulation and implementation of a Citizen Participation Plan

(CPP) in the new pilot districts. The CPP describes the measures to be undertaken by the

districts to ensure adequate citizen participation in the administration of the affairs of the

district. The envisioned CPP is subject to the d i s t r i c t a t ta in ing a c e r t i f i c a t i o n Level 2 .

The CPP i n c l u d es a l o g i c a l framework for citizen participation, a detailed description of

specific activities, as well as guidelines and procedures for the CPC.

Finally, the Program supported the development of a strategy for consensus building of all

central government stakeholders to facilitate inter-governmental coordination.

Component IV– Capital investment capacity building and investment program: DLGP-I

focused on: (i) creating the capacity to manage and maintain basic infrastructure in the

certified districts; and (ii) financing trial road projects. DLGP-II: (i) consolidates institutional

capacity in the already certified districts; (ii) creates institutional capacity for managing basic

infrastructure projects and services in the new pilot districts; and (iii) finances basic

infrastructure projects and services in the certified districts and trial projects for the new pilot

districts, once they are certified at Level 2.

The Program used a participatory methodology to identify, prioritize, and select beneficiary

communities. A ranking system used in all 29 Ressorts in the certified districts considers the

following indicators: (i) households size within the community; (ii) access to healthcare,

utilities (electricity, potable water), education, and garbage collection; (iii) condition of the

road network and drainage systems; (iv) agriculture activities; and (v) recreation facilities. The

project selection methodology is included in the Operating Regulation Guidelines (ORG).

In parallel to the ranking exercise, the districts with the support of the PIU conducted hearings

with communities from all the Ressorts. Four priority sectors were identified: (i) secondary and

tertiary road paving; (ii) basic drainage; (iii) solid waste collection; and (iv) public market

upgrades. Ressort and District Councilors, also with support from PIU consultants, identified

project initiatives.

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Districts selected the priority projects based on: (i) ranked beneficiary communities; (ii) the four

priority sectors; (iii) a cost-effectiveness analysis; and (iv) resources availability. The Program

includes provisions to achieve sustainability within the economic life of the project and define

a plan for their maintenance.

The component supported the districts in formulating and evaluating the selected projects.

It also provided technical assistance for pre-investment activities, and the procurement and

supervision of construction of the specific projects. Finally, the component supported the

districts in formulating the necessary maintenance and operation plans once projects were

finished.

IV. FINDINGS

A. Effectiveness

1. Results for milestones, outputs and outcomes

The tables below are prepared as follows: for components I and II the End of Program planned

indicators stated in the PMR for the second period January-December 2013, are compared with

the actual results found at September 2014.3 For components III and IV, the planned indicators

and the results are extracted from the PMR for the period January-June 20144.Table I shows the

comparison of End of Program (EOP) results for milestone and output indicators. Table II shows

the same results for the outcome indicators. Table I should be read in conjunction with the

narrative or comments for those results expressed in the section “Achievement by component”

and Table II in conjunction with the Comments on section “Outcome achievements”.

Table 1.

EOP Milestone and Output Indicator comparison at September 2014

Milestones and Output Indicators by Component Units Baseline Plan Actual

Component I- Legal Framework-Milestones

1. Traditional Authority Law Drafted Bill None 0 0

2. Agreement between Districts and GLIS Authority (ex

Cadastre Law)

Agree-

ments

None 12 0

3. Laws included in Article 4 of FDIL updated Bills FDIL 1 2

4. Training on decentralization laws Worksh None 0 0

5. State Decree incorporating Districts to DLGP II issued Sta.Dec 5Districts 10 10

6. MRD/MOF Resolution Districts Level I Certificate

issued

Resolu 5Districts 10 10

3 The planned indicator used is the one shown as P(a), indicating that the indicator was reviewed during execution.

4 After the FER was completed, the PIU and the IDB updated the PMR and decided to update the indicators for

components III and IV in the FER.

17

7. Handbook bundle of legislation and procedure for local

government.

Ordinan

bundle

0 1 1

Component I Legal Framework-Output Indicator

Regulatory framework redesign to favor local government

capacity

Framework 0 2 1

Component II-Financial, Planning and Administrative

Capacity-Milestones

1. BFM Systems installed Systems 5Districts 5 6

2. Local tax administration systems installed Systems 5Districts 7 7

3. Local tax administration method and procedures in

place

Method 5Districts 6 7

4. Internal auditing (IA) capacity in the Districts installed Unit MRD/IA

unit

10 0

5. District administrators (DA) positions created DA 5 15 15

6. WAN installed in Districts Districts 0 15 11

7. WAN installed in MRD MRD 0 1 1

8. WAN installed in MOF MOF 0 1 0

9. Districts Offices fully rehabilitated Districts 5 10 10

10. Training provided Workshops 7 25 25

11. Administration and planning systems installed Systems 3

Component II-Financial, Planning and Administrative

Capacity-Output indicator

Administration and planning system to favor local

government capacity

Systems 2 2

Component III- Citizen Participation and Program

Outreach-Milestones

1. Citizen participation plans (CPP) in place CPP 5 5 5

2. Neighborhood Committees (NC) in place NC 0 38 38

3. Citizen Participation Committees (CPC) in place CPC 5 0 0

4. Citizen Information Center (CIC) in place CIC 5 15 13

5. Training Provided Workshop None 50 50

6. Promotion and Outreach Plan (POP) in place POP 5 10 10

7. Consensus Building with Central Government Ministries 1 0 1

Component III- Citizen Participation and Program

Outreach-Output

Citizen participation approach in place to favor participati,

accountability, and transparency at local level.

Approach 1 1

Component IV-Capital Investment Capacity Building and

Investment Program-Output indicators

1. Roads, drainage, garbage collection and market

facilities works

Investment

Projects

45 45

2. Projects design under capital investment projects Projects 0 8 8

18

Table II

Outcome indicators comparison at September 2014

Outcome: Local government capacity enhanced

Indicators Units Base-

line

Base

Year

Planned Actual

Legislation favoring decentralization passed legislation 1 2008 2 0

Districts certified for autonomous financial capacity

and systems

Districts 5 2009 10 10

Districts certified for enhanced management capacity

of capital investment projects

Districts 5 2009 10 10

Outcome: Fiscal relations between central and local government improved

Indicator Units Base-

Line

Base

Year

Planned Actual

Projects executed by certified districts Projects 0 2008 50 26

2. Achievements by component for milestones and outputs

Component I- Legal Framework-Milestones

1. Draft Law on Traditional Authority: the aim of this subcomponent was to integrate the

traditional laws of aboriginal people into the laws of regional Districts. A technical study

was done in 2010, and a consultant was contracted to draft the law regulating the role of the

Traditional Authorities. This consultancy was cancelled, with IDB approval, by the

Minister of MRD due to political sensitivities. Thus, the original planned milestone was

changed from 1 to 0.

