PROGRAM IMPLEMENTATION PLAN - World Banksiteresources.worldbank.org/.../PSCAP/pip_vol_2.pdf ·...

Federal Democratic Republic of Ethiopia

PROGRAM IMPLEMENTATION PLAN

for

PUBLIC SECTOR CAPACITY BUILDING PROGRAM

(PSCAP)

Volume II

Draft Dated: October 28, 2004

Table of Contents

PARTICIPATION AND PERFORMANCE AGREEMENTS............................................................. 4

PSCAP ANNUAL PERFORMANCE AGREEMENT MATRIX..........Error! Bookmark not defined.

FINANCIAL MANAGEMENT GUIDELINES ................................................................................. 4

Introduction............................................................................................................................... 4

Background ............................................................................................................................... 4

Institutional Arrangement ....................................................................................................... 5

Funding Modalities................................................................................................................... 6

Accounting Policies and Procedures ....................................................................................... 6

Budget and Budgetary Control................................................................................................ 7

Budget Code17 Regions that are using single entry accounting code ....................................................................... Budget preparation and control.....................................................................................................

Chart of Account .........................................................................................................................

Accounting Cycle.........................................................................................................................

Receipt of Money.........................................................................................................................

Transfer of Fund to Beneficiaries..............................................................................................

Disbursements .............................................................................................................................

Check Payments and Bank Transfers .......................................................................................

Cash Payments ............................................................................................................................

Journal Vouchers ........................................................................................................................

Accounting Records ....................................................................................................................

Transactions in Register.............................................................................................................

Budget Ledger Card ...................................................................................................................

General Ledger............................................................................................................................

Subsidiary Ledger.......................................................................................................................

Reporting Types and Frequency of Reporting ........................................................................

Report Preparation Responsibilities .........................................................................................

Methods of Report Preparation................................................................................................. Monthly Reporting ...................................................................................................................... Statement of Expenditures (SOE) ................................................................................................. Financial Monitoring Reports (FMR)............................................................................................

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Quarterly Financial Reports.......................................................................................................... Annual Reports ...........................................................................................................................

Travel Expenses ..........................................................................................................................

Procurement ................................................................................................................................

Receipt and Issuance of Goods ..................................................................................................

Management and Control of Program Assets ..........................................................................

Internal Controls .........................................................................................................................

Auditing........................................................................................................................................ External Audit ............................................................................................................................. Internal Audit .............................................................................................................................. Retaining Documents...................................................................................................................

Revision of Financial Manual ....................................................................................................

Annex................................................................................................................................................

Sample Financial Monitoring Report .......................................................................................

Sample Procurement Status Report .......................................................................................... SAMPLE PROCUREMENT TEMPLATES AND FORMS..................................................................

Procurement Planning Template - Goods ................................................................................

Procurement Planning Template - Consultants .......................................................................

Sample Training Plan.................................................................................................................

Sample General Procurement Notice ........................................................................................

Sample Request for Expressions of Interest - Consultants .....................................................

Sample Invitation for Prequalification .....................................................................................

Sample Standard Unit Rates...................................................................................................... DETAILED PROGRAM DESCRIPTION ...........................................................................................

Subprogram 1—Civil service reform........................................................................................

Subprogram 2—District-level decentralization .......................................................................

Subprogram 3—Justice system reform ....................................................................................

Subprogram 4—Urban management capacity building .........................................................

Subprogram 5—Tax systems reform........................................................................................

Subprogram 6—Information and communications technologies...........................................

Mandatory activity—Program support ....................................................................................

SAMPLE TERMS OF REFERENCE – CIVIL SERVICE REFORM SUBPROGRM...........................

Report Card/Client Survey Consultancy ..................................................................................

Route 1 Sub-project Proposal ....................................................................................................

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Route 1 Business Process Review (BPR) and Reengineering ..................................................

Training of Frontline Staff for Route 1.....................................................................................

Training in Strategic Planning for Route 2 ..............................................................................

Preparation of a Strategic Plan for Route 2 .............................................................................

Training in core Civil Service Reform Activities for Route 2.................................................

Implementation Support for Route 2 Implementation............................................................

Job Classification, Grading, and Pay Policy Consultancy ......................................................

Pay Reform Consultancy............................................................................................................

Chief Technical Advisor. Civil Service Reform Program.......................................................

Performance Tracking Facility—Preparation of Operational Manual................................. SAMPLE TERMS OF REFERENCE – DLDP & URBAN...................................................................

Core Capacity for Local Governance .......................................................................................

Medium Term Capacity Building Advisor. District Level Decentralisation Program ........

Pilot Local Government Fiscal/Financial Analyses .................................................................

Assistance in Pilot Infrastructure Rehabilitation Design........................................................ SAMPLE TERMS OF REFERENCE – PROGRAM SUPPORT..........................................................

Planning & Programming Directorate (PPD)..........................................................................

Technical Team (TT) ..................................................................................................................

Procurement Specialist (International).....................................................................................

Procurement Specialist (National).............................................................................................

Project Accountant .....................................................................................................................

Information, Education & Communication Specialist............................................................

Audit of Project Account Statement .........................................................................................

Program Management Assistance .............................................................................................

Assistance in Project Design & Implementation......................................................................

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Public Sector Capacity Building Program (PSCAP) PARTICIPATION AND PERFORMANCE AGREEMENTS

Whereas the Ministry of Finance and Economic Development has entered into an agreement with the International Development Association (IDA) to be known as Development Credit Agreement of Public Sector Capacity Building Program (PSCAP) and whereas the Ministry of Finance and Economic Development has agreed to make finances available to the Ministry of Capacity Building for the provision of goods, training and services to Executing Agency (EA). Now therefore the Ministry of Capacity Building (hereinafter refereed to as the “Ministry” and the [insert official name the [Executing Agency (EA)] (hereinafter referred to as [insert official shortened form of name]); Agree as follows: That the Ministry has agreed to fund technical assistance services, training and goods (except – vehicles) for the period [insert start date of TA, training and goods provision] to the [insert end date of TA, training and goods provision] on a non-reimbursable basis as outlined in [insert relevant section of DCA- Schedule 4: section 5 and 6] of the Development Credit Agreement of Public Sector Capacity Building Program (PSCAP) The funding made available may be used for supporting Technical Assistance, training and goods provision for EAs. The funding will be provided in the form of (----- cash transfers) based upon Annual Action Plan reviewed by (Regional Technical Team / the relevant sub-program directors), submitted by the [insert official shortened form of the name of EA] and approved by the PSCAP Federal Technical Team of the Federal Government of the Democratic Republic of Ethiopia. The [insert official shortened form of name of the EA] hereby agrees that the goods, consultants’ services and training to be financed from PSCAP shall be procured in accordance with procedures ensuring efficiency and economy and in accordance with the provisions made available in the PIP and shall be used exclusively in the carrying out of agreed program activities; and The [insert official shortened form of name of the EA] hereby agrees that the source of technical assistance, training and goods provided will only be from “participating countries” i.e. those countries that meet requirements set forth in Section 5(e) of Resolution No. IDA 184 of the Board of Governors of the International Development Association adopted on June 26, 1996. As at September 2002 the following countries are not eligible to supply technical assistance service, training and goods paid by Public Sector Capacity Building Program (PSCAP) Fund [insert list of countries – Andora, cuba, Democratic People’s Republic of Korea (North Korea), Liechtenstein, Monaco, Nauru, San Marino and Tuvalu]. The list will be updated from time to time. The [insert official shortened form of name of the EA] further certifies that:

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The [insert official shortened form of name of the EA] desires to build capacity to contribute

to the delivery of the overall PSCAP development objectives, namely improve the scale, efficiency and responsiveness of public service delivery at the (EA); empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability.

The EA has agreed to comply with the rules of access allocation and execution of the

Program, as specifically set forth in the Program Implementation Plan, and commit to deliver on agreed performance outputs on a semi-annual basis summarized in the attached Performance Matrix.

The EA has agreed to establish appropriate governance and implementation arrangements

and secured adequate technical, financial management and procurement capacity to implement the proposed PSCAP activities in compliance with the guidelines set forth in the Program Implementation Plan, or has adopted a specific, time-bound plan of actions satisfactory to Federal Technical Team, to strengthen its capacity;

The EA has committed to timely submission of endorsed and costed medium-term rolling

plans, including technically sound, feasible annual implementation and procurement plans for the subsequent Fiscal Year and agreed to complete the minimum capacity building activities before engaging on others; and

The EA has agreed to make adequate provision for carrying out an adequate evaluation of

annual performance for the subsequent year, reporting on progress made to Federal PPD including evidence of dissemination of such evaluation to the public as part of consultative planning process.

The EA has given Federal Technical Team to: (A) inspect by itself, or jointly with the

donors, if the donors shall so request, the goods, services and training included in PSCAP activities and any relevant records and documents; and (B) obtain all information as it, or the donors, shall reasonably request regarding the administration, operation and financial conditions of PSCAP activities.

The EA has attached the documentary evidence for provisions under b, c, d and e including

the action plans, detailed description of the implementation arrangement and performance matirx

In witness of whereof the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the day and year first below written. The Minister of Capacity Building on behalf of the Federal Government of the Republic of Ethiopia:

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___________________________________________________ [insert date of signature] witnessed by: Witness 1 Witness 2 Name______________________________ Name:________________________ Title:______________________________ Title:_________________________ Date:_______________________________ Date:_________________________ Signature: Signature The [insert title of signee] on behalf of the [insert official shortened form of name of the EA] ___________________________________________________ [insert date of signature] witnessed by: Witness 1 Witness 2 Name______________________________ Name:________________________ Title:______________________________ Title:_________________________ Date:_______________________________ Date:_________________________ Signature: Signature

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PSCAP ANNUAL PERFORMANCE AGREEMENT MATRIX

Performance Agreement Matrix with Targets (FY04-05) Quarter 1 Quarter 2 Quarter 3 Quarter 4

Contributing PSCAP Subprogram

OUTPUTS Planned Actual Planned Actual Planned Actual Planned Actual

BUDGET UTILIZED

OOuuttoommee ((aa)):: IImmpprroovveedd PPrree ddiiccttaabbiilliittyy aanndd TTrraannss ppaarree nnccyy ooff FFiinnaanncciiaall RReessoouurrccee FFlloowwss IInn YYee aarr aanndd AAccrroossss YYee aarrss

IInnddiiccaattoorrss ffoorr vveerriiffiiccaattiioonn::

Reduced budget variance at each level

Reduced federal-regional and regional-local fiscal gaps Elimination of backlog accounts at regional and local levels

CSRP

Installation and training in BIS and BDA3 systems in all regional and woreda institutions

TSRP Completion of annual turnover survey

Outcome (b): Greater inclusiveness and transparency of planning and prioritization processes

Indicators for verification:

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

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

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DLDP

Finalization of strategy and action plan for gender sensitized community participation

CSRP Installation and training in medium term expenditure management procedures manual;

Program Support Completion of training in PIP, procurement, financial management, and M&E

Outcome (c): Enhanced fiscal autonomy and revenue performance

Indicators for verification: Increased own revenues and unconditional transfers as a share of total expenditures at sub-national levels

Increased tax effort at all levels

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Adoption of proclamations, regulations, and directives for income and TOT

TSRP Completion of training on laws for tax administrators at regional and city administration levels

Completion of review and preparation of decentralization legal framework, functional assignments, and structures

Review for adoption of region’s decentralization strategy document

DLDP

Technical assistance for implementation of region’s woreda decentralization strategy and policy development, benchmarking and review of plans

Development and adoption of region’s urban development policy and strategy

UMCBP Development and adoption of urban land legislation and the municipal proclamation

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Outcome (d): Enhanced incentive environment for public servants (gender disaggregated)


Increased average civil service salary as percentage of living wage Private-public wage comparison

Wage decompression ratios CSRP Completion of training in and

adoption of result oriented performance evaluation (ROPE) system in all regional bureaus and woredas.

DLDP

Completion of assessments for human resource and training needs for woredas; and the required office infrastructure and equipment for woredas

UMCBP Development and adaptation for implementation of personnel management manuals for local government authorities

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Outcome (d): Improved quality and efficiency of operations


Improved service levels (access, responsiveness and cost efficiency) in priority sectors

Reduced unit costs and processing time for essential rural, urban, social, and legal services in priority sectors

Completion of client score cards in 75% of regional bureaus

Initiation of business process re-engineering in 75% of regional bureaus

CSRP

Completion of top management training in Strategic Planning and Management, Change Management, Performance Management, and Leadership Development for agency heads of 75% of bureaus

DLDP Review for adoption for prototype minimum service standards

Installation of court case management and case recording & transcribing systems in all regional supreme & high courts

JSRP

Installation of color coded filing system in all woreda courts

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Initiation of in-service training and professional development of all judges, lawyers and court clerks

Completion of technical training on network management and system administration for the Regional Date Center staff

Completion of one round of bulk generic training to all relevant regional and municipal staff

ICT

Initiate basic training (computing) for designated ICT focal persons from all woredas

Outcome (d): Improved transparency and accountability


Reduced incidence of corruption and arbitrariness in rule enforcement (as judged by economic agents) Increased access to justice, recourse and redress

Enhanced independence of the judiciary

Increased access to government information

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JSRP Establishment of information counters in all regional high courts and woreda courts

TSRP Completion of 50% coverage for computerized tax payers identification number (TIN)

ICT Establishment and strengthening of Regional Data Centers

Program Support Preparation and dissemination of basic IEC materials on PSCAP

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_________________________________________________________________ PSCAP –Financial Management Guidelines

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Financial management guidelines: 1. INTRODUCTION: The Public Sector Capacity Building Program, PSCAP is a large national program planned to be implemented by different government offices in different government structures. The MoFED will be responsible for the disbursement of program fund to the different beneficiaries and for the eventual gathering of financial reports, consolidating them and preparation of financial reports to the government, donors and other stakeholders. This will only be possible if uniform and agreed procedures are followed by all the concerned. Uniformity of action facilitates bottom-up consolidation of financial monitoring reports in relatively easy, accurate and speedy way, whic h in effect ensures full accountability to providers of the funds. The purpose of this manual is to provide simple and user-friendly reference material for all the people involved to help them in transactions processing from the initial identification of transactions to the final financial reporting. It discusses the detailed procedures in receiving fund (from all donors of PSCAP), keeping the fund, spending it, recording the expenditures, reporting to the appropriate body and in safeguarding the assets acquired using the fund. The basic policies of Financial Management are explained in the Operational Manual/PIP . This manual provides the procedures that will be followed to adhere to the broad policies stipulated in the PIP. In the section that follows, the background of the program, as relevant to the understanding of the manual, is explained. This is essential for the quick grasp of the nature of the program, the purpose and out put of the program especially for the people that will join the structure at a latter date. Auditors will only be involved after the start of the program. The background provided would be a tip to them to kick-off their job. Section three deals with the detail policies and procedures necessary for the management of the fund. Each and every item that will be encountered during the execution of the project are identified and explained in a clear and simple way.

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2. BACK GROUND

2.1. PSCAP In May 2003, the Government launched a new state transformation agenda. Specifically, the MCB announced its intention to rapidly scale up support for the six, out of the fifteen National Capacity Building Programs, core public sector reform programs as subprograms under a consolidated five-year federal program called the PSCAP. 1 The fifteen programs are Civil service reform, Justice reform, Tax reform, District-level decentralization, Urban management, Information and communication technology, Cooperatives, Private sector, Textiles and garments, Construction sector, Banking sector, Agricultural training of vocational and technical levels, Industrial training of vocational and technical levels, Higher education, Civil society. The first six are those covered under PSCAP. The objective of PSCAP Support Project for Ethiopia is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, and local level; to empower citizens to participate more effectively in shaping their own development; and to promote good governance and accountability. This objective will be achieved by scaling up Ethiopia's ongoing capacity building and institutional transformation efforts in the six priority areas under PSCAP.2 There are two main project components. Component 1, Federal PSCAP, supports federal level activities across each of the six subprograms including those capacity building activities for which there are scale and network economies including those activities that require national level prototyping. Component 2 , Regional PSCAP, constitutes the bulk of the Program and is designed to empower regions to adapt and implement national reform and capacity building priorities envisaged under PSCAP's six subprograms in a manner that is efficient, accountable, and sustainable. 3 The components are required to include basic program support activities to ensure effective implementation.

2.2. INSTITUTIONAL ARRANGEMENT

As mentioned above the PSCAP is a nation wide program involving different tiers of the government. The structure of PSCAP is fundamental to the financial mana gement of the program. Funds flow down the channel and reports flow up the channel.

1 Ibid 2 http://web.world ban k.org/ 3 Ibid.

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FEDERAL PSCAP REGIONAL PSCAP Key Fund flow Report flow

Figure 1 - PSCAP Fund and report flow chart The MCB, the MoFED, the MOR, the MFA , Federal Supreme Court, and ICTDA implement the Federal PSCAP. The BCB (BCB), the BoFED, Justice Bureau and the BoTIUD are the implementers of PSCAP at regional level. However, the financial management function will be fully carried out by BoFEDs of the respective regions. The overall coordinator of the program at national level is the MCB. The BCB in regions are the coordinators of the program in their respective regions. The MoFED (MoFED) is responsible for the overall financial management aspect of the program. It opens accounts for the program, receives funds from the donors, release funds to beneficiaries, collect reports from the beneficiaries and consolidate and report on the use of funds to donors, government and other stakeholders. At regional level, BoFED (BoFED) perform the same activity. The detail procedure is explained in the latter chapters.

IDA credit account Washington DC (Foreign currency)

Government of

Ethiopia‘s

Contr ibution

IDA special

account in USD in

Special USD account in

Ethiopia for each of the

Birr account for

PSCAP at each

Birr account for PSCAP

at each federal executing

Birr account for the

pool at MoFED

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2.3. FUNDING MODALITIES Funding modalities or disbursement modalities specify how funds flow from the donors to the government and/or to the relevant public body. They also specify the way reports on the spending of the funds are submitted to the donors. The MoFED has identified three Channels or instruments for the flow of donor funds. 4 CHANNEL I – Aid and Loan funds that flow through the MoFED or BoFEDs are included here and the reporting system has to follow the same procedures. CHANNEL II – This is one of the aid disbursement channels used by bilateral donors for releasing resources to beneficiary institutions under projects financed by them. The donors provide goods and/or funds to beneficiaries usually ministries. CHANNEL III – Under this instrument, the donor directly controls all funds. The donors maintain their own bank account, pays invoices directly to contractors and/or suppliers. Channel I is the recommended funding modality for PSCAP.

4 MoF, Donor Fund Flow, Keeping, Recording and Reporting System (Amharic Version), Addis Ababa, Tir 5, 1991.

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3. ACCOUNTING POLICIES AND PROCEDURES In the remaining part of this manual, detailed discussion of accounting procedures is presented. The first paragraph in each section is given in a box. The text in the box is the accounting policy on the basis of which the detailed procedures are provided. The financial management provisions in the PIP are taken as financial management policies as appropriate to ensure consistency between this manual and the PIP.

3.1. BUDGET AND BUDGETARY CONTROL

Budget codes for PSCAP The budget for PSCAP shall be proclaimed under the name of MCB, MoFED , MFA, MOR, Federal Supreme Court and ICTDA. Once identified and used, the budget code for PSCAP shall remain unchanged through out the life of PSCAP. Budget calendar (as provided in the PIP) The federal lead institutions prepare their PSCAP budget and submit to the FTT) through the PPD no latter than 1st March. The regional lead institutions prepare their PSCAP budget and submit to the RTT through the RPPD no latter than 22nd February. RTT shall forward the regional PSCAP budget toFTT no latter than 1 st March. FTT shall submit the annual regional and federal plan to IDA for no objection no later then 15 th March. FTT shall submit the annual regional and federal plan to cabinet no later then 22nd March. Annual plan for PSCAP, along with the over all budget, shall be submitted to the Council of Ministers and, regional matching fund requirements in the regional budgets shall be submitted to regional council, no latter than 22nd May. The Cabinets shall recommend PSCAP budget no latter than 2nd June. Approval and adoption by federal legislature will be undertaken before 2nd July. Execution of PSCAP budget begins at the start of the fiscal year on 8 th July Mid-year reallocation of budget shall be made between regions and between the federal lead institutions based on rules set out in the PIP by the FTT on or before 1st February. MoFED issues final reallocations on or before 8th February. Supplemental budget proposals shall be finalized by the MCB on or before 8th February.

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a) Budget Codes

In the government accounting system, the coding system starts from budgeting. In the process of budget preparation, all the recipients of the fund from MoFED are identified with specific budget code. That code is basic to understand how much budget is allocated to a public body for the budget year. The public body is the institution that is entitled to request and receive a budget. A pubic body is an institution that has a legal mandate, receives budget directly from the concerned finance and planning body, submits its final accounts directly to the MoFED. The budget proclamation is the basic document. Transfer to the public body shall be made under the code identified in the budget proclamation and the recipient of the budget is responsible to account for the budget it has received.. Using that code, it is possible to produce a report for the transfer, expenditures and the fund balance of a recipient. Under PSCAP, the budget recipient shall be the MCB for the programs that will be implemented by it and all regional PSCAP. All expenditures incurred by the MCB and those incurred by regional BoFEDs shall be given similar code –318. However as MoFED shall make cash transfers direct to BoFEDs, for cash transfer purpose the code shall be the codes that are currently used by BoFEDs when receving cash from MoFED. This code is 154 for regions using the old single entry system: namely Afar, Somali and Gambela. All other regions and MoFED shall use 152 when recording the cash transfer. Five federal implementing agencies shall be recipients of funds for the program each of them will be implementing. These are the MFA, MoFED, MOR, Federal Supreme Court and ICTDA. PSCAP budget shall be proclaimed under the name of these five public bodies. The budget code that will appear in the budget proclamation and thence on each accounting document and report shall be the following. The budget code presented below shall remain the same through out the life of PSCAP, as change of codes from year to year shall hinder preparation of reports correctly.

BUDGET CATAGORY

CODE

Public body MCB 15/318 MFA 15/118 MoFED 15/152 MOR 15/156 ICTDA 15/325 Federal Supreme Court 15/122 Program PSCAP 08 Sub- agency Plan and Program Department 01 Federal implementing agencies other than MCB 00 Sub-program PSCAP - Tigray 01 PSCAP – Afar 02

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PSCAP – Amhara 03 PSCAP – Oromia 04 PSCAP – Sumali 05 PSCAP – Benishangul gumuz 06 PSCAP – SNNPR 07 PSCAP – Gambela 08 PSCAP – Harari 09 PSCAP – Addis Ababa City 10 PSCAP – DireDawa Administration Council 11 Federal implementing agencies 00 Project Civil Service Reform 001 Justice System Reform 002 Tax System Reform 003 Urban Management Reform 004 Information & Communication Technology Reform 005 District Level Decentralization Reform 006 Expenditure Management & Control Reform 007 Program Support 008

Figure 2- PSCAP account code

A complete budget code can be written as follows: Example 1 – Budget for Civil Service Reform sub program at federal level is identified as

15/318/08/01/00/001 Example 2 – Budget for Urban Management and Reform Project in Gambella region is identified as

15/318/08/01/08/004 Example 3 – Budget for Tax system reform at federal level is identified as

15/156/08/00/00/003

Note that in the above code, only the last three fields are variable. If the implementing agency is the MCB, the sub-agency code shall be 01. If the implementing agency is any of the federal lead institutes other than MCB, the sub-agency code shall be 00 . Regions that are using single entry accounting code The budget for PSCAP shall be proclaimed as a federal project under the MCB. Hence the double entry budget coding system shall be used. However, those regions using single entry accounting cannot use the budget code because, firstly, the formats they are using are not designed to include all the information in the double entry system, secondly, the accountants may not be familiar with the double entry. New codes have to be identified so that it will be possib le to identify PSCAP expenditure by both regional and federal users.

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The account code under single entry accounting is organized to show three major elements: the location code, organization code and receipts and payments code. Location code has four fields, each field having two-digit code. The first field is standard, 01 for central government and 02 for regional government. The next field is also a standard two digit, which identifies regions. The third filed which has also two digits is to identify zones and the last filed having two digits is to identify woreda.

E.g.: Ministry of Agriculture in the federal government is located as 01 00 00 00.

Organization code identifies the sector (the budget institution in the sector) and the Project or report ing unit. It has three fields. The first field has three digits the sector and the supervising institution.

E.g. Ministry of Agriculture is in the Economic sector 200 and is number 11. So the code is 211 .

The second field has two digits and identifies the sub unit. The third field has also two digits identifying the sub-sub-unit.

E.g.: To complete the above example – Ministry of Agriculture Administration and General Services Section is identified by 211 01 00.

If the above budgetary institution is implementing a capital budget, another three fields shall be used to identify the project. The first field has three digits and identifies the sector. The next field has two digits and identifies program. The last field has two digits and identifies the specific project.

E.g.: If the Ministry of Agriculture has a project at Gode under a program called Irrigation Development and the sector is Natural Resource Development the code can be 721 02 02.

If the payment in the above example is for land preparation and other construction the code can be 8203. The combined code can be presented as:

01 00 00 00 - 211 01 00 - 721 02 02 - 8203 The above structure can be used to identify a unique code that all the single entry using regions can use so that the program’s expenditure can easily and effectively be identified. Since PSCAP has two components, the first two digits in the location code can be used to identify those. Federal PSCAP is 01 and regional PSCAP is 02. The next two digits are to identify regions. Under PSCAP these shall be used to identify the sub-programs, which are the regional PSCAPs. The list is as shown in the table for double entry budget codes. The zone and woreda digits will not be used.

Egg: PSCAP – Dire Dawa-Bureau of Urban & Works (BoTIUD) is identified as 02 11 00 00 .

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The Public Body or the supervising institution in whose name the budget is proclaimed is the MCB. The Plan and Program Department of MCB is the sub units responsible for PSCAP. Sub-sub-units codes will not be used. Hence the second three fields can be written as 318 01 00. The third group is to identify a capital project code. PSCAP is a capital project. The sector code cannot be used. The program code can be identified as 08. The project code under double entry accounting has three digits. Under single entry the first digit shall be dropped and the last two digits shall be used as follows: Project Civil Service Reform 01 Justice System Reform 02 Tax System Reform 03 Urban Management and Reform 04 Information & Communication Technology Reform 05 District Level Decentralization Reform 06 Expenditure Management & Control Reform 07 Program Support 08

The last group of code is the receipts and payments code. This code is more or less the same as the code under the double entry. The codes relevant for PSCAP are identified in the next section. The combined code for PSCAP under single entry can be written as follows. Take for example, the Dire Dawa- PSCAP has paid for land preparation and other cons truction the code being 8203. Assume the payment is made under Urban Management and Reform sub program.

02 11 00 00 - 318 01 00 - 000 08 04 - 8203 The formats that shall be used under single entry shall be filled with the above codes. It will therefore be possible to identify transactions by source and it is also possible to summarize transactions as needed. Additional information box shall be added on the existing Ge/He/29/4, the Trial Balance, Ge/He/29/5, Monthly Transfer Summary and Ge/He/29/3, Capital Expenditure summary. The heading of, for example, the Ge/He/29/4 can be presented as follows.

This is on the reports this will be added

Reporting unit Code Central government/ region Zone Woreda Unit Sub-unit Sub-sub-unit

Supervising unit Code Name of Public Body Name of Program Name of Sub-agency Name of Sub-program Name of Project Source of finance Bank account No

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All the remaining details shall remain the same as in the existing Ge/He/29/xx. The above will enable the processing of accounts by CAD in an effective way. In addition, the regions that are not yet implementing the accounting reform shall start familiarizing themselves to the requirements of the double entry accounting. Codes to be used for cash and non-cash transfers As mentioned above, implementing agencies shall get transfer from MoFED. Hence, even if the budget is proclaimed in the name of MCB and that the expenditure code for regional PSCAP shall be 318, the cash transfer code will be different. The MoFED code as sender of the mone y and the BoFED code as recipient of the money shall be used. This is not a new requirement but the one that is being used currently. To illustrate: Example 1: MoFED transferred Birr 1 million to Tigray BoFED

• MoFED shall record the transaction as follows:

Account code Debit Credit 01/000/00/152/01/001 4015 1,000,000

15/000/00/152/00/22 4115 1,000,000

• Tigray BoFED shall record the transaction as follows:


15/000/00/152/00/22 4015 1,000,000 Example 1: MoFED transferred Birr 1 million to Somali BoFED

• Somali BoFED shall record the transaction on Ge/He 23 as follows:

Account code Received 15/000/00/154/00/22 4015 1,000,000

• MoFED shall record the transaction as follows:


15/000/00/152/00/22 4115 1,000,000 Note: that 4015 represents transfer and 4115 represents cash at bank accounts.

b) Budget preparation and control The budget preparation at the implementing agency level starts before March 1st of the year. The budget is the annual fiscal plan (annualised drawing rights) in monitory terms. The procedure for the preparation, Appraisal Adoption, Execution, and Re-allocation of budget is provided in the PIP. The relevant section of the PIP (section IV – Resource allocation and Management) is attached at the end of this manual as Annex XXXIX.

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It is very important that the accountants responsible for keeping the records of PSCAP and the budget section representatives in the implementing agencies are fully participated in the budget preparation process so that they can fully understand the budget and they will not be in problem when they perform the control function. The account codes that will be recommended in subsequent sections shall be used for the detailed budget purpose. Expenditure codes shall be assigned to each item in the budget based on the chart of account and that code must be used in keeping the accounting records to ensure comparison of budget with actual spending. The budget ledger card, as described in the following section, shall be used in the budget control exercise. The detail procedure is described in that section. The budget section shall prepare monthly budget tracking report. Preparation of this report is not a difficult task if the budget ledger is kept up-to-date at all time. The budget section shall extract the approved revised budget for each item of expenditure from the budget ledger card. Expenditure to date is also extracted from the same ledger and put in the budget tracking report. Comparison is made between the two and a third column showing the budget balance. The budget balance shall be normal, under spent or over spent. The budget section shall give comments on the budget balance in bullet points to give warnings to the budget users. The accountant shall agree the report by signing on the face of it. The report shall then be circulated to the procurement officer, the section that follows up the program and the head of the implementing agency on the basis of which they can take appropriate corrective action. In regions, BoFED is responsible for the financial management function. The preparation of budget tracking report is therefore the responsibility of BoFEDs. The circulation of the report will be to the above-identified three officers of the implementing agencies. Sample budget tracking report is given in annex I.

3.2. CHART OF ACCOUNT The FGE accounting system provides the FGE Chart of Accounts which is a system of coding government uses to identify and classify financial entities and events.5

5 The Civil Service Reform Account Design Team of MoFED with the support of the Decentralisation Support Activity (DSA) Project, Manual 3 FGE Accounting System, Volume II, FGE Chart of Accounts, Version 1.0, January, 2002.

The Federal Government of Ethiopia’s (FGE) financial management system shall be used in the overall management of the Program. A supplemental chart of account is provided. The purpose of the supplemental chart of account is to enable MOFED to capture and classify the funds received from donors by subprograms. The intent is to enable project costs to be directly related to specific work activities and outputs under PSCAP and to enable MOFED to monitor funds utilization across subprograms and to serve as one of the source of information for assessing performance by relevant entities.

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Under PSCAP, the final financial report that will be produced is the Statement of Cash Receipts and Payments. The Chart of Account that is recommended in this manual is sufficient to capture transactions in a way that enables the preparation of this statement. The account codes shall enable the preparation of the detailed budget, accounting for the transfers from donors and transfers to beneficiaries (receipt from MoFED), capturing the transactions that will occur, and preparation of periodic financial reports and the year-end financial statement. The Chart of Account is developed based on the accounts classification and coding system used in the FGE Accounting system for Modified Cash Basis transactions. The equivalent codes for those agencies that are using single entry bookkeeping is also provided. Under the Modified Cash Basis of accounting, the following accounts shall be used. CAD shall officially issue the final codes .

PSCAP

TRIAL BALANCE

MoFED Implementing

agencies Account

code Debit Credit Debit Credit

Cash on hand 4101 XXX XXX Cash at Bank – Foreign Currency -IDA 4102 XXX Cash at Bank – Foreign Currency – XXX 4102 XXX Cash at Bank – Foreign Currency - XXX 4102 XXX Cash at Bank – Pooled Birr Account 4115 XXX Cash at Bank – Implementing agencies 4103 XXX Cash shortage & overage 4202 XXX XXX Other advance within government 4210 XXX XXX Advance to consultants 4252 XXX Adva nce to suppliers 4253 XXX Due to MoFED 5027 XXX XXX Other payables within government 5028 XXX XXX Transfers - cash 4015 XXX XXX Transfers –non cash 4050 XXX XXX Net asset equity 5601 XXX XXX Revenue - External assistance 2000-2999 XXX Revenue - External loan 3000-3999 XXX Expenditure 6000-6999 XXX _____ XXX _____ XXX XXX XXX XXX

NB: The specific codes for revenue, both assistance and loan, is given in the budget proclamation which will be available soon. Those codes shall be used by MoFED to open ledger accounts and record the income. For example, external loan from IDA is given a code number “3014”. The chart of account shall be expanded as and when the new donors or lenders are identified.

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Under the single entry booking, the following accounts shall be used:

PSCAP TRIAL BALANCE

MoFED Implementing

agencies Account code Account code Cash 4005 4005 Cash at bank 4115 4006 Staff debtors 4101 4101 Cash shortage 4201 4201 Custom deposit 5300 5300 Other paya ble 5400 5400 Transfers – capital 4015 4015 Other cash transfers 4020 4020 Expenditure 8000-8999 8000-8999

The definition and purpose of the above accounts is as provided in the FGE Accounting System. The definition serves for both the single entry using entities and the double entry using entities. Cash: - Under PSCAP, MoFED shall maintain one special account each for the donors. A pooled

local currency account shall be opened wherein transfer from the special accounts and from the treasury (the government contribution) shall be kept. Each of the implementing agencies at federal level and BoFEDs at regional level will have Birr accounts, type “A” which will not be closed at the end of the budget year, opened for PSCAP purpose to receive transfers from MoFED. BoFEDs shall have only one bank account although the fund they are going to handle is for all implementing agencies in the region. In addition each federal beneficiary and BoFEDs will have cash on hand account to handle petty cash. The definition for cash therefore embraces all this accounts.

Receivables: - Included in this category are cash shortage, advances, prepayments and other

receivables. Advances include prepayments to consultants and suppliers. Other receivable is to account for other kinds of advance that will not fall in the other categories.

Payables: - Payables under PSCAP are expected to be short term. Only two accounts are

suggested in the double entry, Due to MoFED and other payables within government. Similar purpose payables shall be identified in the single entry.

Transfers: - This account is not a permanent account and is closed at the end of every year.

During the year it will be used to record monthly transfer of money to implementing agencies at Federal level and the BoFED at region level. The implementing agencies and BoFED shall debit their respective bank account for PSCAP and credit the transfer account. The transfer in the single entry has the same purpose.

The rule is that the total debit in the transfer account of MoFED shall equal the total of credits in all implementing agencies. In effect at the time of consolidation, the transfer account will have a balance of ZERO. The same rule applies for the single entry although the debits and credits are not there.

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The accounting for non-cash transfers will be the same as above except that the implementing agency shall debited the appropriate expense account instead of the bank account.

Revenue : - Only MoFED shall use this account, as the distinction of revenue by source (donor)

in all the implementing agencies is irrelevant and impossible because transfer to the agencies will be made from one pooled Birr account.

There are three categories of revenue under PSCAP: the transfer from central treasury being the Government’s contribution shall be kept in the first revenue account. Income from IDA will be a credit and is categorized as external loan. A separate account shall be maintained for it. Income from other donors can be either external loan or external assistance. Separate account for each of the donor shall be kept according to the nature of the transfer, i.e., either loan or assistance.

Expenditures: - The major and most important section of the Chart of Account is this

section. Most of the expenditure types can be captured by the expenditure account codes being used in the accounting system at present. The expenditure codes have sufficient detail accounts and control accounts as well such that there is no need at all to create new codes.

The expenditure codes have also control account and subsidiary account code system. Fore example 6200 is the general category for Goods and Services and accounts from 6210 to 6224 are the subsidiary ledgers. The control account shall be used to provide summary report by category for the donors’ purpose.

Matching of the single entry code with the double entry code is very important and it is done like shown in the following table. As mentioned earlier PSCAP is a capital budget program. The capital budget expenditures under the single entry are in the 8000 group. It is also possible to establish major categories for donor reporting purpose so that the system can directly produce the donor report. Using the IDA’s category, the chart of account can be designed as follows.