This law would affect mostly the aboriginal people that inhabit the Sipalawini District

which represents around 80% on the Suriname territory and where legal and illegal mining

is taking place. No studies exists at the present time of the possible risks to the culture and

traditions of the aboriginal due to mining exploitation. Furthermore, there appears to be no

consensus among the aboriginal people or among government agencies as to whether

integration of traditional law should proceed and how.

Achievement in comparison to current planned indicator: N/A indicator was eliminated.

2. Agreement between GLIS and the 10 Districts: The original intent of this subcomponent

was to prepare technical and legal studies and to draft legislation in the field of cadastre at

the District level. While the studies were being conducted, National Assembly approved

the Law of Cadastre and on the basis of this law the Program then prepared the technical

and legal studies as well as 10 agreements to be signed between each of the Districts and

19

GLIS5permitting the free use of GLIS Cadastre data by the Districts. The agreements were

forwarded in 2011 to each of the Commissioners in the 10 Districts, to GLIS and to the

Minister of MRD, who stopped the signing of the Agreements. Their signature is still

pending in MRD.

Achievement in comparison to current indicator None (0%)

3. Update the Article 4 laws of the Federal Decentralization Interim Law (FDIL): The

objective of this task was to review the very low level of tariffs for taxes and non taxes, as

well as incorporating these sources of income for the Districts in draft bills regulating

Districts’ revenues. In September 2011, the Program forwarded one draft law and one state

decree to MRD which in 2012, in turn, submitted them to Cabinet. There has been no

progress with their approval since then.6 In other words, while the laws were updated and

thus the indicator was accomplished, the benefits of implementation of the updated laws

are still absent.

Achievement in comparison to current planned indicator: Mixed. Draft legal documents

prepared, but never approved nor implemented.

4. Training on decentralization laws: DLGPI prepared two key laws for the decentralization

of the Districts: the Law of Financial Relations with the Districts; and the District Tax

Law. The former, aimed to create a District Equalization Fund (DEF) to be managed jointly

by MRD and MOF, would transfer funds to the Districts to cover budget shortfalls. The

transfer to be done from the national budget on the basis of economic and social indicators.

On the other hand the District Tax Law aimed to increase tax revenues by allowing the

districts to introduce local taxes and non taxes by District’s Ordinance. These laws were

submitted to cabinet on 2008 and again on 2012. An IDB mission at the beginning of

October 2013, and again in February 2014 expressed to the MRD authorities that the

approval of these laws, is the cornerstone for current and future institutional and fiscal

consolidation of the Districts and concluded that non approval of these laws is the main risk

facing the successful completion of the program. Because these laws have not been

approved the subcomponent on training and its indicator were eliminated.

Achievement in comparison to current planned indicator: N/A. Indicator eliminated

because laws on which training was planned were never passed.

5. State Decree incorporating districts to DLGPII issued: To participate in DLGPII a state

decree is necessary. All districts have been so incorporated. Achievement in comparison to

current planned indicator: Fully achieved

5 GLIS, Geographical Land Information System, is an agency in the Ministry of Ground and Land Use. In operation

since the end of 2010, is charged with the digital plotting of land for registration and titling. 6 After Cabinet receives a law proposal, the procedure calls for presentation of the proposal to the President, who

after consultations with his advisers sends the law to Parliament.

20

6. MRD/MOF District Level 1 Certification: As part of the capacity strengthening of the

Districts, they are certified at two levels: For level 1 the Districts require: (i) to have

installed a core administrative, budgetary and financial management system; (ii) to have

installed a tax administrative system; and (iii) the contracting of a District Administrator.

To qualify for Level 2, in addition to the preceding requirements, the Districts must show:

(i) a strategic development plan; (ii) the capacity for revenue generation; and (iii) the

installation of a civil works management system. At present, all of the Districts are certified

at Level 1 and Level 2. In this accomplishment the PIU was very proactive even advancing

with the fulfillment of level 2 requirements, in the face of MRD/MOF bureaucratic delays

with the approval of Level 1.

Achievement in comparison to current planned indicator: Fully achieved

7. Handbook bundle of legislations and procedures for local government: Through this

component the Program in 2011 prepared for the Districts a compilation of laws, bylaws,

district ordinances, and financial guidelines regulating the financial accounting and

procedures at the level of the Districts. This compilation, organized in the form of a

manual, was sent to the Districts through MRD.

Achievement in comparison to current planned indicator: Fully achieved

Component I-Legal Framework-Output

Regulatory framework redesign to favor local government: The seven original milestones related

to the output indicator can be classified in two different frameworks: The first framework of a

legal nature containing four milestones (traditional authority law, agreement Districts/GLIS,

Article 4 FDIL, training on decentralization laws), and a second framework of an organizational,

administrative nature (incorporation of the districts to the program, level 1 certification, and

handbook of procedures and existing legislation). The second framework was fully implemented.

As to the first, the milestones were: (i) eliminated either because of political sensitivities or in the

case of training because the decentralization laws have not been passed; or (ii) not fully achieved

because the approval process has been withheld (article 4 FDIL, Agreement Districts/GLIS). It

appears that the executing agency MRD has problems advancing the approval of legislation.

Achievement in comparison to current planned indicator: 50% considering the execution

achievements of the organizational/administrative milestones and the lack of execution of the

legal milestones

Component II-Financial, Planning and Administrative Capacity-Milestones

1. BMF installed: The objective was to install in the new pilot districts the financial systems

comprising software, hardware and training for accounting, budgeting and reporting. PIU

has shown a great deal of accomplishment under this activity not only by implementing the

systems in the new districts, including a new one created in Paramaribo, but also by

21

upgrading the software of the systems in the DLGPI districts. When directed by GOS to

change the software in 2010 to avoid license fees, PIU was proactive in researching and

finding the open source software (“Open Resource Planning-Open Erp”) and adjusted the

work of the consultants to implement the systems and manuals using this software.

Notwithstanding these accomplishments, it is possible that there may be the need for major

adjustment to the BFM systems in the future. Early in 2014 GOS decided to use open

source software called Free Balance in the public sector which by necessity will include the

Districts. This is a future activity that will require a considerable effort in changing the

software, preparing new manuals and training the users. It is difficult to assess when this

change may be needed at the level of the Districts, given that the change in the public

sector has not begun as yet.

Achievement in comparison to current planned indicator: More than fully achieved,

however pointing out the possible need for further future revisions and changes in the BFM

subcomponent.

2. Local tax administration systems installed: This activity is geared to implement a

simplified tax administration system in the districts to manage the registration and

collection process for all local taxes and fees and to convert the tax reporting system to

MRD and MOF from manual to electronic. Currently the Districts collect the RVT and the

PET taxes, and report manually to MRD and MOF using a system set up with the help of

TAO which also trained the district on the forms, the procedures to use and the records to

keep. It should be pointed out that the system is simple and at present does not include a tax

accounting system and that consequently the accounting of taxes collected as revenue by

the districts is recorded in the financial accounting system developed in the program by the

BFM activity. The tax accounting system is important because it will permit to have as a

part of the system a data base of taxpayers with their respective collection history.