Account title

Donor Category

Double entry

Single entry

Control account Goods and Services Goods 6200 Subsidiary accounts Office supplies 6212 8303 Printing 6213 8303 Food 6216 8303 Fuel and lubricants 6217 8303 Other material & supplies 6218 8303 Miscellaneous equipment 6219 8303 Research & development supplies 6223 8303 Control account Fixed assets Goods 6310 Subsidiary accounts Purchase of equipment 6313 8204 Purchase of building s, furnishings & fixture 6314 8206 Control account

Contracted services

CONSULTANT

SERVICES

6250

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Subsidiary accounts Contracted professional services 6251 8101 Control account

Personnel service

CONSULTANT

SERVICES

6100

Salaries to permanent staff 6111 8301 Wages to contract staff 6113 8302 Wages to external contract staff 6115 8302 Allowance to permanent staff 6121 8301 Allowances to contract staff 6123 8302 Allowance to external contract 6124 8301 Government contribution to permanent staff pension 6131 8301 Control account

Contracted services

Operating costs

6230

Rent 6252 8303 Advertising 6253 8303 Insurance 6254 8303 Fees and charges 6256 8304 Electricity charges 6257 8303 Telecommunication charges 6258 8303 Water & other utilitie s 6259 8303 Control account Travelling & official entertainment service Operating

costs 6230

Subsidiary accounts Perdiem 6231 8501 Transport fees 6232 8501 Official entertainment 6233 8303 Control account Training Training 6270 Subsidiary accounts Local training 6271 8501 External training 6272 8501 Training related Perdiem 6273 8501

Training related transport fee 6274 8501 Control account

Personnel service

Operating costs

6100

Subsidiary accounts Wages to causal staff 6114 8302 Control account

MAINTENANCE & REPAIR

Operating costs

6240

Subsidiary accounts Maintenance & repair of vehicle 6241 8303 Maintenance & repair of equipment 6243 8303 Maintenance & repair of building, furnishings & fixtures 6244 8303

Figure 3- PSCAP expenditure code

The PSCAP expenditures are not fully known at this stage. The above codes and accounts categories are drawn using the information at hand at the time of writing this guide. It will be mandatory to revise the chart of accounts once the expenditure items are clearer. The responsibility to establish new codes as the need arises shall be of CAD. The new codes shall be identified, organized and communicated in writing to all implementing agencies. The chart of account discussed above is attached as an annex at the end of this manual in a summarized and detachable format. Refer annex XXXVIII.

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3.3. ACOUNTING CYCLE The accounting cycle for PSCAP is not different from the government accounting cycle. It starts when money is received in the special accounts and ends when report of expenditures is presented to the CAD and CAD is closing the accounts. In the sections that follow we shall see the accounting process.

3.3.1. RECEIPT OF MONEY

There are two concerned units of the MoFED that are relevant in the management of the PSCAP. These are the Counterpart fund unit (CFU) in the Treasury Department and the Central Accounts Department (CAD). The CFU is the one authorized to open special bank accounts for programs. It will be requested to open the special accounts mentioned above. The initial deposits to the special accounts will be the advance payments from each donor as agreed in the respective agreements signed with the donors. Subsequent deposits shall be based on Statement Of Expenditure (SOE) that will be presented to the donor. After a certain initial period, the Financial Monitoring Report (FMR) shall replace the SOE. These two reports are discussed further in subsequent sections. The CAD shall be responsible for the accounting function, i.e., to record the receipt transaction, to prepare donor reports and annual financial statements for reporting to donors and for the annual audit. The PSCAP program shall receive money from the two major sources, from donors and from the government. The receipt transaction shall be recorded when bank advice is received from the bank. The accounting entry to record the transfers shall be as follows. Note that only MoFED shall receive money from donors. Hence the entries are relevant for CAD only. 1. If receipt of money is from IDA

Debit Credit Cash at Bank – Foreign currency IDA XXX

Revenue –External credit – IDA XXX 2. If receipt of money is other donors as assistance

Foreign exchange (FOREX) account shall be opened to each donor with the national bank of Ethiopia by the Treasury Department of the MoFED. One of the accounts shall be the IDA special account. The others shall be used to keep funds received from other donors. One pooled Birr account shall be opened to keep transfers from the special accounts and from central treasury being government’s contribution to the program. Transfers to the pooled Birr account shall be made monthly based on the approved annual plan.

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Debit Credit Cash at Bank – Foreign currency (donor name) XXX

Revenue –External Assistance - IDA XXX 3. If receipt of money is treasury

Debit Credit Cash at Bank – Pooled Birr account XXX

Transfer XXX Transfer shall be made from the special accounts to the pooled Birr account whenever the pool account balance is low. The follow up of the bank account balance, like the special account balances, shall be made by CFU. The entry to record the transfer shall be: 4. Transfer from special accounts to the pooled Birr account. Assume that transfer is from IDA

account Debit Credit Cash at Bank – Pooled Birr account XXX

Cash at Bank – Foreign currency IDA XXX

3.3.2. TRANSFER OF FUND TO BENEFICIERIES

All institutions receiving PSCAP fund from the PSCAP Pooled Birr account shall open bank accounts of type “A”. This type of account is more appropriate for the nature of PSCAP of all the account types identified in Guideline No 16/2004, Guideline to Open and Administer Government Bank Account, of MoFED. Transfer of fund to federal implementing agencies and BoFED shall be made by the MoFED, upon receiving instruction from the MCB who is the responsible agency for the overall program. BoFEDs shall not transfer funds to regional implementing agencies. Rather, the BoFEDs will handle the fund and effect all payments related with PSCAP upon request from the implementing agencies.

MoFED Treasury department shall make transfer from the pooled account to the federal beneficiaries and BoFED quarterly after the implementing agencies submit Disbursement Request approved and cleared by MCB and accompanied by Quarterly Report. The amount to be transferred to a beneficiary is calculated as the next quarter budget less procurement to be made centrally less any unused money from the previous quarter. Transfer to the beneficiaries and BoFED shall be made on the 12th day of the quarter. Each federal beneficiary shall open a separate Birr account for PSCAP and transfer from MoFED shall be to the PSCAP account. At region level, BoFED shall open a separate Birr account for PSCAP in which transfer from MoFED shall be deposited. The bank account shall be the only PSCAP account in the region. Transfer account shall be used to record transfer to the beneficiaries and transfer from MoFED. Cash receipt Voucher shall be used to recognize cash transfers received. The equivalent document for regions that are using single entry is Ge/He/21/1.

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BoFED shall be responsible to prepare the monthly reports and present to the MoFED. The first transfer from the pooled account to the federal beneficiaries and BoFEDs’ PSACAP account shall be made on the basis of the first quarter budget that shall be prepared with reference to the approved first year budget. Each beneficiary shall fill the Disbursement Request (see annex II) immediately after receiving its approved budget. Subsequent transfers shall be made on the basis of subsequent Disbursement Requests and quarterly reports. Disbursement Requests shall be identified by the name of the beneficiary and the request number referring to the quarter number for which request is made (the first advance shall be for the 1st quarter). Quarterly reports shall be in the form prescribed in annex III. This report shows the expenditures paid in the quarter on the approved budget lines. It shall also show the budget for next quarter. The amount to be requested for transfer is the budget for the next quarter less any procurement included in the beneficiary’s budget but that will be made centrally (using foreign exchange etc) less the balance of cash on hand and at bank at the end of the quarter. E.g.: If the budget for Quarter II is Birr 100,000, the budget includes Birr 50,000 for goods that

will be paid centrally and the cash on hand and at bank at the end of the quarter is Birr 10,000, and then the amount of transfer requested should equal Birr 40,000.

Disbursement requests from federal beneficiaries shall be forwarded to the MCB for approval. The approved request shall be submitted to the MoFED, CFU. The CFU shall collect quarterly disbursement requests from both federal beneficiaries and regional BoFED and request the Treasury Department to make the transfer to the beneficiaries. Disbursement request from BoFED shall be submitted to BCB, which will approve and forward it to MCB. After checking and approving, the MCB shall advice the MoFED to make transfer to the BoFED. MoFED shall receive final disbursement requests and quarterly reports from federal beneficiaries through MCB on the 10th day of the following quarter. MoFED shall transfer funds on the 12th day of the next quarter (within two working days after it received the approved request). For this to happen, the federal beneficiaries shall submit the Disbursement Request to the MCB on the 6 th day following the end of the quarter. BoFED shall forward its request to BCB’s approval on the 6th day. On the 8 th day, the BCB shall approve the request and forward it to the MCB. The MCB shall forward the approved Disbursement request on the 10th day. The deadlines are very tight that quarterly reports and requests could not be send physically. Reports and requests should therefore be submitted by fax whenever possible and the originals can follow latter for file. Two accounting entries shall be made at this point, one by the CAD and the second by the beneficiary receiving the transfer. The CAD will receive bank debit advice for the transfer. Upon receiving it will,

Debit Credit Transfer account XXX

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Cash at Bank – Pooled Birr account XXX The beneficiaries shall receive bank credit advice when their bank deposits the money in their account. They will write cash receipt and pass the following entry:

Debit Credit Cash at Bank – Pooled Birr account XXX

Transfer account XXX The beneficiary shall use Cash Receipt Voucher as recommended in the FGE acc ounting system (see annex IV). According to the FGE accounting system Cash Receipt Voucher shall be used for all sorts of receipts. Cash may be received in notes and coins, in check, bank transfer or direct deposit in the bank account. Hence all transfers from MoFED to federal beneficiaries and to regional BoFED, and from BoFED shall be captured via Cash Receipt Vouchers. The budget and account code shall be written on the face of the cash receipts as follows: Example – The Amhara region BoFED received Birr 1,000,000 from the MoFED to cover expenditures of all PSCAP projects implemented in the region.

Budget category Account code Birr Debit Credit 152/08/01/03/000 4103 1,000,000 00 152/08/01/03/000 4015 1,000,000 00

The regions that are using the single entry accounting will use Ge/He/21/1, which has the same function as the cash receipt under the double entry accounting. Obviously they will not make journal entries as shown above. However they will record the transfer using the account number 4015 (remember that PSCAP is a Capital project). The above transaction can be recorded as:

Revenue Item Purpose of payment Birr

4015 Transfer for PSCAP program 1,000,000 00 Bank charges to transfer money to regions shall be born by MoFED. This is important to reconcile the transfer account maintained by MoFED with the transfer accounts maintained by beneficiaries and BoFED.

3.3.3. DISBURSMENTS Disbursement can be made in the form of cash (notes & coins), bank check or bank transfer.

The general policy is that disbursement shall be made for goods and services acquired or to be acquired, if there is firm commitment.

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3.3.3.1.CHECK PAYMENTS & BANK TRANSFERS

As much as possible, all payments shall be made by check. Only small payments, the limit/demarcation being the one existing in each of the implementing agencies, shall be made in cash. Bank transfers shall be used to make payments to people in different places from the location of the implementing agency. The Bank Payment voucher that is being used in the FGE accounting system shall be used (see annex V). The payment voucher has all the necessary details to identify the payment and all the details have to be filled in. The account code is filled in the payment voucher as shown in the following examples: Examples

1. Payment of Birr 250,000 is made to MOENCO for the purchase of vehicle by Amahara region Bureau of Urban & Works for UMRP. The region’s BoFED makes payment.

Budget category Account code Birr

Debit Credit 15/318/08/01/03/004 6311 250,000 00 15/152/08/01/03/000 4103 250,000 00

Those regional BoFEDs that are using the single entry accounting shall continue using model 6 until they go through the accounting reform. There is a space to write the expenditure code/budget code and the account code on the payment voucher. Example

2. Payment of Birr 270,000 is made to MOENCO for the purchase of vehicle by Sumali region BCB for ICTD. The region’s BoFED makes payment.

All check payments and bank transfers shall be made via a payment voucher and shall be duly authorized by the responsible officer. Regions that are using single entry will use Model 6. The approval procedure and the authorization limits to approve check payments shall be the procedures existing in each implementing agency. In Regions, the implementing agency shall complete the approval process and present the payment documents for BoFED to effect the payment. Payments by bank transfer shall be made for payees who are in a distant place.

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Budget code shall be 02150000 -3180100-0000805 Account code shall be 8205

Each implementing agency shall use the existing procedures for payment process. This includes the decision as to who will sign checks and the threshold for approval of any one payment. In the regions, the implementing agencies are not check signatories. BoFEDs shall make the payment based on the request of the implementing agencies. All documentations and approval process shall be completed in each of the implementing agency, and on the basis of such document, BoFED will effect the payment. The list of signatories shall be provided to the bank where the PSCAP account is maintained.

3.3.3.2. CASH PAYMENTS The purpose of keeping this fund is to meet small payments for which writing of check is not recommended. The fund shall be replenished whenever the amount of cash in safe is believed to be small. A bank check in the name of the cashier shall be prepared for replenishment. The Cashier shall keep the fund. There should be cash safe and the Cash office should be strong enough. Payment of cash out of the fund shall be made via the Cash Payment Voucher (see annex VI). As in the check payments, the existing procedure for cash payment in each of the implementing agency shall be used. The cashier shall maintain a follow up book, Petty Cash Book given in the FGE accounting system, to track the balance of cash on hand (annex VII). What goes to the debit column is the amount of check to replenish the fund. On the payment column of the book, payment vouchers shall be recorded. Temporary advances, suspense, can be paid out of the petty cash fund. Suspense Payment Voucher given in the FGE accounting system (annex VIII) shall be used to process the suspense transaction. The voucher shall not be recorded in both the petty cash book and the Transaction Register. Under single entry accounting system, Model 6 (annex IX) is used for both check and cash payments. Model 6 is also used to make temporary advances such as travel advances and salary advances. When used as suspense vouchers, Model 6 is prepared in one copy only. When the advance is settled, the single voucher shall be cancelled and returned to the one settling the advance. The actual expense shall then be recorded following the normal procedure.

An imprest petty cash fund shall be established with each implementing agency at federal level and with each BoFED. The Cashier shall keep the fund in a safe. All small payments shall be paid out of petty cash. Every payment has to be duly approved. Suspense payments can be made form the petty cash account.

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Both the cash and check payment transactions shall be prepared for posting to the transaction register when double entry, or to Ge/He/23 (annex X) when single entry. The preparation for posting is the coding of the payment vouchers. The accountant shall write the appropriate accounting code on the face of the voucher as shown earlier. In regions, BoFED shall keep one petty cash fund for PSCAP purpose. Payments shall be made based on the request of implementing agencies just like for Check Payments.

3.3.4. JOURNAL VOUCHERS

Not all transactions involve payment of cash or receipt of cash. The purpose of the Journal Voucher is to capture such non-cash transactions. Other common Journal Entries are correction of errors. For example, a payment might have been debited to a wrong expenditure account and need correction. The correction shall be made via Journal Voucher. The Journal Voucher in the FGE Accounting System shall be used for PSCAP purpose (annex XI). It shall be prepared in two copies. The first copy is the accounts copy and the second copy is pad copy. The Head of Budget and Accounts must approve all Journal Vouchers after the accountant prepares it. The accountant then posts it to the transactions register. The following examples illustrate the way the Journal voucher is prepared.

Example 1 – The MoFED purchased ICT equipment for Oromia region PSCAP from Blue Nile Trading. The cost of the equipment is Birr 265,000. Oromia region BoFED will record the transaction as follows:

Description Budget Category Account Code Debit Credit Equipment 318/08/01/04/005 6313 265,000 00 Transfer 318/08/01/04/000 4050 265,000 00

Example 2 – In SNNPR’s JSRP, Birr 100,000 paid for external training was wrongly charged to local training. The correcting entry would be:

Description Budget Category Account Code Debit Credit External training 318/08/01/07/002 6272 265,000 00 Local training 318/08/01/07/002 6271 265,000 00

Under single entry accounting, there is no document equivalent to the Journal Voucher that exists under double entry accounting. But Model 64B (Annex XII) is used to account for non-cash transfers from the MoFED to implementing agencies and from one implementing agency

Journal Vouchers shall be used to capture transactions that do not result in payment or receipt of cash. The Head of the Budget and Accounts shall approve all Journal Vouchers.

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to the other, The implementing agency, when receiving Model 64B from MoFED shall treat it as if it has received money from MoFED and immediately transfer the back to MoFED. To illustrate the treatment of Model 64B, assume that MoFED paid for consultancy who provided service in Gambela region. The payment was Birr 100,000. MoFED shall write a letter to the region that it has paid for the service. The region shall record the following on Model 64. two entries shall be recorded. The first is to record the transfer as if it is a cash transfer.

Account code Receipts Payments 08/000/00/154/01/001 4012 100,000

The second is recording of the payment under the appropriate expense code;

Account code Receipts Payments 08/000/00/318/01/001 8101 100,000

3.3.5. ACCOUNTING RECORDS The recodes that shall be used under PSCAP shall be, Transactions register, Budget ledger card, General ledger and Subsidiary ledger. The use and the manner of recoding in the above records shall be explained in this manual but full discussion is made in the FGE accounting system manual.

The FGE standard accounting records, as described in the FGE Accounting System Manual III, Volume I (Accounting for Modified Cash Basis Transactions) shall be used by all implementing agencies uniformly in keeping records for PSCAP. Appropriate modifications to the reports shall be discussed in this manual Double entry Each implementing agency shall maintain the FGE transactions register. All transactions of PSCAP concluded by the implementing agency shall be recorded in the register from the source documents. Each debit and credit amount, for each transaction recoded in the transaction register, shall be recorded on a ledger card in the general ledger. When necessary, subsidiary ledger shall be maintained and posting to it shall be made from the transactions register. Single entry Each implementing agency shall maintain Ge/He 23.

Transfer received from MoFED and all payments made shall be registered in the Ge/He23.

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Transactions Register At Federal level, MoFED shall maintain three groups of transactions registers. The first group of transaction registers will be used to deal with the special accounts. One transaction register per special account shall be maintained. The second group will have only one transaction register. This register shall be maintained for the pooled Birr account. The third group shall also contain only one register, which will be used to record the PSCAP transactions that will be implemented by MoFED. As the first group of transaction registers will be used to deal with the special accounts, the foreign currency transactions register (annex XIII) shall be used. This register is different from the local currency register in that it has additional column to fill in the foreign currency information. The first part of the register is used to fill information about the transaction. The second part is used to do the accounting. Taking the second part of the register, the common transactions that will be recorded in the register can be illustrated as follows:

Example 1: On July 9, 2004 USD 100,000 is received in the IDA special account. The exchange rate on that date was Birr 9 for one USD. IDA account No is 3014.

Example 2: On July 10, 2004 USD 50,000 is transferred from special account to Birr

Pool account. The rate on the date of transfer was 8.5 as per the bank advice. The account No for the pooled Birr account is 4103.

Others Cash at bank Foreign currency

Acct No Debit Credit Debit Credit Debit Credit Example 1 3014 900,000 900,000 100,000 Example 2 4102 425,000 425,000 50,000

The register for pooled Birr account shall be maintained using the local currency format (annex XIV) of the transaction register. To illustrate:

Example 1: On July 10, 2004 Birr 425,000 is transferred from IDA special account to Birr Pool account.

Example 2: On July 12, 2004 Birr 300,000 is transferred to Tigray BoFED. The amount

will be credited to a transfer account 4015. Others Cash at bank

Acct No Debit Credit Debit Credit Example 1 3014 425,000 425,000 Example 2 4015 300,000 300,000

The third type of transaction register will be used for the program MoFED is going to implement. This same transaction register shall be maintained by each implementing agency using the double entry accounting. To illustrate let us assume that the Tigray MoFED shall record the following transactions:

Example 1: On July 12, 2004 Tigray BoFED received Birr 300,000 from MoFED.

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Example 2: On July 17, 2004 Birr 100,000 is paid for local training.

Others Cash at bank

Acct No Debit Credit Debit Credit Example 1 4015 300,000 300,000 Example 2 6271 100,000 100,000

Those BoFEDs who are not yet using the double entry accounting will use Ge/He 23, which has the same purpose to the Transaction Register. The detail is more or less the same with the transaction register. Using the above example, Tigray PSCAP would register the transactions in Ge/He/23 as follows:

Safe Bank

Acct code (item code) Received Paid Received Paid

Example 1 4015 300,000 Example 2 8501 100,000

The accountant is responsible for the maintenance of the register. The register shall be prepared in two copies. The original shall remain with the implementing agency. The second copy shall be submitted to MoFED. Regional BoFED shall keep separate transaction registers for each of the program implemented in the regions. Budget ledger card Budget ledger card shall be maintained for each item of expenditure with approved budget. The format of the budget ledger card shall be the one that is given in the FGE accounting system (annex XV). The approved budget for each expenditure item shall be posted to the budget ledger cards that will be maintained by the budget section. Approval of the budget section shall be obtained before the accounts section makes any payment. The approved budged shall be increased or decreased by mid -year reallocation based on the notice obtained from MoFED. If the implementing agency is a poor-performer the approved budget shall be decreased and, if it is high-performer then the budget shall be increased. Similarly, the approved budget shall be increased if the MCB approves supplemental budget through rapid utilization of future drawing rights. Let us illustrate how implementing agencies can use the budget card. Assume that the budget ledger card is maintained by Oromia region. Example 1: The approved budget for contracted professional service is Birr 500,000. Example 2: A Birr 250,000 contract is signed with a local consultant. No payment is made. Example 3: Birr 350,000 is received from MoFED. Example 4: Birr 100,000 is paid to a second consultant as advance payment. Example 5: Birr 90,000 received from one of the poor-performing regions. Approved

budget Addition to budget

Reduction to budget

Revised budget

Payment received

Unpaid balance

Commit ment

Balance not committed

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Example 1 500,000 500,000 500,000 500,000 Example 2 150,000 250,000 250,000 Example 3 350,000 250,000 Example 4 100,000 150,000 Example 5 90,000 590,000 240,000 240,000

In the case of regions using single entry accounting, they can use Ge/Be/we 14/1 although the form is prepared to control recurrent expenditures. PSCAP is a capital expenditure but the detail is the same as a recurrent budget. Ge/Be/We 14/1 is more or less similar to the budget ledger card except that it has no column for commitment. Instead it has column to record actual payments. Let us see how the above example can be illustrated.

Approved

budget

Budget transfer or supplement

Budget deduction or

transfer

Revised budget

Amount

paid

Budget balance

Example 1 500,000 500,000 500,000 Example 2 Example 3 Example 4 100,000 400,000 Example 5 90,000 590,000 490,000

General ledger General ledger is a group of accounts (all cards together) that is used as a second step in the process of recording and summarizing transactions. The primary book of record is the transaction register and the general ledger is the second register. It is between the register and the financial reports and as such prepares information that goes into the reports. The general ledger card in the FGE accounting system is a multi-columnar card. It shall be maintained for each and every account code in the transaction register. The ledger car d (annex XVI) shall be used with out any modification in the form. The accountant shall be responsible for the maintenance of the general ledger. There is no equivalent in the single entry accounting system. Model 36 is used as a working paper to list revenues and expenditures item by item in order to prepare the monthly reports. There fore, the single entry using regions shall continue using Mode 36 as working paper since the report they are going to prepare are the Ge/He/29/XXs. Subsidiary ledger Control account balances may need detail in some cases. Subsidiary ledgers shall be maintained to provide that additional detail information. Accounts that needs subsidiary ledger are the expenditure, receivable and payable. Since there will be one cash account and one bank account at the implementing agency and BoFED level for PSCAP, there will be no need to maintain subsidiary ledger for cash and bank accounts. In the transaction register of PSCAP, there is a last column to put in the subsidiary ledger code to which posting is made. Posting to subsidiary ledger shall be made for each transaction. At the

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end of every month, the total of the subsidiary ledgers in a group of expenditure shall be equal to the total of the amounts posted to the general ledger. Each regional BoFED shall be responsible to maintain appropriate records for all the projects that will be carried out in the region. For example, the Tigray BoFED shall maintain accounting records for all the six sub programs of PSCAP. Six subsidiary ledgers shall be maintained for each item of expenditure. The subsidiary ledgers shall be differentiated by the budget code. Taking “salary to permanent staff” as an example, the ledger accounts that shall be maintained by the Tigray BoFED shall be:

Project Budget code Account code Civil Service Reform 318/08/01/01/001 6111 Justice System Reform 318/08/01/01/002 6111 Tax System Reform 318/08/01/01/003 6111 Urban Management and Reform 318/08/01/01/004 6111 Information & Communication Technology Reform 318/08/01/01/005 6111 District Level Decentralization Reform 318/08/01/01/006 6111

The accountant shall maintain the subsidiary ledger. Posting to subsidiary ledger shall be made as soon as the transaction is registered in the register. The format given for the general and subsidiary ledgers are similar in all respects. Separate files of general and subsidiary ledgers should be maintained to avoid posting of general ledger information into subsidiary ledger or vice versa. It would be very important to differentiate the two legers using different colours. In a single entry environment, there are no subsidiary ledgers. As mentioned earlier, the records in the Ge/He/23 are summarized in Model 36 and monthly reports are prepared there from.

3.3.6. REPORTING TYPES AND FREQUENCY OF REPORINTG

MoFED shall be responsible for the preparation of consolidated financial reports. All reports submitted to MoFED must be copied to the MCB Plan and Program Directorate. Reporting from implementation agencies shall be on the pooled account in general with out a need to identify the source of the fund. The source of income shall be identified at MoFED level based on bank transactions and income ledger account. The regular reporting period will be monthly. The monthly report pack shall include an SOE, Bank Reconciliation and the monthly reports that are being prepared under both double and single entry accounting environments. The timetable and channel of reporting shall be:

a) For regional expenditures, BOFEDs to MoFED within two weeks after the end of the month;

b) For federal expenditures, implementing agencies to MOFED within two weeks after

the end of each month;

c) MOFED to donors within three weeks after the end of the month. In the initial period of the project, CFU of MoFED shall prepare statement of Expenditure as a

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41

Report preparation responsibilities MoFED has the overall responsibility of account maintenance and report preparation for PSCAP. The Central Accounts Department (CAD) and the Counterpart Fund Unit (CFU) are jointly responsible for the management of the PSCAP fund. The CAD shall be responsible for collecting periodic reports from the implementing agencies. The federal implementing agencies should send a copy of the reports to MCB at the same time when they submit the reports to MoFED. BoFEDs shall send a copy of their reports to BCB at the same time when they submit their reports to MoFED. This is to avoid any inconsistency between the activity report and financial report. The PSCAP expenditures have to be incorporated in the government accounts at federal levels. The PSCAP monthly report pack is a bit different from the usual report pack. In addition the SOE and Bank reconciliation shall accompany the monthly reports. Hence a separate pack shall be prepared and submitted to CAD as regards PSCAP. At regions level as well, the PSCAP report shall be separately prepared and send to CAD. Method of report preparation The implementing agencies know that there is a pooled Birr account for PSCAP in general and transfers to them shall be made from this pooled account. It is the pooled (common) fund that is channelled to the beneficiaries and not the money from donors identified by name. They have to account for this common money as receipt, spent it according to their approved budget and report on the common account up the reporting line. Hence the source of the money is not relevant at the implementing agency level for accounting purpose.

After a certain period, the SOE shall be replaced by FMR. This is essentially one repor t to be presented to the pool of donors. The donors shall decide as to how to share the expenditures. Quarterly financial report This shall be prepared as a basis for requesting quarterly transfers Annual report shall include:

• A statement of Receipt and Payments including account balances, • A statement of Uses of Funds, • Notes to the accounts,

Special Account Reconciliation Statement The report shall be ready within six weeks of the end of the year.

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42

The CAD and CFU can identify at any time the amount of money received from any donor. The way report is presented to donors shall be Statement of Expenditures (SOE) or Financial Monitoring Reports (FMR) as explained below. Monthly reporting This is the basic reporting period. Quarterly, semi-annual or annual reports can all be prepared on the basis of the monthly reports. The format to be used for monthly reporting determines the formats to be used for Quarterly, semester and annual reports. It is advantageous to use similar formats for all. The monthly reports that are being used in the government reporting system shall be used for PSCAP purpose also. Under double entry accounting system this shall include, Capital Expenditure Report, Transfer Report, Receivable Report, Payables Report and the Trial Balance. Other reports are not relevant for PSCAP. (The specimen reports are given in annex XVII). No modification will be necessary on the supporting schedules that will accompany the monthly Trial Balance. However, the Trial Balance that will be used for PSCAP is a modified version of the Trial Balance in the Government Accounting System. This is done to enable BoFEDs to prepare one Trial Balance for all the sub-programs that are implemented in the region. BoFEDs has to maintain subsidiary ledger for each sub-program they are responsible for. The specific details for each sub program will be presented in the supporting schedules. The total of the supporting schedules will be transferred to the Trial Balance and the total of expenses paid by BoFED and the balance of other transactions for all the sub programs can be obtained from the Trial Balance. This will make easy reconciliation of the ledger balances with the bank balances. (Annex XVIII provides the amended trial balance.) The modified Trial Balance has three sections. The first section shows the expenditures incurred in the current month. This is obtained from the supporting schedules. The second section shows the total of the expenditures incurred in the months before the current month. This can be obtained from the last month’s Trial Balance. The Third section gives the total of expenditures incurred to the date of reporting. This column is important to follow up the expenditures incurred to date and also to easily reconcile the Trial Balance with ledger also with the bank balance. Under single entry accounting, the monthly report pack shall contain Ge/He/29/4/2, Ge/He/29/5/2 and Ge/He/29/3/2. Ge/He/29/4/2 is a summary sheet equivalent to the Trial Balance in double entry accounting. The existing format can be modified slightly to enable BoFEDs to prepare consolidated statement for all sub-programs they are responsible for. Ge/He/29/3, which is capital expenditure report shall be prepared for each sub program that is carried out in the region. The total from each page of the capital expenditure report shall be transferred to the modified Ge/ He/29/4(see annex XIX). The total of the expenditure can then be compared with the cash on hand and at bank. In addition, an information table shall be added at the top. The table shall contain:

Supervising unit Code Name of Public Body Name of Program Name of Sub -agency Name of Sub -program

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43

The above information shall help the CAD to correctly identify report and expenditures included in it. Ge/He/29/5/2 (annex XX) is equivalent to the Transfer Report under double entry bookkeeping. The same information shall be filled in it except that the account codes will be different. Again the above information table shall be printed on the existing format. Ge/He/29/3/2 is equivalent to the Capital Expenditure Summary under double entry bookkeeping. The same information shall be filled in it except that the account codes will be different. The above information table shall be printed on the existing format. In addition, two account code columns shall be used in the report. The first column shall be for the account codes under single entry bookkeeping system and the second column gives the equivalent codes under double entry bookkeeping system. This will increase the correctness of the reports, decrease the time of report processing at CAD and also familiarizes the single entry using regions with the double entry. Proposed format is given in (annex XXI) In addition to the usual monthly reporting, each federal implementing agency and BoFEDs shall attach an SOE as explained below. Bank reconciliation of the pooled accounts maintained for PSCAP purpose shall always accompany the monthly report. Format for the bank reconciliation is given in annex XXII. The timetable outlined above shall be observed to submit reports. Statement of Expenditure (SOE ) SOE is a way of requesting reimbursement of payments already made. In the initial period of PSCAP implementation, the SOE procedure shall be used to replenish the special accounts maintained in Ethiopia. Each donor will receive an SOE on the basis of which the donor will replenish its special account. When and to which donor an SOE will be send is a matter to be decided by the CFU. The CFU will establish some sort of mechanism to do this. Then it will prepare and submit the consolidated SOE to each donor alternately. The preparation of the consolidated SOE is the responsibility of the Counterpart Fund Unit (CFU) of MoFED. To ensure the consistency of the accounting records with the expenditures in SOEs, SOEs shall be prepared by each federal implementing agency and by BoFEDs, forwarded to CAD in the monthly report pack and then the CFU will receive the SOEs from the CAD. The CAD shall make preliminary check of the agreement of the SOEs with the other reports and records. A uniform SOE format shall be used by each implementing agency. A proposed format is given in annex XXIII. The SOE shall be clearly filled and approved before it is sent to the CAD. The CFU shall collect the monthly SOEs from CAD and prepare a consolidated SOE. The CFU also returns an approved SOE to the federal implementing agencies and BoFEDs so that the reporting entities could know the amount they have reported is fully accepted or not. The implementing agencies shall compare the SOE approved by the CFU and compare their record.

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44

If they agree to the corrections made by the CFU, then they shall amend their records accordingly. The format for the consolidated SOE shall be the same format as given for the implementing agencies except that columns shall be added to fill foreign currency amounts (See annex XXIV). If it decides that replenishment should be requested, then it will complete the necessary formalities in preparation for the request. This will include the application pre-screening checklist, the Application for Withdrawal, Special Account Reconciliation Statement, copy of Bank Statements and the necessary supporting documents. CFU is well acquainted with the procedures and hence there is no need to discuss the procedures. Financial Monitoring Reports (FMR) FMRs are intended to provide information whether or not funds disbursed to projects are being used for the purpose intended, project implementation is on track, and budgeted costs will not be exceeded. The FMR links financial reporting with activity reports and procurement reports. The emphasis of FMR is on the financial aspects of the project. In FMR system, the Accountant is responsible for the preparation of the financial reports, the technical specialists shall prepare the activity progress reports and the procurement staff shall prepare the procurement reports. In PSCAP, MoFED shall be responsible for the preparation of the financial reports and the MCB Plan and Program Directorate shall be responsible for the activity and procurement reports. Financial reports under FMR must include a statement showing for the period and cumulatively (project life or year to date) cash receipts by sources and expenditures by main expenditure classifications; beginning and ending cash balances of the project; and supporting schedules comparing actual and planned expenditures. The Statement of Receipts and Payments together with Use of Funds by Sub Program as a supporting schedule (see annex XXV and XXVI) shall be adequate to satisfy the requirements of the FMR. The CAD in collaboration with CFU shall be responsible to prepare these reports. The monthly reports gathered from implementing agencies shall be processed to update the records of PSCAP in general that is implemented in CAD. Based on that information the periodic Statement of Receipts and Payments with the supporting schedule shall be prepared. As the special account is maintained in USD, the Statement of Receipt and Payments need also be prepared in USD. The records of PSCAP are maintained in Birr. At first, the Statement of Receipt and Payments shall be prepared in Birr. Then it will be translated to USD. The rate that will be used to translate the report shall be:

• Opening balance of Special Accounts, at a rate ruling on that date, • Closing balances of Special Accounts, at a rate ruling on that date, and

• Expenditures during a reporting period, at simple average rate of transfers from Special

Account to Pooled Birr Account during the reporting period. The FMR prepared in this way shall be the report that is going to be presented to all donors.

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45

Before presenting it to the donors, the Statement of Receipt and Payment and the supporting schedule shall be sent to the Plan and Program Directorate of MCB for the latter to compare it with the activity progress and procurement report it is compiling. Similarly, CAD shall receive copies of the activity and procurement reports prepared by MCB to check and agree that the reports are consistent with the financial report. When MCB and MoFED agree that the report can be presented to donors, the reports shall be submitted. The frequency for presenting FMR to donors shall be six monthly and the report shall be submitted within 45 days from the end of the reporting period. Quarterly financial reports These reports are used as a basis to make transfers to federal implementing agencies and BoFED. The format and the purpose are fully explained in previous section. Annual reports These are mainly prepared for audit purpose. Annual reports are not separate reports from the FMRs that will be prepared periodically (at lease six-monthly). Rather they are similar except that the periodic FMRs shall be consolidated to give the annual reports. To facilitate consolidation and to reduce degree of error in compiling the annual accounts, the periodic reports shall be prepared for periods that start on July 8 (Hamle 1) of the year and ends July 7 (Sene 30) of the next year. If, for example, FMRs are prepared quarterly, the four quarter of the year will be: July 8 – October 7; October 8 – January 7; January 8 – April 7; and April 8 – July 7. The annual report will then become the consolidated report of the four quarters. FMRs may not be introduced as a disbursement mechanism during the initial period of the project implementation. For the annual accounts purpose however, the two financial reports, Statement of Receipts and Payments and Use of Funds by Sub Program, will be prepared starting from year one. Whenever there are figures that need additional explanations, notes to the accounts shall be prepared. The notes to the accounts shall also be used to give brief information about the nature of the project, the accounting policies followed in the preparation of the financial statements and any additional information relevant for the reader of the financial statements. The two annual financial statements shall be the one that will be presented to the auditors to start their annual audits.

3.4. TRAVEL EXPENSES

Each travel has to be requested and authorized in advance of the travel. The traveller has to liquidate the travel advance when returning from the trip. The government Perdiem rate shall be used for local travels.

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46

Travels are usually pre-planned. The traveller shall fill travel advance request and authorization form (Form 1 as shown in annex XXVII). The officer approving the trip shall sign the form. The form shall be distributed to the finance section, personnel section and property section. Upon return from the trip, travel expense report form (Form 2 as shown in annex XXVIII) shall be filled. The Budget and Accounts Head of the agency shall sign the form after checking the accuracy. This form states the actual expenditure of the trip and the amount due to or from the agency. The amount due to the traveller shall be paid by check or in cash depending on the amount. The amount due to the agency shall be collected by cash receipt or shall be deducted from the traveller’s salary. There is another form (Form 3 in annex XXIX) that should be filled upon return from trip. It is Perdiem Payment Control and Work Performed Record. This form, although given number three, has to be filled before form 2. It explains the detail of the travel and the work performed during the travel. The form shall be signe d by the traveller and shall be approved by the supervisor. This should be the basis to approve the expenses by the Budget and Finance Head.