Furthermore, one of the requirements for Level II certification was the measurement of the

collection rate for RVT. But without a tax accounting system with a recording of the

receivables from taxpayers, such measurement is not possible. Further work will be needed

in the future for the eventual development of a tax accounting system in the districts.

While analyzing the activities in this indicator the consultant was made aware of some

apparent problems that under observation were not technical or structural in nature, but that

may be more related to communication shortfalls: There is an impression at a high level of

MOF that there are connectivity problems between the districts and TAO that should have

been resolved by the program. In fact, because of security reasons the connectivity afforded

by the WAN system developed in the program (see below), cannot be used because tax

information must be transmitted in a dedicated, secure line. TAO is proceeding according

to its plans which include developing in the future a dedicated connectivity line between

TAO and the districts. TAO will finance this activity with its own budget. Apart from the

22

connectivity issue, the use of the new software Free Balance to connect the district systems

with TAO systems (mentioned above) will have to be resolved. At this point there are

neither plans nor budget to this effect.

Finally, it should also be pointed out that the planned and actual indicator of 7 districts do

not include the districts of Coronie, Brokopondo, and Sipalawini which have no tax base

for RVT

Achievement in comparison to current planned indicator: Fully achieved, with the caveat

that further work will be needed in the future for this activity.

3. Local tax administration methodology and procedures in place: As pointed out in the

preceding numeral the procedures for local tax administration were set up with the

assistance of TAO. The methodology and procedures were set up at the seven districts

where the local tax administration system was set up.

Achievement in comparison to current planned indicator: Fully achieved, with the caveat

that further work will be needed in the future for this activity.

4. Internal Auditing (IA) capacity in the Districts installed: The objective was the

implementation of internal audit capacity at the district level by either setting up a unit for

each district, or by pooling resources to organize one office for a group of districts or for all

the districts. The request to initiate this activity and the corresponding TORS, were

presented to the IDB only in July 2013. This delay was due in part to several factors: (i) the

lack of qualified auditing personnel to set up an IA unit at the level of individual districts,

or as one office for several or all of the districts; (ii) the reviews required in the financial

BFM system of the districts as a result of the change of financial software to Open Erp.

Because audits are conducted to asses compliance with existing financial procedures and

regulations, the BFM manual which contains district financial procedures needed to be

updated. Another part of the delay appears to be related to the lack of participation of

MRD, particularly the Internal Control Unit, in the process of either supporting the creation

of an independent audit unit for the districts, or – in the case of the Internal Control Unit -

becoming the Internal Audit Office for all the Districts, as a part of the audit functions it

already carries out. In this regard, at present the program has a consultant for supporting the

work and organization of the Internal Control Unit. Some preparatory work has been

planned by this consultant, but this work is dependent on the selection of counterpart

personnel of the Internal Control Unit at MRD. This selection has not occurred and the

consultant’s work has stopped.

Achievement in comparison to current planned indicator: None.

5. Districts Administrators (DA) positions created: This activity is geared toward the

selection, recruitment, and training of district administrators charged with supervision of

23

administrative and financial functions for the new districts in DLGPII. Being a condition

for level I certification, particular attention was given to the selection and training of the

administrators. The potential administrators were selected by a Commission composed of

representatives of PIU, MRD, the District Commissioner’s office and the District Councils.

Consultants were contracted for the preparation of the job description and of the regulations

for recruitment and selection as well as for initial training. During program execution,

training was also provided by PIU and MRD staff. Because Paramaribo split into 2 District

Offices, the final aim of the program was adjusted to establish have administrators in all 11

districts, counting the five from DLGPI. As execution progressed the original district of

Sipalawini was also split - into 5 Districts - resulting finally in an actual implementation of

15 DAs.

Achievement in comparison to current planned indicator: Fully achieved

6. Wide Area Network (WAN) installed in the Districts, in MRD and in MOF: the objective of

this activity was to install an information and communications technology network (ICT)

connecting the districts with both the MRD and the MOF via a WAN to facilitate the

harmonization of financial and data transfer, and to give the individual taxpayer the

facilities to pay in any location. At present the following has been accomplished: (i) the

financial departments of all districts have connected to the WAN. This included the

installation of the Open-erp software and the training on the use of the WAN and of the

software; (ii) MRD has also been connected to the WAN; (iii) document circulation

software has been installed in 4 districts and in the 12 Ressorts of the Paramaribo district;

(iv) Citizen Information Center (CIC) news channels were established in all districts

established through Facebook, where citizens can get information on what is happening in

their districts and input their commentaries. The planned indicator for the districts is 15, as

compared to the actual of 11. The difference is the 4 newer offices in Sipalawini, where the

WAN has not been connected as yet. The planned and the actual indicator deal only with

the WAN connections to the financial departments in the districts, and, as such do not

include the additional achievements associated with the WAN system (document

circulation, Facebook for CICs).

The WAN has not been connected to the MOF/TAO for the reasons expressed before under

the milestone “Local tax administration installed”.

Achievement in comparison to current planned indicator for the districts: Not fully

achieved with the proviso that neither the planned indicator nor the actual include the

additional achievements unrelated to the financial offices. For MRD: Fully Achieved. For

MOF: no achievement.

7. Districts offices fully rehabilitated: included the provision of equipment and the

rehabilitation of offices to accommodate the new financial system, the office of the district

24

administrator and the offices newly created to organize the Commissioner office and

his/her district team. As planned all district offices were rehabilitated.

Achievement in comparison to current planned indicator: Fully achieved

8. Training provided: Under this component training covered the areas of BFM, tax

administration, the use of newly installed software and the WAN. Training at the outset

was provided by a consultant and later given by PIU and MRD staff. The number of actual

workshops agreed with those planned.

Achievement in comparison to current planned indicator: Fully achieved

9. Administration and planning systems installed: This milestone has unit of measure and

indicator number similar to that of the output indicator, and consequently it has not been

analyzed separately.

Component II-Financial, Planning and Administrative Capacity-Ouput

Administration and planning systems to favor local government capacity: This component

worked for the support of the districts in three areas: (i) financial planning/budgeting and

administration (BFM, tax administration and WAN as information channel); (ii) district

administration (posts of DA, organization of offices, WAN as channel of communication); and

internal control (audit). Accomplishments were notable in the first two areas with actual results

equal or very close to plans. For the third area there were not accomplishments. Thus, the

planned indicator should have been 3 systems, for which 2 systems had high achievements. In

consequence the level of achievement in comparison to current planned indicator in terms of

systems could be expressed as 2/3 or 67%.

Regarding Component II it should be mentioned that the actual activities also included the

preparation of 5 District Strategic Development Plans. For these plans, which were prepared with

the support of consultants, there is no current indicator in the PMR.

Component III-Citizen participation and program outreach- Milestones

1. Citizen participation plans (CPP) in place: In DLGPI 5 CPPs were implemented. In this

program this activity is directed to the new pilot districts. Its objective was the formulation

and implementation of plans to guide and ensure adequate citizen participation in the

administration and affairs of the districts. The CPP- prepared by the districts in close

cooperation with PIU and with the help of consultants as required- are one of the conditions

for the districts to attain certification level 2. All new pilot districts in DLGPII prepared the

CPP.

Achievement in comparison to current planned indicator: Fully achieved

25

2. Neighborhood Committees (NC) in place: These committees formed at the community

level with the aim to monitor and report progress of capital investments in neighborhoods.

Integrated by a mix of neighbors (both sexes, old and young), they were instructed on

simple monitoring procedures, on the content of tender documents and on basic patterns of

conduct toward contractors. NC became an exemplary form of citizen participation, not

only monitoring the quality and timing of the work being carried out in the neighborhood,

but also improving business relations with contractors by collaborating with them in

ensuring the overnight safety of their equipment. During program execution the NC were

formed in the number needed.

Achievement in comparison to current planned indicator: Fully achieved

3. Citizen participation committees (CPC) in place: The objective for this activity was to

continue in the DLGPII with the formation of CPCs under the same principles applied for

those started and already implemented during DLGPI. The role of the committees was one

of selection and monitoring of district projects, the principle was the participation on a

voluntary basis of NGO and Community Based Organizations (CBO). However as

execution of the program progressed, NGOs and CBOs, requested compensation and

equipment for their participation on the CPC. Given that these requests could not be

financially satisfied by the program, in 2010 the CPCs were moved to the level of the

Ressorts, where it now functions as needed with local NGOs acting on a voluntary basis.

Because district projects are determined after consultation with the Ressorts, this change

had no effect in the participation of the community in the selection of projects. There is no

information whether the monitoring of district projects intended to be performed by the

CPC has suffered. This may be due to the mitigation resulting from the well organized

supervision being carried out by the engineering group at PIU and at MRD.

Achievement in comparison to current planned indicator: Not achieved due to justified

reasons.

4. Citizen information centers (CIC) in place: Created at the district level, CIC is a local

government institution that provides information and fosters citizen mobilization through

various communication and dissemination activities. DLGPI created 5 CICs. DLGPII was

to continue supporting the creation of CICs in the pilot districts of the program. The main

benefit of this subcomponent has been the centralization and accessibility of information at

the local level, with an information office with its own server and with its own facebook

page to transmit information to its citizens and receive feedback from them electronically.

Due to the split of Sipalawini into 5 District offices, and Paramaribo into 2, a total of 15

CICs were planned during execution of DLGPI and DLGPII, with 13 CICs actually needed

being implemented.

Achievement in comparison to current planned indicator: Fully achieved

26

5. Training provided: Training was ample and conducted in several areas: (i) to

commissioners in public management and public administration; (ii) to CIC personnel on

communication tools and to NC on works’ monitoring; (iii) to resorts and district councils

on citizen participation harmonization mechanisms and on tools to organize hearings; and

(iv) to PIU and MRD personnel as trainers training. The training was conducted first by

consultants and, as experience and knowledge improved, by PIU and MRD personnel. An

estimated number of 50 workshops were conducted.

Achievement in comparison to current planned indicator: Fully achieved

6. Promotion and outreach plans (POP) in place: POPs were established to: (i) raise

awareness and obtain active citizen participation for the identification of project

development; and (ii) identify issues during project execution. Through this

subcomponent, PIU promoted - and citizens expressed their views - on projects in 8

communities of the new pilot districts. PIU also promoted the work of the DLGP in the Fair

of the Chamber of Commerce and is currently developing a book directed to the general

public and to government on the 12th

anniversary of DLGP. Finally, the program assisted

the Districts in the creation and implementation of their own websites and facebook sites,

further contributing to the promotion and awareness of the program. PIU has counted each

of these actions as programs, for a total of 10 promotional activities completed.

Achievement in comparison to current planned indicator: Fully achieved

7. Consensus building with central government: Because of the several ministries involved,

the objective of this activity was to support the development of consensus among all central

government stakeholders to facilitate inter-governmental coordination. Only one ministerial

meeting was held, and in 2010 MRD cancelled this activity arguing that ministries have an

obligation to collaborate in government programs, without the need of a special activity to

this end.

Achievement in comparison to current planned indicator: Not achieved due to cancellation

of activity

Component III-Citizen participation and program outreach- Output

Citizen participation approach in place to favor participation, accountability, and transparency

at local level: Measured from the point of a vertical analysis in which the level of achievement of

the milestones determines the level of the achievement of the output, it could be advanced that

the output’s component has been fully or mostly achieved. At the close of the program, there is

much evidence demonstrating the important accomplishments in this regard: Citizens at the level

of the Ressorts participate in open hearings for the multiannual planning of the resorts that, in

turn, evolve into the District plans; communities and neighborhoods now have a voice in the

27

projects affecting them and can monitor their advance or delays; the internet, through the

districts own websites has put the citizens in touch with the business of the district government

and has opened a way for citizens to communicate with their government.

Achievement in comparison to current planned indicator: Fully achieved in terms of the

achievement of the milestones supporting the output approach.

Component IV-Capital investment, capacity building and investment program- Output indicators

1. Roads, drainage, garbage collection and market facilities works

2. Project design under capital investment projects

The narrative that follows was prepared on the basis of the research on site performed by the

consultant in September 2014, complemented by the information in a PIU’s matrix received in

November 2014 showing the breakdown of the actual work done for this component.

In summary Component IV had as objectives: first to create and consolidate capacity in the

districts to manage and maintain basic infrastructure projects; and second to finance basic

infrastructure in the certified districts and trial projects in the new pilot districts. In regard to the

first objective the program set up civil technical and environmental units in all districts, and

provided an extensive training program involving: (i) the methodology to select road and

drainage projects; (ii) the preparation of tender documents for roads; (iii) the process of

contracting, reporting, quality control and supervision in the execution of road projects; (iv)

environmental requirements in road projects; (v) procurement; (vi) preparation and execution of

solid waste projects; and (vii) rehabilitation and maintenance of public markets. In addition,

manuals were prepared for the maintenance of roads and for the maintenance of drainage

systems. Furthermore, for the first time in the country a digital inventory was prepared for

secondary and tertiary roads, and for drainage.

With regards to the above mentioned second objective, 10 training projects were executed in the

pilot districts. While all of them were worthwhile projects, there is one in particular that stands

out, the Sipalawini Communication Path Project, connecting small communities that have been

isolated or badly connected for well over 30 years. The project, which included the construction

of 22 new bridges with a total extension of 1000 meters, benefited 47 small rural communities.

Additionally, in the certified districts a number of small infrastructure projects were designed

and executed, including; 12 road projects, 7 drainage projects, 2 urban markets, and 5 solid waste

projects for a total of 26 projects.