3.5. PROCURMENT

Procurement usually starts by a purchase requisition. A purchase requisition form shall be filled by the user department and shall be approved by the department head. In PSCAP, the responsible person for PSCAP in the implementing agency shall approve the purchase requisition (see annex XXX). Prior to the approval by the responsible officer, the request shall be presented to the budget section for checking of the availability of the budget. If there is adequate budget for the item requested and the request is approved, the procurement process starts. Procurement of the consultancy service shall start when the user department requests for the service by referring to the approved procurement plan. The request shall be in writing. Then the procurement process starts as per the provisions of the PIP. Final or staged payments for services shall be made when the concerned department declares that the consultant have successfully delivered the service.

3.6. RECEIPT AND ISSUANCE OF GOODS

Procurement in PSCAP shall be carried out in accordance with the procedures explained in the Program Implementation Manual. Payment for purchases of goods and services shall be made if the procurement procedures are satisfied and duly approved payment request accompanied by the necessary documents is received.

A Store Receiving Voucher shall evidence receipt of goods by the store of the implementing agencies. Final payment for goods acquired shall only be made after the goods purchased are received in good condition and a copy of the receiving voucher is sent to the accounts. Issuance of stock for use shall be requested via store requisition and shall be issued via Store Issue Voucher.

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47

Purchased goods shall be inspected by the store before receiving. Inspection is made to check the goods brought to store do agree with the order put both in quantity and specification and that they are received in good condition. The concerned user should check specialist items, as the storekeeper might not have the appropriate knowledge of the items. After the items are checked, Receipt for Articles or Property Received-Model 19 (annex XXXI) shall be prepared to receive the goods in the store. One copy of the voucher shall be sent to the accounts section. The voucher shall be attached or adequately cross-referenced to the Payment Voucher through which the final payment to the supplier is made. Writing the Receipt for Articles or Property Received No on the Payment Voucher and vice versa can be adequate cross-referencing. At this point, the accountant shall reve rse all advance payments kept as debtors, if any, to the appropriate expense account using Journal Voucher. This is an important step as expenses incurred might otherwise be only partly reported. The user shall request issuance of stock through Store Requisition -Model 20 (annex XXXII). The Stores Head shall check the existence of stock and authorizes the issuance on a Delivery Order – Model 21 (annex XXXIII). The stores clerk shall issue the requested item to the user through Receipt for Articles or Property Issued Model 22 (annex XXXIV). Stock cards having detail of quantity and price shall be maintained by the store. Each receipt and issuance of goods shall be entered in the Stock Card – Mode 70C (annex XXXV). A person other than the Storekeeper shall maintain stock cards for each item. In addition to a Stock Card, the storekeeper may maintain registers of stock – Model 70A. Bin cards (annex XXXVI ) for each item shall also be maintained. Periodic inventory of the stock on hand shall be made and shall be reconciled with the Stock Card balance. Immediate action has to be taken on any stock shortage or overage. 3.7. MANAGEMENT AND CONTROL OF PROGRAM ASSETS All assets that will be purchased for PSCAP shall be expensed upon purchase. This is important because, the program is run using donor funds who will need report of all expenditures as and when incurred.

Fixed assets constitute assets that have the expected useful life of more than one year. Fixed assets shall be expensed upon purchase. Follow up record, Fixed Assets Register, shall be maintained to control the whereabouts of the assets.

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48

The process to acquire, receive and issue fixed assets shall be the process for receiving stock. After fixed assets are issued to the user, assets shall be included in a fixed assets register (annex XXXVII) with all the necessary details to know about the location and user of the assets.

Each fixed asset shall be identified using tag numbers organized in such a way that enables identification of the implementing agency, the program, and the nature of the asset, the user department and the asset number. For example, a computer purchased under PSCAP for BCB procurement desk can be assigned a tag as

“BCB/PSCAP/ PD /C /001”

A specific tagging system is not recommended in this manual as the implementing agencies have their own tagging system already. The important thing to do is to make sure that PSCAP is included in the numbering so that the program assets can be easily identified.

3.8. INTERNAL C ONTROLS

Each implementing agency shall ensure that adequate internal controls are put in place and that the controls are adhered to consistently. Among others, the internal control system should ensure that all transactions are recorded, the recorded tra nsactions have substance, they are recorded at correct amounts in the correct period in the correct accounts and that they are posted and summarised correctly. (For further explanation please refer the Project Implementation Plan).

3.9. AUDITING

3.9.1. EXTERNAL AUDIT The Office of the Federal Auditor General shall audit the annual financial statements of PSCAP or shall cause the accounts to be audited by independent auditors in accordance with the TOR for audit that will be agreed with the MCB. The Project Implementation Plan has provided sample TOR for audit. The annual financial statements for audit shall be ready within eight weeks after the end of the budget year. The audit shall be finalised with in nine months after the presentation of the financial statements.

3.9.2. INTERNAL AUDIT

As one of the programs in which the government has invested money in, the MoFED Inspectors shall be involved to carry out internal audit of the PSCAP. They shall include audit of PSCAP in their annual audit program. The internal audit reports referring to PSCAP shall be submitted to the MCB/ and MoFED. Corrective actions shall be taken based on the recommendations. Subsequent audit reports shall mention about the actions taken on the previous recommendations. As one of the programs managed by an implementing agency, the federal implementing agencies internal auditors shall include PSCAP in their annual audits. The report of the

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49

implementing agencies internal auditors shall be addressed and submitted to the head of the agency.

3.10. RETAINING OF DOCUMENTS According to Financial Documents Preservation Guideline No 5/1999 of MoFED, financial documents shall be preserved for ten years from the date they were created or up to two years after the audit by the Auditor General is completed, which ever comes last. For further detail please refer the guideline. It would be very difficult and time consuming to transfer documents to a central point. All documents shall be kept with the respective federal implementing agency and BoFEDs. Documents refer to all the ledger cards, registers and supporting documents. The PSCAP documents shall be kept separately and shall be filed in a way that makes referring to the documents very easy. The filing system should enable the auditors of PSCAP and any one who is authorized to check the documents of PSCAP to easily and systematically trace the documents and information they are looking for.

3.11. USING COMPUTERS

As discussed in this manual, the final report preparation is the responsibility of the CAD and CFU. At the implementing agency level, there is no need for new way of compiling the financial information for PSCAP purpose except that a separate budget and account codes will be used. What this entails is that, the existing system in each implementing agency, be it manual or computerized, will continue to be used for PSCAP. Simple templates for budget tracking and report preparation can be prepared on Microsoft Excel centrally and can be distributed to the implementing agencies’ accountants with a ppropriate training. This would speed up the process for decision making and reporting.

3.12. REVISION OF FINANCIAL MANUAL

The procedures described in this section may need revision from time to time so that they can address the practical difficulties that may be encountered during the actual implementation of the program, and to increase the efficiency and effectiveness of the financial management function. Any of the stakeholders in the PSCAP, may propose amendments to any of the procedures and/ or additional procedures. The auditors, both internal and external, may also

Upon due approval of MCB, amendment to and/ or introduction of new procedures shall be annexed to the existing procedures until full revision of the procedures is necessitated and made.

The retention of documents shall be governed by Financial Documents Preservation Guideline No 5/1999 of MoFED. Proper filing system shall be introduced.

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50

propose amendments. Proposed changes shall be addressed to MoFED who will summarises the proposed changes and present it to the MCB. The MCB shall examine or shall cause examination of the proposed change and shall approve the change. The change shall be effective from the date of the approval. The change shall be adequately cross referenced to the relevant section of this manual and shall be annexed to the manual until a full revision of the entire financial management procedures may be made.

3.13. ANNEX ANNEX Budget Tracking Report I. Disbursement Request II. Quarterly Reports III. Cash Receipt Voucher IV. Bank Payment Voucher V. Cash Payment Voucher VI. Petty Cash Book VII. Suspense Payment Voucher VIII. Model 6 IX. Ge/He/23 X. Journal Voucher XI. Model 64B – Journal voucher for non-cash trascations XII. Foreign currency Transactions Register XIII. Local currency Transactions Register XIV. Budget Ledger Card XV. Financial Ledger Card XVI. Monthly report formats XVII. Trial Balance XVIII. Ge/He/29/4/2 XIX. Ge/He/29/5/2 XX. Ge/He/29/3/2 proposed format XXI. Bank Reconciliation Statement of PSCP Bank Account XXII. Statement of Expenditure (SOE) XXIII. Consolidated Statement of Expenditure (SOE) XXIV. Statement of Receipts & Payments XXV. Use of Funds by Sub Program XXVI. Travel Advance Request and Authorization Form XXVII. Travel Expense Report Form XXVIII. Per Diem Payment Control And Work Performed Record XXIX. Purchase Requisition XXX. Receipt for Articles or Property Received-Model 19 XXXI. Store Requisition - Model 20 XXXII. Delivery Order – Model 21 XXXIII. Receipt for Articles or Property Issued Model 22 XXXIV. Stock Card XXXV. Bin Card XXXVI. Fixed Assets Register XXXVII. Chart of account - summarized XXXVIII.

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Excerpt from the PIP – Section IV Resource Allocation & Mana gement

XXXIX.

Annex I

THE FEDERAL DEMOCRATIC REPUBIC OF ETHIOPIA MOFED PSACAP

BUDGET TRACKING REPORT

Implementing agency: MOR/BoFED Month: July 2004

Budget lines

Account code

Approved

revised budget

Expenditure to date

Budget balance

Birr Birr Birr Tax systems reform Goods & services 6200 100,000 10,000 90,000

Office supplies 6212 50,000 5,000 45,000 Printing 6213 20,000 2,000 18,000 Educational supplies 6215 10,000 1,000 9,000 Other material and supplies 6218 20,000 2,000 18,000

Contracted service (Consultants, audit) 6250 90,000 50,000 40,000 Contracted professional service 6251 30,000 35,000 (5,000) Freight 6255 30,000 5,000 25,000 Fees and charges 6256 30,000 10,000 20,000

Training 6270 100,000 25,000 75,000 Local training 6271 50,000 - 50,000 External training 6272 50,000 25,000 25,000 Grand total 290,000 85,000 205,000

Prepared by: ________________ Agreed by: _______________

Budget accountant Accountant Checked by: _____________

PSCAP 1

Comment • The budge for goods and service in general appears to be spent according to physical plan. • The budget for contracted service is spent very fast. The budget for contracted service is

over spent. This is due to price change and not out put increase. • The budget for local training is not spent although the activity plan shows that the activity

had to be performed in the month of July.

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52

Budget & accounts head

Annex II


DISBURSMENT REQUEST

Implementing agency/Region: MOR/SNNPR BoFED QUARETER: 2 (October 8 to December 8, 2004) Request No: ____2__

Birr Birr Budget for the next quarter (attached) XXX Less: Purchases to be made centrally (XXX) XXX Less: Balance of cash at bank XXX

Balance of cash on hand XXX XXX Amount requested for transfer XXX

Prepared by: ________________ Checked by: _____________

Accountant Budget & accounts head Authorized by: _______________ Approved by: _______________

Implementing agency head BoFED Head

PSCAP 2

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53

Annex III


QUARTERLY REPORT

Implementing agency/Region: MOR/SNNPR BoFED QUARETER: 2 (October 8 to December 8, 2004) Request No: ____2__

Expenditures

Budget lines

Account code

Previous quarter

Current quarter

Cumulative

Next Quarter Budget

Birr Birr Birr Birr Tax systems reform

Goods & services 6200 10,000 90,000 100,000 150,000 Office supplies 6212 5,000 45,000 50,000 25,000 Printing 6213 2,000 18,000 20,000 30,000 Food 6216 1,000 9,000 10,000 70,000 Other material and supplies 6218 2,000 18,000 20,000 25,000

Contracted service (Consultants, audit)

6250

50,000

40,000

90,000

200,000

Contracted professional service

6251

25,000

5,000

30,000

150,000

Insurance 6254 5,000 25,000 30,000 10,000 Fees and charges 6256 10,000 20,000 30,000 40,000

Training 6270 25,000 75,000 100,000 250,000 Local training 6271 - 50,000 50,000 60,000 External training 6272 25,000 25,000 50,000 190,000 Grand total 85,000 205,000 290,000 600,000

Prepared by: ________________ Checked by: _____________

Accountant budget & accounts head

Authorized by: _______________ Approved by: _______________ Implementing agency head BoFED Head

PSCAP - 3

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54

Annex XVIII

y£úB ¥m²z¾ Trial Balance

m¼£ 27 ymNG|T m¼b@t$

|M_______________________ mlÃ q$_R

______ wR______

Name of Public Body:______________________

Code ______ Month

yPéG‰Ñ |M_____________________________

mlÃ q$_R

______

Name of Program: ________________________

Code ______

y|‰ KFl# |M_____________________________

mlÃ q$_R

______

Name of Sub Agency: _____________________

Code ______

yN;#S PéG‰Ñ |M________________________

mlÃ q$_R

______

Name of Sub Program: ______________________

Code ______

yPéjKt$ |M_____________________________

mlÃ q$_R

______

Name of Project: __________________________

Code ______

yÍYÂNS MNu_____________________________

mlÃ q$_R

______

Source of Finance: ________________________

Code ______

yÆNK £œB q$_R_____________________________

PSCAP - 4

________________________________________________________________________


55

Bank Account Number: ______________________

¾›G<’< ¨

Current Month ÁKñƒ ¨^ƒ Previous

months •eŸ ›G<” É[e Cumulative

y£œB mdB y£œB mGlÅ Áb!T KÊÄ!T ÉU Áb!T KÊÄ!T ÉU Áb!T KÊÄ!T ÉU

Account Code

Account Description Debit Credit Total Debit Credit Total Debit Credit Total

xgR WS_ gb!½ :RÄ¬½ BDR £œB ¶±RT Revenues/Assistance/Loan: (From Revenue/Assistance/Loan Report)

wÀãCÝ( Expenditures:

mdb¾ wÀ ¼kmdb¾ wÀ £œB ¶±RèC DMR¼ Recurrent expenditure (Total of Recurrent Expenditure Reports)

yµpE¬L wÀ ¼kµpE¬L wÀ £œB ¶±RèC DMR¼ Capital expenditure (Total of Capital Expenditure Reports)

Civil Service Reform ¾c=y=M ›ÑMÓKAƒ ThhÁ

Justice System Reform ¾õƒI e`¯ƒ” ThhÁ

Tax System Reform ¾•¡e e`¯ƒ” ThhÁ

Urban Management Reform ¾Ÿ}T ›e}ÇÅ` ThhÁ

Information & Communication Technology Reform ¾›=”ö`T@i” ¢S<’>Ÿ?i” ‚¡•KAÍ= ThhÁ

District Level Decentralization Reform u¨[Ç Å[Í ¾eM×” T" óðM e[›ƒ” ThhÁ

ZWWéC ¼kgNzB ZWWR £œB ¶±RèC DMR¼ Transfers: (from Transfer Report)

tsBúb! £œïC ¼ktsBúb! £œB ¶±RèC DMR¼ Receivables: (from Receivables

________________________________________________________________________


56

Report) Civil Service Reform

¾c=y=M ›ÑMÓKAƒ ThhÁ





District Level Decentralization Reform u¨[Ç Å[Í ¾eM×” T"óðM e[›ƒ” ThhÁ

tkÍY £œïC ¼ktkÍY £œB ¶±RT¼ Payables: (from payables Report)







l@tR åF KÊÄ!èC ¼b£œB mdB kx-”§Y mZgB¼ Letters of Credit: (by account code-from General Ledger)




________________________________________________________________________


57




5601 ytÈ‰ hBT ¼kx-”§Y l@jR¼ Net Assets/Equity (form General Ledger)

_Ê gNzBÂ y_Ê gNzB Xk#L êU Ã§cW ¼ b£œB mdB kx-”§Y l@jR¼ Cash & Cash Equivalents (by account code-from General Ledger)

4101 bœ_N Ãl gNzB Cash on hand

4102 bÆNk Ãl yWu MN²¶ gNzB Cash at bank in foreign currency

4103 bÆNK Ãl gNzB Cash at bank

DMR

Total

________________________________________________________________________


ANNEX XIX

THE FEDERAL DEMOCRATIC REPUBIC OF ETHIOPIA

(MOFED) PSACAP

TRIAL BALANCE SUMMARY REPORT ¾¾ \ ¾Ñu=“ ¾¨Ü H>Xw Te• mÁ

GE/HE/29/4

¾-----------------------¨ 19 ------ ¾H>dw ›p^u= S/u?ƒ ¢É ¡õM 4 TÖnKÁ

pê ÑH> 29/4

T°/S”Óeƒ/¡MM µ” ¨[Ç › •eƒ ”®<e ›`•eƒ ”®<e”®<e › •eƒ ¾Ñ”²u< M¡ U`S SÓKÝ }kuM Ÿ< cÖG< ¡õM 3 "ú•M ¨Ü Civil Service Reform

¾c=y=M ›ÑMÓKAƒ ThhÁ

T[ÒÑÝ Justice System Reform ¾õƒI e`¯ƒ” ThhÁ




Ÿ²=I uLÃ ¾}SKŸ}¬ TÖnKÁ“ Ÿ²=I Ò` ¾}ÁÁ²<ƒ c”Ö[¼‹ ¾ -------- ¨` 19-------¾Ñu=“ ¨Ü ƒ¡¡K— H>dw ¾T>ÁSK¡~ SJ“†¬” uò`T‹” •“[ÒÓ×K”::


¾uLÃ vKeM×”

¾H>dw g<U

¾Ñ”²w Á»

¡õM 5 K"ú•M ¨Ú 4012 ò`T ðce 4020

T°[Ó K” wÉ` KS”Óeƒ W^}™‹ 4101

K?L (W”Ö[» }ÁÃ³DM) 4102 ¾XØ” Ñ<ÉKƒ 4201 Ç=þ¸ƒ Ñ<U\¡ (W”Ö[» }ÁÃ³DM) 5300

Tdcu=Á K?L 5400 ¾I pê ¾T>ÁÑKÓK¬ KÓUÍ u?ƒ Ñu=“ ¨Ü Te• mÁ w‰ ’¬

"Kð¬ ¨` ¾µ[ W’É 4004 "Kð¬ ¨` ¾µ[ v”¡ 4003 Ÿ¨Ü k] uXØ” uØ_ Ñ”²w 4001 K}Ÿ•Â ¨ ¾T>µ` uv”¡ 4003 Ÿ¨Ü k] uXØ” uØ_ Ñ”²w 4001 Ÿ¨Ü k] uc’É 4004 TS³²—