The component suffered some delays: in 2010 due to the electoral process, at the end of 2013

due to the uncertainty as to whether the program was going to continue after the then contract

final project date, and for some time in 2011 for disbursement delays caused by adjustments

28

required by the centralization of the government treasury function. Notwithstanding these delays

the component performance is highly satisfactory in terms of number of projects and execution

time and this is due to a great extent to three factors: (i) the communities participated in the

identification of infrastructure projects; (ii) there was a joint MRD/PIU supervision; (iii) the

packaging of several small projects into one for contracting to avoid the administrative and

contract supervision delays occasioned by many small projects. This showed flexibility and

prompt action on the part of PIU.

The November 2014 PIU matrix shows the following breakdown for actual work accomplished

in the component: (i) create institutional capacity new pilot districts-6 projects; (ii) consolidate

institutional capacity certified districts- 7 projects; (iii) Training projects in new districts- 10

projects; and (iv) small infrastructure projects (roads, drainage, garbage collections and markets)

in certified districts- 26 projects. This categorization and numbers do not correspond to the

indicators categories and numbers stated in the PMR for January-June 2014 and shown on Table

I. Consequently, while from the point of view of results the component was successful, it is not

possible to measure the achievement based solely on the comparison of Planned and Actual

indicators from the January- June 2014 PMR.

Achievement in comparison to current planned indicators: N/A

3. Achievement for Outcomes

Outcome: Local government capacity enhanced

Legislation favoring decentralization passed:

This outcome was not achieved and is a major risk for the sustainability of the program. There

are three pieces of legislation and a set of agreements that favor decentralization and that bear

directly on its success. They are: (i) the Law on Financial Relations with the Districts; (ii) the

District Tax Law; and (iii) the updated article IV laws of the FDIL, as well as (iv) the 10

agreements between the districts and the GLIS authority. The nature of this legislation has been

discussed previously in this report. All are quite important for the organization of a financial

framework for decentralization, especially the first two laws which are specifically geared

towards the generation of district revenues and the participation of the national budget in the

district finances. This approval of this legislation has been in suspense between 4 and 6 years.

MRD has shown limited pro-activity in moving along this legislation, apparently because it

lacks the political power.

Achievement in comparison to current planned indicators: None.

29

Districts certified for autonomous financial capacity

Districts certified for enhanced management capacity for capital investment projects

The first of the above indicators has to do with Level I certification, the second with Level II

certification. At present all districts have been certified at Level I and at Level II

Achievement in comparison to current planned indicators: Fully Achieved from the point of view

of certification. However, the Districts have not reached autonomous financial capacity as yet

Outcome: Fiscal relations between central and local government enhanced

Projects executed by certified districts

The planned indicator number for this outcome is P=50. As reported above under “Component

IV -Capital investment, capacity building and investment program - Output indicators”, the

number of projects executed by certified districts was 26, that actually agrees with the output in

the PIU plans. From the point of view of P=50 projects and A= 26 projects, the outcome has

been partially achieved. However, the indicator and its number raise some questions: the

indicator (projects) does not seem to be related to the nature of the outcome, namely: “Fiscal

relations between central and local government enhanced”. A more appropriate indicator in the

sense of being closer to the nature of the outcome probably could have been for instance “Law

on Financial Relations with the Districts approved”7.

4. Program budget and projected costs

The following table shows by cost categories the original budget and the projected cost to the

end of the program. The table was prepared using unaudited data, which means the amounts

could be somewhat different in the final program’s audited financial statement.

7 In fact the means of verification is: “MOF issues resolution assigning transfers to certified districts”

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Table III

Budget and projected costs as of September 22, 2014

The columns “Differences in %” measure the relation in percentages between the projected

expenses and the original budget. Overall projected total expenses are very close to the amount

budgeted (96.8%). On a cost category basis the major differences are an expected over budget of

33% in program’s administration due to the increase in the execution period, with most of the

increase of the cost arising from the overhead charged to the program for the assigned rental

value of the PIU premises and for utilities. In the components themselves there is an expected

under budget difference of approximately 36% in Citizen Participation Outreach which is mostly

due to the suspension in the organizing of CPC, lower expenditures on the creation and

organization of CICs, and the budget movement of local resources from this component to the

Capital Investment component. There is also an expected under budget difference of about 25%

in the component Financial Planning and Administration mostly due to expenditures not effected

in the training on the decentralization laws which have not been passed, and of 89% in Audit and

Contingencies due to no expenditures, commitments, or budget reclassifications for

Contingencies.

B. Efficiency

1. Organizational structure

For execution the program organized a Program Implementation Unit (PIU) headed by a

Managing Director and comprising 4 professional task managers-one for the Works and Capital

component, one for the Administration, Finance and Planning component, one for Citizen

Participation and one for the ICT/WAN component. The Managing Director, in addition to his

normal duties, also had an operational role with the activities in the Legal component. This

structure was reproduced at the MRD and at the District levels -- as TMRD (within the MRD)

and DMT (in each of the Districts) . This overall structure was to be supported by a task force in

Cost Category

GOS IDB TOTAL % GOS IDB TOTAL % GOS IDB TOTAL

Legal Framework 0 85 85 0.6 0.0 84.3 84.3 0.6 99.2 99.2

Financial, Plan. & Adm. Capa 450 1450 1900 12.7 158.2 1268.5 1,426.7 9.8 35.2 87.5 75.1

Citizen Partici & Prog. Outreach 300 540 840 5.6 110.0 431 541.0 3.7 36.7 79.8 64.4

Capital Inves, Capac. Buildin and

and Invest. Program 370 9480 9850 65.7 651.9 9443.2 10,095.1 69.5 176.2 99.6 102.5

Program Administration 244 1500 1744 11.6 660.7 1653.1 2,313.8 15.9 270.8 110.2 132.7

Audit and Contingencies 136 445 581 3.9 0.0 62.9 62.9 0.4 0.0 14.1 10.8

TOTAL 1500 13500 15000 100.0 1,580.8 12,943.0 14,523.8 100.0 105.4 95.9 96.8

% 10 90 100 10.9 89.1 100.0

Original Budget (000) Projected Expenses Differences in %

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the MOF (TMOF), to provide assistance in the quality control of financial activities for the

districts Level 1 certification.

TMRD, headed by an Assistant PS, was designed to work actively and jointly with the PIU, so as

to develop within the permanent staff of MRD knowledge and experience in program execution

with an IDB program. At the district level, the DMTs -- headed by the respective District

Commissioner, directing task managers organized one for each component -- aimed to ensure

functional counterparts to PIU/TMRD.

The findings-strengths and limitations- found in the organizational structure are described in the

following paragraphs.

1. Organizational structure was well conceived: A strong PIU with the required systems and

human resources working actively with a TMRD mirror unit would ensure know-how

transfer and ensure continuity of a capable executing unit. Both units, in turn, working with

counterparts at the district level formed an integrated execution structure, and at the same

time increased the availability of human resources for execution. The support of TMOF

ensured quality control in the key financial area of financial administration.

2. PIU developed high quality systems and efficient internal operations: Operations are based

on a well prepared operating manual (ORG) detailing 10 steps involved in the program and

the procedures and responsibilities necessary to carry them out. The ORG, in turn, is

supported by planning and monitoring systems, as well as administrative, accounting and

contracting systems. Operationally PIU has performed efficiently - even under constraints in

the normal execution process. For instance, in spite of the delays caused by the elections in

2010, the program was able to keep up with the planned goal for that year and for year 2011.

In response to the GOS request for a change in the type of software for the financial

administration, PIU found the necessary new software and adjusted the work of the

consultants. What is more remarkable is that at present, as the program is closing, it is

executing on time an important part (in number and value) of the investment component,

despite a major decrease of staff and with serious constraints in petty cash to cover

operating expenses. Part of the recent success has been due to the support received from the

technical unit at TMRD.

3. Continuity and strong leadership: The PIU has had a capable director which has served

continuously DLGPI and DLGPII. He was able to build around him a professional and

cohesive team, highly identified with the program and with its success.

4. Coordination with TMRD not entirely satisfactory: TMRD has developed into a current

structure with a staff of around 27 persons, the majority of them university trained. The

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level of coordination and joint working with PIU has been mixed: It has generally been very

good for citizen participation and the ICT components; and poor in the legal component and

the financial/administration component. In the civil work area the level of joint work

participation was not consistent, being good to very good in some projects (for instance the

current project in Sipalawini) and absent in others. This experience can be explained by

several factors:

(a) Lines of reporting and the nature of the program: both the PIU Managing Director and

the Assistant PS (in charge of TMRD ) report to the MRD Permanent Secretary. The

program’s nature involves not only the execution of the four components, but also the

organizational development of the TMRD team for a potential role as executing unit in

the future, when the PIU is no longer considered necessary. In this type of situation in

which one of the partners has a role of learner (TMRD) and the other of teacher (PIU),

while both are to share the operating responsibility as task managers for execution, a

very good understanding of the program and a very strong leadership and direction is

required at the very top, so that this mix of roles are carried out smoothly at the

subordinate level. This leadership and direction should have been present at the

inception of DLGPII - at the level of the PS. But this was not the case. In the absence of

this initial leadership and direction, the coordination between teams was left laregely to

individuals’ likes, dislikes and objectives. This may be the reason for having good

collaboration among PIU and TMRD in some components, but not in others. It should

be pointed out that leadership and knowledge of the program has vastly improved with

the current PS at MRD.

(b) The function of the TMRD: From interviews with its members, it appears that TMRD

regards its main function as one of supporting the districts in the areas of the program’s

components, namely: legal, administration and finance, citizen participation, and capital

investments8. It is not clear how long this perceived function has been in place, or

whether it has been officially assigned. From this perspective, it is justified for TMRD to

see itself not only as the mirror team, but also and mainly as MRDs district support

team, on its own right. The problem with this view, when not properly set up and

communicated, is that staff at the TMRD team may give priority to their own perceived

functions at the cost of activities of program collaboration to meet DLGP targets.

5. MOF unilateral decision to terminate the MOF team: In the first quarter 2011, the PS of the

Ministry of Finance decided to stop the team MOF (TMOF) under the logic that the

functions assigned to the team were the normal functions of the Ministry, and consequently

8 An institutional analysis of capacity of the TMRD team was not in the TORS of the consultant. However, a

superficial analysis shows good capacity in civil engineering for the capital investment component, and in the citizen participation component. The legal area and the administration/finance area would have to be reinforced.

33

there was no need for a special team and that PIU could at any time go to the MOF to

request that support. There were two aspects not considered in that decision: (i) the

participation of TMOF is established in the ORG and it is part of the contract with the IDB.

In accordance with Section 4.05 of the contract especial conditions, any changes in the ORG

must have the prior approval of the Bank. Such approval was neither sought nor obtained;

(ii) eliminating TMOF stopped the direct link between technical staff, and introduced

bureaucratic steps to get TMOF collaboration through the PS. One practical result was that

TMOF never participated again after 2011 in the process of certification. The unforeseen

distancing from PIU may have also provoked the communications shortfalls discussed under

the milestone Local tax administration systems installed.

6. The Program Advisory Council (PAC) was never implemented: The organizational structure

for execution included an Advisory Council comprised of representatives of MRD, MOF,

Directorate of OTA, Ministry of Home Affairs, and the Ministry of Public Works. This

Council was to provide a consultative and problem solving forum to the PIU. While the

decree formally organizing the PAC was prepared this advisory unit was never

implemented.

7. The District management teams(DMT): Organized in a form similar to the PIU and MRD

team structures, the DMT is headed by the District Commissioner, with the following units

reporting to him: (i) the District Administrator; (ii) Financial and Planning; (iii) Civil

Technical; (iv) ICT; (v) Citizen Participation; (vi) Environment. The last five units

correspond to the components included in the program. The DMTs have played an active

role in the program’s execution, not only receiving the training included in the program, but

also applying that training in the execution of work. For instance, the Civil Technical units

were the recipients of training in the preparation of bidding documents and the supervision

of works. After this training they prepared (initially with the help of PIU) bidding

documents for works financed by the program, and later participated together with

PIU/MRD engineers in the supervision of contracted work.

One risk of this structure is the level of salaries in all areas, especially in technical and

administrative personnel. All district staff is paid by the MRD budget. Their level of salary

is determined by the civil service classification, where salaries are higher for university

graduates. The program trained in ICT, and administrative-financial non university

graduates district personnel that are performing well in their new posts, but that have

remained at their old salary classification. This has produced unhappiness and the risk of

losing trained personnel.

8. Level of autonomy and placement of the executing unit: Because of the identification with

an IDB program and the contractual regulations in the program, PIU had some level of

34

operating autonomy, but very little managerial power to have influence with the parallel

teams, and negligible or no political clout to influence in the approval of strategic laws

necessary to advance decentralization. Considering TMRD as a potential executing unit,

there are already signs that it could have less operating autonomy than PIU (based, for

example, on the way the TMRD capital investment projects are currently being selected).

Furthermore, it’s not likely that TMRD, as an executing unit, would have any more success

than the PIU in promoting pending decentralization reforms, judging from the difficulty

MRD has had in advancing the program’s strategic laws in the past 8 years.

When DLGPI was designed there were few proactive stakeholders and a more unified

central government political support to enhance and amend the enabling legislation for

decentralization. Times have changed apparently bringing more diffuse central political

support, but at the same time more proactive stakeholders: (i) the districts are active

participants and will probably evolve into a political force with a strong call for more steps

toward decentralization, and for more public works; (ii) the public is more informed on the

basics of decentralization, and citizens are willing to voice their concerns on local needs;

(iii) the ministries involved remain the same, but they are at present more informed about

the needs and solutions. For instance, there is a general awareness of the benefits of

increasing the generation of revenues at the local level and TAO/MOF is planning to

improve its systems to connect secure lines to the districts for tax reporting; (iv) there are

government agencies more actively involved, CLAD and NIMOS, for instance; (v) non-

profit agencies – NGOs - have been participating and their role is bound to grow in the

future, especially in Sipalawini due to issues related to traditional communities; and (vi) the

general assembly has to some degree been involved with the program in the last ten years.