PSCAP - 5

________________________________________________________________________


Annex XXI


MONTHLY CAPITAL EXPENDITURE REPORT

Project Code Head Sub-Head Project

Account title Double entry Single entry Refund Office supplies 6212 8303 Printing 6213 8303 Food 6216 8303 Fuel and lubricants 6217 8303 Other material & supplies 6218 8303 Miscellaneous equipment 6219 8303 Research & development supplies 6223 8303 Purchase of vehicles 6311 8205 Purchase of equipment 6313 8204 Purchase of building s, furnishings & fixture 6314 8206 Contracted professional services 6251 8101 Rent 6252 8303 Advertising 6253 8303 Insurance 6254 8303 Fees and charges 6256 8304 Electricity charges 6257 8303 Telecommunication charges 6258 8303 Water & other utilities 6259 8303 Perdiem 6231 8501 Transport fees 6232 8501 Official entertainment 6233 8303 Local training 6271 8501 External training 6272 8501 Training related Perdiem 6273 8501 Training related transport fee 6274 8501 Salaries to permanent staff 6111 8301 Wages to contract staff 6113 8302 Wages to causal staff 6114 8302 Wages to external contract staff 6115 8302 Allowance to permanent staff 6121 8301

Reporting entity Code Federal/Region Head Sub-Head

Ge/He/29/3/2 – PSCAP 6

Supervising unit Code Public Body Program Sub-agency Sub-program Project

________________________________________________________________________


Annex XXI (continued)

Allowances to contract staff 6123 8302 Allowance to external contract 6124 8301 Government contribution to permanent staff pension 6131 8301 Maintenance & repair of vehicle 6241 8303 Maintenance & repair of equipment 6243 8303 Maintenance & repair of building, furnishings & fixtures 6244 8303 Total to be carried forward to Ge/He/29/4/2

Annex XXII

PSCAP 7

________________________________________________________________________



PSCAP BANK RECONCILIATION STATMENT

Implementing agency: MFA For the month ended on: August 8, 2004 Birr Opening Bank Balance as per ledger (8/7/04) 100,000 Transfer received from BoFED/MoFED 400,000

Total cash available 500,000 Total expenditures for the month (350,000) Cash at bank Balance as per ledger (8/8/04) 150,000 Bank balance shown in the Bank statement (8/8/04) 160,500 Add: Deposits in transit

CRV 006 – Refund from a supplier 10,000 CRV 009 – Refund of travel advance 1,500

11,500 172,000 Less: Checks written but not presented for payment

BD 12345 6,000 BD12349 7,000 BD12400 9,000

(22,000) 150,000 Prepared by ______________________ Checked By________________

Accountant Budget &Accounts Head

Annex XXIII


MOFED PSCAP 8

________________________________________________________________________


PSACAP MONTHLY STATEMENT OF EXPENDITURE (SOE)

Project Code Head Sub-Head Project

For the month of _________________Year ___________ SOE No _____________

Item No Reference No Payment Voucher or Model 6

Brief description of Goods, Works or Services

Name and address of suppliers

Total amount of contract

Invoice amount (Model 6)

Birr Birr

NB: Supporting documents should be attached if a payment is greater than the allowable threshold. Prepared by: ________________ Checked by: _____________

Accountant budget & accounts head

Author ized by: _______________ Approved by: _______________ Implementing agency head BoFED Head

Reporting entity Code Federal/Region Head Sub-Head

Supervising unit Code Public Body Program Sub-agency Sub-program Project

________________________________________________________________________


Annex XXIV


CONSOLIDATED STATEMENT OF EXPENDITURE (SOE)

FOR THE PERIOD FROM ____________ TO________________

Item No

Reference No Payment Voucher or Model 6

Brief description of Goods, Works or Services

Name and address of suppliers

Total amount of contract

Invoice amount (Model 6)

Eligible percentage of Finance

Amount Eligible for

Finance

Remark

Birr Birr Birr US Grand Total

PSCAP 9

Page Of Application No Credit/assistance No Currency Rate

Counter Part Fund Unit Prepared by: Approved By: Position: Position: Signature: Signature:

________________________________________________________________________


Annex XXV

THE FEDERAL DEMOCRATIC REPUBIC OF ETHIOPIA MOFED PSCAP

CONSOLIDATED STATEMENT OF RECEIPTS AND PAYMENTS FOR THE MONTH ENDING SEPTEMBER 8, 2004

Previous months Current month Birr Birr Birr Birr RECEIPTS

IDA FUNDS 1,000,000 1,000,000 GOVERNMENT FUNDS 1,000,000 1,000,000 DFID 1,000,000 1,000,000 SIDA 1,000,000 1,000,000

Total Financing 4,000,000 4,000,000 Less: Expenditures by subprograms Federal PSCAP

Civil Service Reform 100,000 200,000 District level Decentralization 100,000 200,000 Justice System reform 100,000 200,000 Urban management Capacity Building 100,000 200,000 Tax System Reform 100,000 200,000 Information & communications Tech 100,000 200,000 Program support 100,000 200,000

700,000 1,400,000 Regional PSCAP (detail for each region)

Civil Service Reform 100,000 200,000 District level Decentralization 100,000 200,000 Justice System reform 100,000 200,000 Urban management Capacity Building 100,000 200,000 Tax System Reform 100,000 200,000 Information & communications Tech 100,000 200,000 Program support 100,000 200,000

700,000 1,400,000 Total Payments 1,400,000 2,800,000 Excess of Receipts over payments 2,600,000 1,200,000 Add: Opening cash balances

Pooled Birr account - 1,000,000 Special Accounts _______- 1,600,000

________- 2,600,000 Net available cash 2,600,000 3,800,000 Comprising

Pooled Birr account 1,000,000 1,500,000 Special Accounts 1,600,000 2,300,000

2,600,000 3,800,000

PSACP 10

________________________________________________________________________


Annex XXVI


PSCAP CONSOLIDATED USE OF FUNDS BY SUB PROGRAM

FOR THE MONTH ENDING SEPTEMBER 8, 2004

Current months Cumulative Planned Actual Variance Planned Actual Variance Birr Birr Birr Birr Birr Birr Federal PSCAP

Civil Service Reform 250,000 200,000 50,000 300,000 300,000 - District level Decentralization 250,000 200,000 50,000 300,000 300,000 - Justice System reform 250,000 200,000 50,000 300,000 300,000 - Urban management Capacity Building 250,000 200,000 50,000 300,000 300,000 - Tax System Reform 250,000 200,000 50,000 300,000 300,000 - Information & communications Tech 250,000 200,000 50,000 300,000 300,000 - Program support 250,000 200,000 50,000 300,000 300,000 ______-

1,750,000 1,400,000 350,000 2,100,000 2,100,000 ______ Regional PSCAP (detail for each region)

Civil Service Reform 200,000 200,000 - 350,000 300,000 50,000 District level Decentralization 200,000 200,000 - 350,000 300,000 50,000 Justice System reform 200,000 200,000 - 350,000 300,000 50,000 Urban management Capacity Building 200,000 200,000 - 350,000 300,000 50,000 Tax System Reform 200,000 200,000 - 350,000 300,000 50,000 Information & communications Tech 200,000 200,000 - 350,000 300,000 50,000 Program support 200,000 200,000 _____- 350,000 300,000 50,000

1,400,000 1,400,000 ______ 2,450,000 2,100,000 350,000 Total Project Expenditures 3,150,000 2,800,000 350,000 4,550,000 4,200,000 350,000

PSCAP 11

________________________________________________________________________


Annex XXX


PURCHASE REQISITION

Implementing agency/Region: MOR/SNNPR BoFED Requested by: ___________________________ Request Approved by: ________________________________ Budget checked by: ____________________________________ No Description Unit of

Measure Quantity Budget

code Budgeted

price Delivery

Date

Remark

PSCAP - 12

________________________________________________________________________


Annex XXXVI


BIN CARD

Implementing agency/Region: MOR/SNNPR BoFED Stock Item: _______________________________ Store No: _________________________________ Shelf No: _________________________________

Quantity Date

Ref No

Description Received Issued Balance

Remark

PSCAP - 13

________________________________________________________________________


Annex XXXVII


FIXED ASSETS REGISTER

Implementing agency/Region: MOR/SNNPR BoFED

Issued

Remark

Tag

Number

Description

Date of

purchase

Document Reference

Cost (Birr)

Voucher

No

Date To

(Name of user)

PSCAP - 14

________________________________________________________________________


ANNEX XXXVIII


SUMMARIZED CHART OF ACCOUNT

1. BUDGET CODES (For Both Double Entry And Single Entry Users)

BUDGET CATAGORY

CODE

Public body MCB 15/318 MFA 15/118 MoFED 15/152 MOR 15/156 ICTDA 15/325 Federal Supreme Court 15/122 Program PSCAP 08 Sub- agency Plan and Program Department 01 Federal implementing agencies other than MCB 00 Sub-program PSCAP - Tigray 01 PSCAP – Afar 02 PSCAP – Amhara 03 PSCAP – Oromia 04 PSCAP – Sumali 05 PSCAP – Benishangul gumuz 06 PSCAP – SNNPR 07 PSCAP – Gambela 08 PSCAP – Harari 09 PSCAP – Addis Ababa City 10

PSCAP - 15

________________________________________________________________________


PSCAP – DireDawa Administration Council 11 Federal implementing agencies 00

2. PROJECT CODE FOR DOUBLE ENTRY USERS

Project Civil Service Reform 001 Justice System Reform 002 Tax System Reform 003 Urban Management Reform 004 Information & Communication Technology Reform 005 District Level Decentralization Reform 006 Expenditure Management & Control Reform 007 Program Support 008

ANNEX XXXVIII

3. PROJECT CODE FOR SINGLE ENTRY USERS Project Civil Service Reform 01 Justice System Reform 02 Tax System Reform 03 Urban Management and Reform 04 Information & Communication Technology Reform 05 District Level Decentralization Reform 06 Expenditure Management & Control Reform 07 Program Support 08

4. ACCOUNT CODE FOR DOUBLE ENTRY USERS

Account title

Donor Category

Double entry

Remark

Balance sheet accounts

Cash on hand 4101

Cash at Bank – Foreign Currency -IDA 4102 Cash at Bank – Foreign Currency – XXX 4102 Cash at Bank – Foreign Currency - XXX 4102 Cash at Bank – Pooled Birr Account 4115 Cash at Bank – Implementing agencies 4103 Cash shortage & overage 4202 Other advance within government 4210 Advance to consultants 4252 Advance to suppliers 4253

________________________________________________________________________


Due to MoFED 5027 Other payables within government 5028 Transfers - cash 4015 Transfers –non cash 4050 - 4099 Net asset equity 5601 Revenue - External assistance 2000-2999 Revenue - External loan 3000-3999 Control account Goods and Services Goods 6200 Subsidiary accounts Office supplies 6212 Printing 6213 Food 6216 Fuel and lubricants 6217 Other material & supplies 6218 Miscellaneous equipment 6219 Research & development supplies 6223 Control account Fixed assets Goods 6310 Subsidiary accounts Purchase of equipment 6313 Purchase of building s, furnishings & fixture 6314 Control account

Contracted services

CONSULTANT

SERVICES

6250

Subsidiary accounts Contracted professional services 6251 Control account

Contracted services

CONSULTANT

SERVICES

6100

Subsidiary accounts Salaries to permanent staff 6111 Wages to causal staff 6114 Wages to external contract staff 6115 Allowance to permanent staff 6121 Allowances to contract staff 6123 Allowance to external contract 6124 Government contribution to permanent staff pension 6131 Control account Contracted services Operating

costs 6230

Rent 6252 Advertising 6253 Insurance 6254 Fees and charges 6256 Electricity charges 6257 Telecommunication charges 6258 Water & other utilities 6259 Control account Traveling & official entertainment service Operating

costs 6230

Subsidiary accounts Perdiem 6231 Transport fees 6232 Official entertainment 6233

________________________________________________________________________


Control account Training Training 6270 Subsidiary accounts Local training 6271 External training 6272 Training related Perdiem 6273

Training related transport fee 6274 Control account

Personnel service

Operating costs

6100

Subsidiary accounts Wages to contract staff 6113 Control account


Operating costs

6240

Subsidiary accounts Maintenance & repair of vehicle 6241 Maintenance & repair of equipment 6243 Maintenance & repair of building, furnishings & fixtures 6244

ANNEX XXXVIII

5. ACCOUNT CODE FOR SINGLE ENTRY USERS

Account title

Donor Category

Single entry

Asset Accounts Cash 4005 Cash at bank 4006 Staff debtors 4101 Cash shortage 4201 Custom deposit 5300 Other payable 5400 Transfers – capital 4015 Other cash transfers 4020 Control account Goods and Services Goods Subsidiary accounts Office supplies 8303 Printing 8303 Food 8303 Fuel and lubricants 8303 Other material & supplies 8303

________________________________________________________________________


Miscellaneous equipment 8303 Research & development supplies 8303 Control account Fixed assets Goods Subsidiary accounts Purchase of equipment 8204 Purchase of building s, furnishings & fixture 8206 Control account

Contracted services

CONSULTANT

SERVICES

Subsidiary accounts Contracted professional services 8101 Control account

Personnel service

CONSULTANT

SERVICES

Subsidiary accounts Wages to causal staff 8302 Wages to external contract staff 8302 Allowance to permanent staff 8302 Allowances to contract staff 8301 Allowance to external contract 8302 Government contribution to permanent staff pension 8301 Control account Contracted services Operating

costs

Rent 8303 Advertising 8303 Insurance 8303 Fees and charges 8304 Electricity charges 8303 Telecommunication charges 8303 Water & other utilities 8303 Control account Traveling & official entertainment service Operating

costs

Subsidiary accounts Perdiem 8501 Transport fees 8501 Official entertainment 8303 Control account Training Training Subsidiary accounts Local training 8501 External training 8501 Training related Perdiem 8501

Training related transport fee 8501 Control account

Personnel service

Operating costs

Subsidiary accounts Salaries to permanent staff 8301 Wages to contract staff 8301 Control account


Operating costs

Subsidiary accounts Maintenance & repair of vehicle 8303 Maintenance & repair of equipment 8303 Maintenance & repair of building, furnishings & fixtures 8303

________________________________________________________________________


ETHIOPIA: Public Sector Capacity Building Program Support Program

DETAILED PROGRAM DESCRIPTION

How PSCAP’s two components work

PSCAP is the scale-up of ongoing institutional transformation and capacity building activities through two components—one federal, and the other regional. Activities planned under these two components will be drawn from a menu of eligible expenditures consisting of PSCAP’s six subprograms and a mandatory program support activity. Drawing on this menu, each component is (i) planned based on annualized five-year drawing rights; (ii) adjusted semi-annually and annually; and (iii) reflected in participation and performance agreements with commitments to deliver on specific capacity building outputs.

• Component 1—Federal PSCAP: This component supports federal level activities across each of the six subprograms including those capacity building activities for which there are scale and network economies including those activities that require national level prototyping. The component is required to include basic program support activities to ensure effective implementation.

• Component 2—Regional PSCAP: This component constitutes the bulk of the Program and is designed to empower regions to adapt and implement national reform and capacity building priorities envisaged under PSCAP’s six subprograms in a manner that is efficient, accountable, and sustainable. Synergies and trade-offs between key subprograms will be fully leveraged through this component. Regions will also shift resources year-to-year and in-year from poor performing to higher performing subprogram activities. This component is also required to include basic program support activities to ensure effective implementation.

Drawing down on activity menus within PSCAP Subprograms The objectives and specific menu of activities that fall within each subprogram of PSCAP are explained below. Selected and planned on a annual basis, these activities provide the building blocks for the components described above. Subprogram 1—Civil service reform The overall objective of the Civil Service Reform Subprogram is to promote the development of an efficient, effective, transparent, accountable, ethical and performance-oriented civil service at the federal, regional, and local levels. Under this subprogram, beneficiaries draw down on support across the following seven areas:

________________________________________________________________________


§ Strengthening the capacity of Civil Service Reform (CSR) Coordinating structures is designed to

enable CSR coordinating structures at federal, regional and local levels to more effectively support target institutions in implementing reforms and performing at levels that citizens require of them. Specifically, the following activities are envisaged: (1) review and redesign of the organizational structures as well as roles and responsibilities of CSR coordinating structures; (2) assessment and implementation of jobs and staffing requirements for change management and results-oriented performance; (3) assessment, management, and implementation of training requirements including preparation of materials, training of trainers, packaging of generic training activities, and coordination of external training or study tours; (4) design, development, and adoption of appropriate CSR change management (including M&E) and coordination systems; and (5) strengthening of Information, Education, and Communication activities including the provision of equipment and technical know-how.

§ Improving expenditure management and control activities seek to deepen implementation of the

Country Financial Accountability Assessment Report and Country Procurement Assessment Report Action Plans, strengthen Ethiopia’s public sector fiduciary framework, and in the process, improve the efficiency and effectiveness of public expenditure management through the following capacity building activities: (1) development of a comprehensive legal framework for public sector financial administration; (2) nation-wide adoption of the new budget classification systems and related budget reforms; (3) roll-out of the double entry accounting system; (4) development of medium-term planning systems including the transition from the existing Public Investment Program into a Public Expenditure Program or PEP system and its integration with strategic planning and management initiatives; (5) implementation of procurement reforms; (6) strengthening of the internal audit function including the introduction of systems audits; (7) modernization of cash and asset management; and (8) roll-out of financial management information systems.

§ Improving governance of human resources management and control aims to instill ethical, merit-

and performance-based personnel management practices in the Ethiopian civil service through the following capacity building activities: (1) development and implementation of the prototype rules, regulations, and policies for human resource development, time management, promotion and transfer, as well as job grading and remuneration; (2) rollout of the results-oriented performance evaluation system and related incentive measures; (3) development and installation of payroll management as well as more comprehensive human resource management information systems; (4) strengthening of human resources through improved in-service training and sensitization of civil servants of key Government policies.

§ Improving performance and public service delivery is a spearhead of the overall Civil Service

Reform Program and aims to install a performance management system across ministries, agencies, and bureaus (MABs) in a phased manner. Specifically, the following activities are envisaged: (1) assessment of performance barriers through client surveys, business process and functional reviews, and training assessments; (2) preparation of targeted performance improvement plans and more comprehensive strategic plans; (3) retooling, training, implementation support, and related technical assistance for implementation of performance improvement initiatives.

§ Improving accountability and transparency activities include: (1) strengthening of external audit

and parliamentary oversight for economic governance; (2) technical assistance for promotion of performance monitoring techniques including expenditure or input tracking surveys, cost efficiency studies, and service delivery report cards; (3) development and implementation of

________________________________________________________________________


ethics management and anti-corruption policies; and (4) continuing support for the development of accounting and auditing professions.

§ Strengthening top management systems through: (1) the development of new and improved

strategic planning and management systems, performance measurement techniques, and decision-making methods to aid civil service management; (2) training of top managers in strategic planning, performance measurement, top management decision-making, and value for money management; (3) development and implementation of top management development systems inter alia through leadership training and preparation of handbooks.

§ Building the policy and institutional capacities of emerging regions such as Afar, Somalia,

Benishangul-Gumuz and Gambella, through: (1) assessment of existing civil service institutions including identification of capacity and infrastructure constraints as well as performance barriers; (2) development, on a learning by doing basis, of alternative techniques for implementing modern civil service management practices and reforms in emerging regions; (3) development and implementation of basic or “hybrid” legislation, structures, and systems to support basic governance improvements in emerging regions.

Subprogram 2—District-level decentralization The District-Level Decentralization Subprogram (DLDP) seeks to deepen the devolution of power to the lower tiers of regional government, to institutionalize decision-making processes at the grassroots level with a view to enhancing democratic participation, to promote good governance, and to improve decentralization service delivery. Capacity building support under the subprogram covers the following seven areas: § Capacity building for manning and training activities support the following technical assistance

activities: (1) preparation of human resource plans for woredas including aggregate projections of staffing requirements; (2) assessment of short-term training needs for woredas; (3) development of modules for short-term in-service training for electorates, administrators and civil servants in areas such as decentralization policy and strategy, local governance and capacity building, democratization, grassroots participation, general management, monitoring and evaluation, and local level planning; (4) development of systems for provision and evaluation of in-service training; and (5) training of trainers in facilitation techniques to support training of woreda level personnel.

§ Grassroots participation support activities for woredas includes technical assistance and training

activities for (1) further development of local grassroots participation framework manual and related monitoring and reporting mechanisms; (2) promotion of participatory techniques in woredas including the involvement of NGOs, civil society institutions, and other donor agencies in the development process at the local level; (3) measurement of the impact of participatory techniques and processes.

§ Capacity building for woreda institutions and organizations involves: (1) technical assistance for

gap analysis of functional assignments and remedial actions; (2) preparation of restructuring guidelines based on the legal framework of the regional governments and sample woredas; (3) implementation support for restructuring and performance improvement.

§ Capacity Building for Program Development includes technical assistance for the following: (1)

assessment and refinement of decentralization strategies and linkages among programs & sectors; (2) assessment of the impact of decentralization policy; (3) conduct of policy analysis on capacity building and decentralization; (4) development of benchmarks and monitoring and evaluation

________________________________________________________________________


system for implementation of DLDP and strengthen the capacity of DLDP office; and (5) evaluation of PSCAP plans of woredas for nine regional governments and evaluation of the overall performance of woredas for nine regional governments.

§ Capacity building for woreda fiscal transfer and own revenue enhancement comprise the

following technical assistance activities: (1) studies, development, and adoption of model formula and budget allocation system for region-woreda block grant; (2) studies on options for capital investment and sector priority setting at woreda level; (3) identification of institutional constraints on and remedial measures for own revenue collection, utilization, and revenue sharing at the woreda level.

§ Capacity building for woreda planning and financial control aims to strengthen expenditure

management and related fiduciary aspects of woreda decentralization through: (1) the development and implementation of a local (Woreda) multi-year planning system and fiscal framework; (2) training and technical assistance for improving reporting and supervision practices; and (3) the development and roll out of budget consultation systems to ensure participatory woreda planning and budgeting. It is important to note that capacity building activities related to financial management such as the roll-out of budgets and accounts reforms will be undertaken at the woreda level under the “governance of financial resource management” activities envisaged under the CSRP.

§ Minimum service standards for woredas will help establish minimum basic service levels in

priority sectors inter alia through: (1) technical assistance for refinement of minimum standard service indicators; (2) the development of general guidelines for rural woredas; and (3) assessment of the implementation of minimum service levels including through performance benchmarking at the woreda level.

Subprogram 3—Justice system reform The Justice System Reform Subprogram aims to promote the rule of law as well as the efficient and effective functions of the justice system as part of Ethiopia’s democratization and private sector development processes. This subprogram, currently a work-in-progress, will receive Bank assistance for the following activities: § Strengthening of the Justice Systems Reform Office will involve (1) review of the organizational

structures as well as roles and responsibilities of Justice System Reform Office structures; (2) assessment and implementation of jobs and staffing requirements for change management and results-oriented performance; (3) assessment, management, and implementation of training requirements including preparation of materials, training of trainers, packaging of generic training activities, and coordination of external training or study tours; (4) design, development, and adoption of appropriate change management (including M&E) and coordination systems; and (5) strengthening of Information, Education, and Communication activities including the provision of equipment and technical know-how.

§ Strengthening the judiciary comprises the following capacity building activities : (1) training and

professional development of judges and court clerks (with a special focus on the training of female judges); (2) establishment of training institutes for the judiciary; (3) court administration reform; (4) implementation of modern case load management systems within federal and regional courts; and (5) identification of measures to enhance access to justice.

§ Law Revision and law reform initiatives include consultancy services for : (1) technical analyses

and studies on the establishment of systems and procedures for declaring income and property;

________________________________________________________________________


(2) reviews and analyses in new areas of law; (3) publication and distribution of legal research materials; (4) compilation, consolidation and distribution of legislation and regulations; (5) studies on procedural, commercial, and stock exchange draft laws.

§ Strengthening legislative processes will be achieved through (1) training, technical advisory

services, and acquisition of equipment for staff of federal and regional standing committees on legislative drafting and analysis of legislative process and management; and (2) training for members of standing committees on principles of federal grant and intergovernmental fiscal framework, monitoring and impact assessment, HIV/AIDS and gender issues, accountability and participation.

§ Law Enforcement Organ capacity enhancement through: (a) establishment of community policing

system; (b) upgrading existing national forensic laboratory; (c) developing a national crime prevention strategy; (d) developing a program of continuous professional development training for prosecutors; (e) developing and delivering special training to police officers to enable them properly direct and manage police institutions with a view to developing a modern police force; (f) conducting continuous professional development for members of the police on crime prevention, human rights, constitutional law, criminal procedure, investigation techniques, community policing, and the management of evidence; (g) developing training standards for penitentiary staff; (h) providing Police and the Penitentiary Administration for the installation of modern equipments; (i) equipping the law enforcement organs with information communication technology; (j) undertaking training and workshops for members of parliament and staffs; (k) undertaking revision of the existing laws and enacting new legal provisions where required; (l) conducting study on comprehensive national justice system reform program; (n) developing a publication and distribution of proceeding of legislation; (o) compiling, consolidating and distributing legislation and regulations; (p) publishing and distributing legal research materials; (q) procuring information and other working facilities; (r) undertaking study on the establishment of systems and procedures for declaring income and property; and (s) developing by-laws of the Human Rights Commission and Ombudsman’s office.

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Subprogram 4—Urban management capacity building The objective of the Urban Management Reform Subprogram is to enhance the capacity of municipalities in the delivery of services and enable urban centers to play a more effective role in social and economic development. Three sets of activities, financed under PSCAP, are envisaged. § Federal and regional urban management policy involves technical assistance and support for (1)

preparation of a National Urban Development Policy; (2) preparation of a National Urban Land and Housing Policy and Strategy; (3) preparation of a Model Municipality Act; (4) establishment of the Urban Development Fund (UDF); and (5) establishment of the National Association of Municipalities.

§ Deepening the process of decentralization covers support for (1) preparation of model operating

manuals and prototypes on financial management, procurement and contract administration, solid waste management system, operations and maintenance of infrastructure services, archive management, organizational structure and staffing plan, personnel policies and incentive mechanisms, land information systems, model municipality acts, model city court systems, municipality revenue and inter-governmental fiscal transfer systems (including service charges), and urban planning systems; (2) strengthening of relevant federal and regional institutions to provide technical support; (3) development of efficient revenue mobilization and fiscal transfer mechanisms including analyses of revenue potential of various urban centers; and (4) establishment of regional and town planning units.

§ Local government restructuring and capacity building involves technical assistance and

implementation support for the following municipal level activities: (1) the delivery of sanitation services; (2) the supply of serviced of urban land; (3) restructuring of the municipal financial system; (4) restructuring and preparation of staffing plans; (5) introduction of land information systems; (6) restructuring of services delivery systems in the areas of procurement and contract administration, operation and management of infrastructure services, overall municipality service delivery system, revenue mobilization and fiscal transfer; and (7) provision of "bulk" generic training to regional and municipality staff.

Subprogram 5—Tax systems reform The Tax Systems Reform Subprogram aims to encourage capital investment and development, increase tax revenues (through improved compliance and efficiency of collection), and ensure equity and fairness in the tax system through a comprehensive overall of the current legislation and tax administration system. These objectives are to be achieved through the following subprogram activities: § Tax policy and legislation activities include technical assistance for (1) the amendment of the

current income tax legislation by reflecting the current tax business and investment environment; (2) strengthening of the enforcement powers of the tax collection institutions; (3) simplification of tax administration procedures and practices; (4) issuance and adoption of proclamations, regulations & operational directives; (5) development and implementation of regional revenue enhancement programs; (6) development of agricultural income tax and land use fee proclamations and directives; (7) research and review of various proclamations that need to be amended; and (8) analyses of revenue potential across regions.

§ Taxpayer Identification Number (TIN) system rollout activities aim to information sharing

between FIRA, ECuA, as well as regional and city administrations in order to control tax evasion, create a dependable database on taxpayers, and forge efficient and effective tax collection through

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inter alia : (1) installation of equipment at operational TIN sites; (2) deployment of the TIN system at the national and regional levels; (3) training in the TIN system of relevant staff and other users; (4) enhancement of MIS capacity including procurement of hardware and software; (5) development, printing and publication of certificates, forms and manuals; (6) public awareness campaigns for tax payer registration; (7) monitoring and evaluation of the implementation activities; (8) establishment of links between TIN system of customs and financial institutions; and (9) TIN implementation for new tax payers.

§ Presumptive taxation implementation aims broaden the tax base through sensitization of the hard-

to-tax group, particularly the large informal sector and taxpayers who understate their income, through: (1) review of the profitability rate; (2) surveys of annual turnover of businesses; (3) IEC and other consultations with stakeholders prior to making amendments; (4) development and implementation of profitability rate directive(s); (6) development of relevant operating manuals and training for staff and taxpayers; (7) implementation of standard assessments based on review of the profitability rate; (8) development and implementation of accounting systems for revenue transfer payments refund; and (9) review and implementation of the revised standard assessment scheme.

§ Value-Added Tax (VAT) implementation aims to ensure the appropriate balance between income

taxes and commodity/consumption taxes, enhance the competitiveness of the Ethiopian business community internationally, and promote capital investment and development through technical assistance and capacity building for : (1) migration from VAT system to the main VAT system; (2) development and implementation of coherent operational programs and procedures; (3) development and implementation of comprehensive audit and enforcement programs; (4) organization of sustained staff training, taxpayers education campaigns, registration and revenue collection activities; and (5) regular monitoring and evaluation of the implementation progress.

§ Strengthening of organizational structures, operational programs, systems and procedures is

expected to foster voluntary compliance by taxpayers and ensure fairness and equity in tax administration through support for: (1) the development and implementation of comprehensive and accurate computerized accounting systems and operations; (2) training of federal, regional and city administration tax officers on the usage of manuals and adoption of various systems and procedures (3) review and evaluation of other relevant strategies, systems and procedures; (4) identification of training needs and organizing training and study tours; (5) customization & implementation of the integrated tax system; and (6) adoption of an effective organizational structure with competent and skilled staff.

§ Reforming and modernizing customs aims to improve the efficiency, efficacy, and transparency of

customs services through (1) supporting the migration to an enhanced IT system; (2) improving the management of the tariff classification through inter alia establishment of a customs laboratory; (3) establishing a customs training school to develop the knowledge and skills required by ECuA personnel to successfully implement new programs and procedures; (4) strengthening enforcement to combat contraband trade and international criminal activities; and (5) implementing all procedures consistent with sub-regional, regional, and international agreements.

Subprogram 6—Information and communications technologies The objective of the Information & Communications Technologies (ICT) Subprogram is to harness ICTs for the development of human resources, democratization, service delivery, and good governance. Several programs under PSCAP including CSRP, DLDP, Urban Management, and Tax Sector Reform are seeking to use of ICTs in this manner. Successful implementation of ICT-based

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solutions across government will require support for the procurement of hardware and software, establishment of enabling legislation and regulations on the procurement and utilization of ICTs, development of human resources, content, and applications relevant to service delivery; and promotion of community-based information systems/services. The following areas will be addressed under this subprogram: § ICT human resource development for e-government initiative seeks to generate a critical mass of

ICT literate worker in government through the following activities: (1) provision of ICT training for civil servants at all levels of profession; (2) establishment of ICT training centers, where relevant and affordable; (3) development of ICT training materials in working and local languages; and (4) provision of technical assistance to review human resource requirements of rolling out Government systems and applications.

§ ICT for public service delivery and good governance through technical assistance and capacity

building for: (1) development of information systems strategies, system design studies, and related analyses; (2) establishment of regional information centers, where feasible and affordable; (3) implementation of WAN, LAN and other information systems at the federal and regional levels; (4) procurement of appropriate hardware and software for public service delivery systems; and (5) IEC and other awareness building activities.

§ ICT applications for sector development in health, education, agriculture, e-government, e-

commerce, and other priority sectors through technical assistance, procurement of equipment, and training to support (1) customization of common administrative applications to regional context; (2) development and implementation of sectoral information systems at federal and regional levels; (3) coordination of different sector-specific information systems.

§ Community-based information systems and services that allow access to government data and

information and enable communities to become centers of indigenous knowledge and contents. The latter is an important dimension of ICTs for development and a strong effort must therefore be made to enable ICTs to operate at grass roots level and in all walks of life. The empowerment of communities with information is essential to its pursuit of specific developmental activities. These goals are expected to be achieved through: (1) development of local language content; (2) repackaging of globally available information to local community needs; (3) establishment of multi purpose community centers; (4) broadcasting of information through the local media; (5) procurement and distribution of appropriate technology for information sharing; and (6) training of communities in ICT use.

Mandatory activity—Program support

A mandatory activity, program support is designed to ensure speedy implementation of the six subprograms under both the federal and regional components. It finances incremental costs associated with operating requirements of Planning and Programming Departments or equivalents in regions, the Budget and Finance Directorate in the MCB, and related subprogram offices that serve members of the federal and regional Technical Teams. Support activities also include the costs of program/project coordination and planning, training management, IEC activities, monitoring and evaluation, training of staff in program management, auditing, office supplies, equipment operation, transport, travel, and per diems.

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SAMPLE TERMS OF REFERENCE – CIVIL SERVICE REFORM SUBPROGRM

Report Card/Client Survey Consultancy Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritization of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

Task Objective

The objective of this TOR is to recruit a firm with the requisite international expertise and experience to provide prior assistance to the Ministry of (or the Authority), which is embarking on the design and implementation of client survey/report cards as a basis for problem identification.

Task Background

A critical first step in the MAB’s participation in the PSIP is an assessment of service delivery performance and an identification of the root causes of performance problems. In addition to the perspective of the public servants currently involved in the MAB’s operations, the perspective of key clients is a critical element of problem identification. In line with the PSIP’s objectives, the MAB intends to use international best practice approaches to Report Card/Client Survey implementation.

Report Cards are instruments to exact pubic accountability. Report cards solicit user perceptions on the quality, efficiency, and adequacy of the various services provided by MABs. Qualitative user opinions are aggregated to create a ‘score card’ that rates the performance of service providers. The findings present a quantitative measure of overall satisfaction as well as other indicators such as processing time. By systematically gathering and disseminating public feedback, report cards serve as an important incentive mechanism for MABs to be as responsive to their client’s needs and embark on a sustained program of performance improvement.

Scope of Work

The consultancy is expected to support the MAB’s Report Card Initiative through implementation of the following six sequential activities: i) Identification of Actors, Scope and Purpose, ii) Design of Questionnaires, iii) Sampling, iv) Execution of Survey, v) Data Analysis, vi) Dissemination and IEC. These are described below:

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§ Identification of Scope, Actors and Purpose: The consultancy will identify the scope of the Report Card exercise, that is, either a specific service in the case of Route 1 or the full range of services provided under Route 2. In addition, it will identify the broad class of users from which the sample will be drawn as well as the audience for the Report Card’s findings (for example, the general public, the media, or clients in specific sectors or locales.

§ Design of Questionnaires: Following the identification of stakeholders, the consultancy will

support focus group interactions with at least the two constituencies – the providers of service and its users – in order to provide inputs to design questionnaires usefully. Providers of service should be able to indicate not only what they have been mandated to provide, but also areas where feedback from clients can improve their services. Similarly, users can sound out initial impressions of the service, so that areas that deserve extensive probing can be catered to. After the questionnaire is designed, it will be necessary to pre-test it with similar focus groups before a full-scale launch. Trade-offs between detail and the time requirements of the Report Card will need to be discussed with the participating MAB and the CSRP CO.

§ Sampling: The consultancy will advice on an appropriate sample size give the budgetary, time, and human resource constraints. It will be critical to ensure that the sample size is representative. After an appropriate aggregate sample size has been determined, allocations will have to be made to appropriately carved geographic regions. The standard principle here is to use the multi-stage probability sampling technique with probability proportional to the size of population. Households are usually the most convenient units of analysis, while caveats about cultural mores and intra-household distribution of wealth and power need to be observed. Sample households within the sample precinct should then be chosen for questioning. Within sample households, sample respondents have to be chosen.