Given this wealth of official and non- official stakeholders, apart from the necessary

technical qualifications, a careful analysis will have to be made on the leadership and

placement required for the future executing unit. From the point of view of leadership the

unit should be able to amalgamate and negotiate among different participants with their own

specific goals. From the point of view of placement, the unit will have to be located at a

place high enough to have the political muscle to contend with political opponents

2. Project inputs:

There are three types of input for project execution: human resources, equipment and

financial resources. PIU was adequately staffed for most of the project execution period.

An exception is that the task manager in the administration/financial component was let

go too early - in may 2014, given that preparatory work could have been done with his

help on the government-announced adoption of a new software for the financial systems.

35

Sporadically there have been shortages of consultants due to international experts’

reluctance to accept work in Suriname. Interestingly, this problem provided an incentive

for development of local consultants – at least in the financial system area. Human

resources shortages may be experienced in the future at the districts level, however, if

there is no review of salary classifications for personnel that have been trained by the

program. No staffing problems were detected in TMRD.

Office equipment was provided in a timely fashion at all levels. Of lately there has been

some inability to use the PIU transportation equipment for field inspections due to the

lack of petty cash to buy gasoline. This constraint - which is not budgetary, but caused

by bureaucratic delays - has also affected the availability of funds to pay for utilities and

for salaries for office routine maintenance personnel and for the office driver. Except for

these cases, there have not been problems with the contribution of counterpart funds. A

review of past years audited financial statements show that loan finances and counterpart

funds were used for the purposes established in the contract.

C. Design and relevance.

DLGPII is basically a continuation of DLGPI, thus the program design focus was to continue in

the new districts with the development of institutional capacity for fiscal management and for the

management of capital investment, and in the certified districts to implement basic capital

investment projects. The design also included the consolidation of the legal framework for

decentralization prepared in DLGPI. The components and the Results Matrix were jointly

prepared by the IDB team and its national counterpart. The level of achievements of the

milestone indicators, and the level of projected execution of the program budget, shows that the

program was in general well designed in terms of goals and costs needed to accomplish them.

Nonetheless, several factors were probably not foreseen: the most important is the change of

political support for the decentralization laws. The program legal indicators establish as a goal

only the drafting of the laws, probably under the assumption that political support will continue

and that the laws would be passed. But that political support did not continue with the result that

while the indicators (drafting of the laws) have been achieved, the actual benefits of the law were

never obtained in the absence of their approval. Future programs should consider indicators and

conditionalities based on the actual approval of laws.

Another factor not foreseen is the level of effort actually required to execute a larger investment

component. Assessment based on end of program opinions with professionals involved with the

component, show that the program could have benefitted, in terms of increased quality control

and less time in execution, from the addition of a second task manager to supervise 5 of the

districts. A final unforeseen factor was how to deal with remuneration for clerical staff trained in

36

the districts to perform technical or semi technical tasks. Leaving that staff at the old level of

remuneration creates discontent and the risk of losing trained personnel.

The program was and continues being relevant: Its activities and objectives are geared to comply

with a constitutional mandate, and they are in line with the country’s development plan 2012-

2016. From interview with a District Commissioner the program’s objectives are valid and the

program relevant in terms of the districts’ goals to increase self generated revenue and to

implement projects born out of local needs.

D. Monitoring and evaluation systems

The program has used two monitoring systems: operationally, the MS project software; and to

comply with IDB requirements, the Bank’s monitoring system. The MS project system divides a

program’s activity into any number of sub-activities required - establishing time, costs and

responsibilities for each. All PIU task manager are experts in the use of this tool and their work

is controlled by the managing director. Furthermore, the tool has been used to monitor the

advance of work at the district level. Results are evaluated periodically and adjustments are taken

as needed. The operational MS project is complemented by the program’s budgetary system

which organizes budget and expenses in accordance to physical components and activities. This

monitoring and evaluation systems has worked well.

The IDB system includes the PMR monitoring system, semi-annual and annual progress reports,

the annual work and procurements plans, the monitoring and evaluation visits for IDB country

and headquarters officials, the authorization and control procedures established for procurement

and disbursements, and finally the end of year audited program financial statements and auditors

review of the program’s system of internal control. The system is detailed and comprehensive - a

reason why it is rather surprising that MOFs unilateral action to dismantle TMOF apparently

slipped past undetected.

In regards to the PMR system it should be pointed out the PIU reports a great deal of time

required to comply with preparation of PMRs and semi-annual reports, especially in 2013 and

2014, as a result of changes in the system. Also, there is a need for borrower’s training on the

logic and concepts of milestones/activities, outputs, and outcomes. This is an area where

conceptual misunderstandings have occurred.

V. RISKS AND SUSTAINABILITY

Briefly stated, for the districts’ decentralization to be sustainable it has to be financially feasible,

because without funds the institutional capacity erodes and services decrease and eventually

disappear. The main risk attempting against the financial feasibility is legal and this legal risk is

37

closely tied to a political one. In addition there are institutional risks and financial risks to be

considered - to a great extent, the financial risks deriving again from the legal risks.

Legal risk: As pointed out before there are three laws that represent the backbone to a future

financial support and feasibility of the districts, namely: (i) The District Tax Law; (ii) the Law on

Financial Relations between the Central Government and the Districts; and (iii) the update of the

of Article IV of the FDIL law. Complements to these laws are the 10 agreements between the

districts and the GLIS. The approval of the first two laws has been pending since year 2008. The

update of the Article IV has been in Cabinet since 2012. The approval of the signing of the 10

agreements has been pending in MRD for several years. The lack of action toward the approval

of these laws is the serious risk that if not mitigated or controlled could very well affect the

decentralization. In this connection, consider as an example the case the district of Para that in

2013 had a planned budget (net of salaries) of SRD$ 17 million. In comparison, the MRD actual

budget allocation to Para for the same year was SRD$1.5 million. This allocation was arrived at

by MRD under the assumption that the budget needs for Para were around SRD 2 million and

that SRD$ 0.5 million of it was going to be financed by Para with its own generated resources.

The extremely large difference between planned and actual budgets in this one district is

presented here to point out that at the district level there is a need to increase the generation of

funds and that there is also a need for a more systematic transfer of national resources. This is

what the above three fundamental laws pursue.

Political risk: The fact that the laws have not been approved in several years brings an analytical

observer to the conclusion that the delay may not caused by an opposition to the laws, in and of

themselves, but by an opposition to the broader strategic goal of decentralization. In this

connection is worth quoting the conclusion reached by the author of the mid-term review of

DLGPII:

“The political risk is always a permanent risk, mostly if we consider (that) this program is very

political and very sensitive in terms of power structure of Suriname. Decentralization is viewed

by most politicians in the Central Government as giving up power and control. However the

Constitution of Suriname of 1987 stipulates decentralization as a model of governing and

organizing its political system defined as “Decentralized Monocratic State” and is recognized

that the Central Government by itself cannot bring development for the people. A common effort

of the Central Government, District authorities, Private Sector, and Civil Society is needed to

push forward Suriname into a modern, developed country.”9 It is hard not to agree with this

conclusion that also implicitly contains the action needed to control this risk, namely: a common

effort of all stakeholders to comply with the Constitution and to push Suriname into a modern,

developed country.

9 Claudio Ansorena PhD, Mid Term Evaluation Suriname DLGPII, July 2012.

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Institutional risks are associated with institutional capacity risks at three levels: (i) the

institutional capacity to execute any new follow-up program contemplated after DLGPII ; (ii) the

central institutional capacity to continue supporting the districts – irrespective of a new program;

and (iii) the institutional capacity of the districts to sustain themselves.

Decentralization is a medium to long term effort and GOS may wish to continue with a new

program. The institutional risk related to execution of such a program is twofold. The first has to

do with the placement of the executing unit: if the executing unit is not placed at a level with

power enough to deal with political risk, history- as experienced thus far- may repeat itself. The

second is of operational capacity to carry out execution. There are some key functions and

systems necessary for effective execution, regardless of the type of project, namely: planning;

procurement; financial budgeting, accounting and reporting; monitoring; internal controls; and

management. An unusually well-honed capacity was created in all these functional areas through

the current executing mechanism of DLGPII. The risk is that the capacity and systems for these

functions may be lost and will have to be rebuilt after the termination of the current program.

As regards the question of central capacity to continue supporting the districts, in the short to

middle term, the districts will require support to maintain proficiency, especially in the areas of

financial administration, taxes, the WAN, and the implementation of the new financial software

mandated by Government. Without a thorough institutional analysis it is not possible to

determine fully whether TMRD has developed the required capacity for continuous support to

the districts, but observations based on short interviews indicate the need for strengthening on

planning and financial systems and administration and systems.

Finally, in terms of the capacity of the districts to sustain themselves, the program trained district

personnel in a number of important areas with satisfactory results. This personnel is being paid at

old levels because their posts have not reclassified - as they should have. Their salary levels,

especially for clerical personnel trained in the ITC and financial areas, is low. There is the risk

this personnel may leave, accentuating the already existing limitations of trained staff. The

program also trained district councils on citizen participation topics and to conduct hearings.

This training will have to be repeated periodically as the councils change with elections.

Financial risk: The central government covers 100% of the districts’ salaries and around 75% to

80% of actual non-salary current and capital expenditures. Furthermore, as noted above with the

example of the Distric of Pará, actual non-salary expenditures are only a fraction (around 12%

in the case of Para for year 2013), of the budgetary needs derived and approved by the district

councils. Thus, there is a significant financial risk of non-sustainability at the District level. As

mentioned above, there is an urgent need for self generated revenues by the districts and for a

systematic, predictable way of allocating central government transfers to the district. These

actions will go a long way toward mitigating the existing financial gaps and risks

39

VI. LESSONS LEARNED AND RECOMMENDATIONS

Political support and mitigating measures: Decentralization programs, like the one under review,

require legal reforms in an environment with a wealth of local and national stakeholders with

different perceptions on decentralization and its processes, and with different political views.

This makes the approval of the legal reforms risky. To mitigate this risk, the following measures

should be considered: (i) placing the executing unit at upper levels of political power to permit a

negotiated consensus between political equals; (ii) information campaigns directed to the public,

and to government officials on decentralization- its basis, benefits and needs. (PIU ran a very

limited information campaign in support of legal reforms, as part of its POP activity; it should

have been more ample.); (iii) consensus/lobbying efforts directed to gain support from ministers

and the General Assembly. (The activity included in the program for this consensus building was

unfortunately eliminated by MRD during the execution of the program.); (iv) milestones and

contractual clauses requiring the approval and implementation of laws- not only the drafting of

such laws; and (v) more support from IDB experts to assess achievements of key milestones or

contractual agreements- and require timely adjustments. Alternatively, the IDB may consider the

granting of different type of credits or programs in which disbursements are conditioned to legal

reforms.

Institutional analysis and organizational development: During project preparation there should

be an institutional analysis of the unit to be organizationally developed, so as to have a base line

and monitor its development progress. The program included the organizational development of

TMRD by way of transfer of capacities from PIU, while also participating as a parallel team in

the execution of the program. Unfortunately, there was no institutional analysis of TMRD during

program preparation, so as to know its institutional capacity, its needs and its potential. As a

result, TMRD has developed into a unit with apparently a double function as parallel execution

unit and central support to the districts. However at the present time it is unknown what has been

the degree of organizational development accomplished and what are MRD true capacities,

needs and potential.

Strong direction and coordination: Clear supervisory directions and objectives should be defined

for independent units sharing execution responsibility, while at the same time performing

dissimilar roles. PIU and MRD had the same supervisor and shared responsibility for some

execution activities, but the latter had a role of beneficiary of the know-how to be transferred

from the former. To promote coordination, and avoid subjective interpretations among members

of the units, clear directions should have emanated from the PS in this regard from the inception

of the program.

40

Continuity of executing unit: Units with continuous strong leadership create cohesive teams with

members highly identified with the accomplishment of the program’s goals. In spite of many

problems and delays suffered, PIU was able to maintain a good to excellent level of performance

thanks to continuity of a strong, capable leadership.

Institutional strengthening in a future program: The following institutional strengthening should

be included in a future DLGP program:

(k) Implementation of the GOS newly mandated “Free Balance” financial software at the

districts’ level. This task to include the preparation of system documentation, users’

manuals and training.

(l) Training on the new decentralization and financial laws, once they have been approved.

(m) Development and implementation of a tax accounting system for the districts.

(n) The prompt signing of the 10 agreements of the districts with GLIS and the

implementation of a system to transfer data from GLIS to the districts tax accounting

system.

(o) A subcomponent for dissemination of information on decentralization and for the

consensus building with ministers and the general assembly.

(p) A joint effort with OTA to resolve the connectivity issues between this office and the

financial district offices.

(q) Development of an Internal Audit Office (IAO) for the districts. The MRD office of

Internal Control could be the basis for organizing the IAO. However the Internal Control

office very possibly would have to be reorganized and strengthened.

(r) Development of a salary classification system for District personnel.

(s) A subcomponent to finance as needed expert support to the legislative reform process-

including technical promotion and negotiation with legislative staff, as well as mounting

public communication and education campaigns.

(t) Certification processes must be thoroughly spelled out in terms of procedures and

responsibilities- and must be accompanied by the systems needed to measure benchmarks

required as part of the certification.