§ Execution of Survey: The consultancy will include the costs of selection and training of a cadre of survey personnel. The consultancy will ensure that survey personnel or enumerators should not only be thoroughly informed about the basics and the purpose of the project, but also be skilled in questioning respondents with courtesy and patience. Like the pre-testing of questionnaires, the work of enumerators themselves has to be pre-tested, with preliminary feedback used to modify questionnaires or the tactic of questioning. To ensure that recording of household information is being done accurately, the consultancy will ensure that spot monitoring of question sessions at random is undertaken in phases after a proportion of interviews are complete. If questionnaires were mis-interpreted, or some answers found inconsistent, re-interviewing is required. Upon completion of each interview, the enumerator would ideally go over the information collected and identify inconsistencies. After the record is deemed satisfactory, it is to be inputted into standardized data tables.

§ Data Analysis: The consultancy will ensure that all inputted data is consolidated and analyzed.

Typically, respondents rate or give information on aspects of government services on a scale, for example, –5 to +5, or 1 to 7. These ratings of representative users on the various questions are then aggregated, averaged, and a satisfaction score expressed as a percentage. The consultancy will ensure that well-tested survey techniques that conform to international standards are employed and that data is subjected to standard error analysis and tests of significance.

§ Dissemination or IEC: The consultancy will present the Report Card findings in written form as

well as through PowerPoint presentations, etc. Local languages will be utilized for purposes of IEC. A series of focus group discussions on the Report Card findings with public officials in the MAB as well as clients will be carried out and summarized as a part of the final output.

Qualifications

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An effective Report Card undertaking requires a skilled combination of: i) the governance context and the structure of public finance of a particular MAB, ii) technical competence to scientifically execute and analyze the survey, and iii) information, education, and communication activities to share the findings with various stakeholders, iv) commitments to institutionalize the practice through PSIP implementation.

A local consultancy firm will be required for this activity. Qualifications should include an established track-record in survey design, a team comprised of sector specific experts (relevant to the MAB in question), methodology specialists, and a readily available team of enumerators will be required. Specific proposals from firms should include details on survey design, sampling methodology, survey execution, data analysis, and dissemination.

Estimated level of effort and cost

The estimated level of effort will depend on the range of services covered in the report card, and therefore on whether the relevant MAB has embarked on Route 1 or Route 2. It is envisaged that the activity should take approximately person months, costing a total of USD15, 000-USD25, 000.

Mode of payment

Payment will be effected on a lump sum against deliverables.

Deliverables and Reporting

Key deliverables for the consultancy will include (i) a detail plan for execution of the report card exercise, (ii) a survey questionnaire, (iii) presentation of report card/survey findings. Copies of the plan, questionnaire, and final report on findings will be shared with the Government of Ethiopia, the relevant MAB, and the World Bank for review at each stage of delivery.

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Route 1 Sub-project Proposal

Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritisation of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

As a spearhead of the Government’s reform program, the Performance and Service Delivery Improvement (PSIP) aims at promoting result-oriented performance in ministries, agencies and bureaus (MAB) in exchange for focused capacity building support. Specifically, PSIP requires a set of prior actions from MABs such as review of organizational performance and agreement on indicators, development of action plan for restructuring, capacity building, and performance improvement within an agreed timetable. A fund has been established under the project to provide resources as incentives for MABs to carry out performance and service delivery improvement initiatives on the basis of an agreed action plan. MABs will access resource from the fund through a process-based framework. Individual MABs will apply and be selected for either the Client Service Route of PSIP implementation (focusing on a particular area of improvement) or the Strategic Planning Route (focusing on a comprehensive program of organizational improvement). Task Objective The objective of this TOR is to provide prior assistance to the Ministry of (or the Authority) to prepare a properly costed, well-sequenced subproject proposal to draw down resources from the PSIF for implementation of Route 1 or the Client Service Route, which aims at promoting results-oriented performance in the delivery of specific services.

Task Background

A variety of performance problems were identified during the Client Report Card/Survey exercise and related focus group discussions undertaken by the Ministry of (or the Authority) around the provision of the (type of services reviewed). These include . The MAB has decided to embark on a program of targeted performance improvement to address these service delivery problems and the organizational constraints that contribute to them. In order to demonstrate its readiness for participation in PSIP, the MAB is seeking consultancy services to help develop an implementation plan for Route activities, i.e., further assessment of organizational constraints, training, re-tooling, and related institutional strengthening activities. These activities are intended help improve delivery performance for the specific services identified for improvement in Route 1.

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Scope of Work

The consultant will identify and prepare a sub-project proposal to the PSIF comprising some or all of the following eligible expenditures:

∗ a detailed business process review (BPR) of the relevant service(s) including the recommendations for process re-engineering and innovation, as well as prospective service standards and benchmarks;

∗ key service-specific and generic training activities for “frontline” staff in line with recommendations of the BPR;

∗ re-tooling and procurement of relevant equipment necessary for objectives of re-engineering; ∗ information, education, and communication, as well as M&E activities involving both clients and

providers The proposal should fall within the threshold set of Route 1 inclusive of the costs for the Client Report Card as well as the Subproject Proposal Consultancy. Accordingly, the sub-project for MAB implementation of Route 1 is anticipated to cost between USD70,000-80,000.

Following approval by the participating MAB and submission to the CSRP CO, the consultant will be responsible for incorporating comments received from the Technical Evaluation Committee. A final version of the proposal will be completed.

Qualifications

The assignment will require the services of a local consultant with technical competence on issues of performance management in the public sector including business process reengineering, restructuring, and capacity building. In addition, the following qualifications will be required:

• PhD/MSc/MBA in Public Management or Administration, Finance, and Public Policy or equivalent experience.

• A minimum of 6-8 years’ experience as a consultant or equivalent in the design or implementation of capacity building in the public sector (including preparation of grant applications, project management, procurement, M&E) as well as demonstrated familiarity with civil service reform, performance improvement and measurement, restructuring, and/or change management.

• Experience in implementation support for other World Bank and donor programs. • Strong communication and writing skills, track-record as a team player.


The consultancy should be undertaken within no more than 15-20 person days (or 3-4 working weeks) at a cost of USD3,000-USD4,000.

Mode of payment



The key deliverable for the consultancy is a final sub-project proposal for participation of the MAB in PSIP Route 1. Copies of the document will be provided to the CSRP CO, the relevant MAB, and the World Bank.

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Route 1 Business Process Review (BPR) and Reengineering Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritization of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

As a spearhead of the Government’s reform program, the Performance and Service Delivery Improvement (PSIP) aims at promoting result-oriented performance in ministries, agencies and bureaus (MAB) in exchange for focused capacity building support. Specifically, PSIP requires a set of prior actions from MABs such as review of organizational performance and agreement on indicators, development of action plan for restructuring, capacity building, and performance improvement within an agreed timetable. A fund has been established under the project to provide resources as incentives for MABs to carry out performance and service delivery improvement initiatives on the basis of an agreed action plan. MABs will access resource from the fund through a process-based framework. Individual MABs will apply and be selected for either the Client Service Route of PSIP implementation (focusing on a particular area of improvement) or the Strategic Planning Route (focusing on a comprehensive program of organizational improvement). Task Objective The objective of this TOR is to assist the Ministry of (or the Authority) in carrying out a detailed business process review (BPR) and an improvement plan for relevant service(s) included in its participation in PSIP Route 1 or the Client Service Route. Task Background A variety of performance problems were identified during the Client Report Card/Survey exercise and related focus group discussions undertaken by the Ministry of (or the Authority) around the provision of the (type of services reviewed). These include . The MAB has decided to embark on a program of targeted performance improvement to address these service delivery problems and the organizational constraints that contribute to them. In order to demonstrate its readiness for participation in PSIP, the MAB is seeking consultancy services to undertake a detailed review of business processes and to develop a reengineering plan, pursuant to the achievement of service standards. Scope of Work

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The consultant will undertake a BPR for services selected by the Ministry of (or the Authority) including an analysis of the existing workflows and process within and between organizations (or units) as well as a proposal for redesign of existing process to achieve breakthrough improvements in performance measures. Specifically, the BPR should:

§ Define the MAB’s business vision and process objectives, i.e., the specific business objectives such as cost reduction, time reduction, output quality improvement, etc.;

§ Identify processes [either the most important processes or all processes] to be redesigned including

beginning and end points, interfaces, as well as organizational units and stakeholders involved, particularly the unit facing the client;

§ Understand and measure the existing processes to provide process and output benchmarks; § Identify whether in-house provision vs. various forms of contracting out or contracting in service

provision functions have been considered, whether sufficient number of alternative suppliers can be identified in the market, and estimate cost efficiency gains of various alternatives;

§ Identify how IT capabilities can influence and improve process design; § Design and reengineer a prototype of the new process (along with identification of structures and

processes to be rationalized or outsourced or strengthened) along with expected service standards in line with business objectives such as cost reduction, time reduction, output quality improvement; and

§ Identify training and logistics requirements of process reengineering.

The consultant will ensure that the BPR report is prepared in a participatory manner that supports and strengthens the commitment of MAB management and staff; ensures the realism in terms of scope and expectations; acknowledges the challenges inherent in the process such as resistance to change. Close collaboration with the CSRP CO (or regional equivalent) will be required to ensure consistency in methodology as well as participatory approach.

Qualifications

The assignment will require the services of a local consultant with technical competence in public management and management consulting concepts such as business process reengineering, restructuring, and total quality improvement. In addition, the following qualifications will be required:

§ PhD/MSc/MBA in Public Management or Administration, Finance, and Public Policy or equivalent experience.

§ A minimum of 8-10 years’ experience as a consultant or equivalent in the implementation of civil service reforms, agency creation, performance improvement and measurement, restructuring, and/or change management.

§ Experience in implementation support for other World Bank and donor programs.

§ Strong communication and writing skills, track-record as a team player.


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The consultancy should be undertaken within no more than 15-20 person days (or 3-4 working weeks) at a cost of USD4,500-USD6,000.

Mode of payment



The key deliverables for the consultancy include the actual BPR of the relevant service(s) including the recommendations for process re-engineering and innovation as well as process and output benchmarks. Copies of the document will be provided to the CSRP CO, the relevant MAB, and the World Bank.

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Training of Frontline Staff for Route 1

Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritization of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

As a spearhead of the Government’s reform program, the Performance and Service Delivery Improvement (PSIP) aims at promoting result-oriented performance in ministries, agencies and bureaus (MAB) in exchange for focused capacity building support. Specifically, PSIP requires a set of prior actions from MABs such as review of organizational performance and agreement on indicators, development of action plan for restructuring, capacity building, and performance improvement within an agreed timetable. A fund has been established under the project to provide resources as incentives for MABs to carry out performance and service delivery improvement initiatives on the basis of an agreed action plan. MABs will access resource from the fund through a process-based framework. Individual MABs will apply and be selected for either the Client Service Route of PSIP implementation (focusing on a particular area of improvement) or the Strategic Planning Route (focusing on a comprehensive program of organizational improvement). Task Objective The objective of this TOR is to provide bulk basic training of frontline staff in X MABs ( ) in line with the reengineering/improvement plans for (type of services reviewed) as part of their PSIP Route 1 or the Client Service Route. Task Background/Scope of Work The BPRs undertaken as part of PSIP Route 1 implementation identified basic training needs in the following areas critical for achieving performance improvements across services: • Basic computing. • Financial management • Office management and administration • Human resource management • Secretarial skills English as a Second Language (or other foreign languages) • Other

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The consultant will provide basic training in bulk to frontline staff from X MABs ( ) in the above-mentioned areas in line with the training needs assessed under the BPR exercise. The consultant will ensure that participants receive intensive hands-on instruction and develop a level of competence necessary to perform at levels envisaged in the BPR/service improvement plans. Qualifications The assignment will require the services of a training provider that can meet the following criteria: • Provides training in adequate facilities for public servants (including access to computers, textbooks,

and relevant training materials in an agreed upon language of instruction); • Uses trainers with qualifications and experience in the skills areas identified above; • A track-record providing in-service training to civil servants in Ethiopia or other countries. Estimated level of effort and cost The estimated level of effort will be based on acceptable in-service training norms for the distinct areas noted above. Costs for bulk training will need to be determined through a competitive tendering process. Mode of payment Payment will be effected on a lump sum against deliverables. Deliverables and Reporting Training will need to be carried in a timely manner. Training providers should ensure that participants satisfactory complete relevant courses and receive appropriate certification. Evaluations of courses by the trainees should be undertaken and consolidated into a final report.

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Training in Strategic Planning for Route 2

Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritization of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

As a spearhead of the Government’s reform program, the Performance and Service Delivery Improvement (PSIP) aims at promoting result-oriented performance in ministries, agencies and bureaus (MAB) in exchange for focused capacity building support. Specifically, PSIP requires a set of prior actions from MABs such as review of organizational performance and agreement on indicators, development of action plan for restructuring, capacity building, and performance improvement within an agreed timetable. A fund has been established under the project to provide resources as incentives for MABs to carry out performance and service delivery improvement initiatives on the basis of an agreed action plan. MABs will access resource from the fund through a process-based framework. Individual MABs will apply and be selected for either the Client Service Route of PSIP implementation (focusing on a particular area of improvement) or the Strategic Planning Route (focusing on a comprehensive program of organizational improvement). Task Objective The objective of this TOR is to provide bulk basic training in Strategic Planning and Management in X MABs ( ) in line with eligibility criter ia for participation in Route 2 or the Strategic Planning Route of the PSIP. Task Background/Scope of Work The consultant will provide basic training in bulk to key staff (identified below) from X MABs ( ) in strategic and performance management. The consultant will ensure that participants receive intensive hands-on instruction and develop a level of competence necessary to support implementation of performance management system in respective MABs. Qualifications The assignment will require the services of a training provider that can meet the following criteria: • Uses trainers with qualifications and experience in strategic management; • A track-record providing in-service training to civil servants in Ethiopia or other countries.

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Estimated level of effort and cost The estimated level of effort will be based on acceptable in-service training norms for the distinct areas noted above. Costs for bulk training will need to be determined through a competitive tendering process. Mode of payment Payment will be effected on a lump sum against deliverables. Deliverables and Reporting Training will need to be carried in a timely manner. Training providers should ensure that participants satisfactory complete relevant courses and receive appropriate certification. Evaluations of courses by the trainees should be undertaken and consolidated into a final report.

Preparation of a Strategic Plan for Route 2 Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritisation of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery. As a spearhead of the Government’s reform program, the Performance and Service Delivery Improvement (PSIP) aims at promoting result-oriented performance in ministries, agencies and bureaus (MAB) in exchange for focused capacity building support. Specifically, PSIP requires a set of prior actions from MABs such as review of organizational performance and agreement on indicators, development of action plan for restructuring, capacity building, and performance improvement within an agreed timetable. A fund has been established under the project to provide resources as incentives for MABs to carry out performance and service delivery improvement initiatives on the basis of an agreed action plan. MABs will access resource from the fund through a process-based framework. Individual MABs will apply and be selected for either the Client Service Route of PSIP implementation (focusing on a particular area of improvement) or the Strategic Planning Route (focusing on a comprehensive program of organizational improvement). Task Objective

The objective of this TOR is to provide prior assistance to the Ministry of (or the Authority) to prepare a comprehensive strategic and organizational improvement plan as a basis for implementation of PSIP Route 2.

Task Background/Scope of Work

A variety of performance problems were identified during the Client Report Card/Survey exercise and related focus group discussions undertaken by the Ministry of (or the Authority) around the provision of the (type of services reviewed). These include . The MAB has decided to embark on a program of comprehensive strategic planning and organizational improvement in order to address these service delivery problems and the organizational constraints that contribute to them.

In order to demonstrate its readiness for participation in PSIP Route 2, the MAB is seeking consultancy services to undertake the following activities in participatory manner:

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§ Examine the overall performance of the Ministry in terms of processes, intermediate outputs, and results, and services delivered (building on the Client Report Card’s findings);

§ Conduct an organizational diagnosis/functional review which includes a situational analysis, review of mission and objectives, functions, organizational structures, staff numbers and skills, and core management systems (e.g. EMC, HRM) developed under the CSRP. This should include:

1) A review of the following management processes affecting MAB performance:

- Management structures (at ministry, directorate/division, individual levels) - Budget preparation and execution - Staff recruitment, selection, promotion, and deployment - Employee recognition and rewards, and career paths - Service delivery arrangements including whether whether in-house provision vs.

various forms of contracting out or contracting in service provision functions have been considered, whether sufficient number of alternative suppliers can be identified in the market, and estimate cost efficiency gains of various alternatives;

2) An assessment of the ministry’s organization culture (such as core values, management style,

esprit de corps) which hold these processes and practices in place. 3) Assist in preparation of a costed 3-yr organizational improvement plan that establishes

outcome-oriented objectives, lays out a strategy for accomplishing them including:

4) 3 year output based performance targets and establishing accountability for these targets

5) A simple performance management system for the Ministry of (or the Authority) linked with Public Expenditure Program and the annual budget process, which aims to strengthen ministries’ existing planning and review processes

6) Restructuring plans for the relevant MAB within annual and medium term budgets

7) Organization and work unit incentives to improve performance (e.g., retention of savings,

linking cost center budgets to performance, outsourcing or autonomization or corporatization of specific services)

8) Procedures for reviewing actual performance against these targets on a regular basis, and

advise on essential information systems to generate data on performance

9) A Client Service Charter to establish appropriate service delivery targets

10) An action plan/Gantt chart of the range of technical assistance, training, study tours, retooling, contracting in/out of specific functions, as well as IT and IEC activities that are necessary to implement the plan

Qualifications

The assignment will require the services of international and local consultants with technical competence in public management and management consulting, a track-record in undertaking

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functional reviews, knowledge of various modern management techniques and approaches to facilitation. In addition, the following qualifications will be required:






The consultancy should be undertaken within no more than 50-60 person days at a cost of approximately US40,000-USD50,000.

Mode of payment



The key deliverables for the consultancy include a final organizational assessment or functional review as well as a strategic plan and the costed organizational improvement plan. Copies of the document will be provided to the CSRP CO, relevant MAB, and the World Bank.

Annex I. Steps for Development of a Strategic Plan

Step Key Questions 1. Situation Analysis ∗ Is our current mission clear? Is it appropriate?

∗ What are the mandates that we are required to execute by law? ∗ What opportunities and threats do we face in our external

environment? ∗ What do our clients think about our services? ∗ What are our internal strengths and weaknesses? ∗ What critical issues do we need to address in the next 5 years?

2. Mission and Strategic Objectives

∗ How do we need to change our current mission? ∗ What are our long-term goals and objectives? ∗ When do we think we can achieve them? ∗ What are our priorities for tomorrow?

3. Strategies ∗ What broad approaches will enable our objectives to be achieved? ∗ When do we make the change? ∗ What resources do we need? ∗ What skills do we need?

4. Bridges & Barriers ∗ What will hold us back from making the change? ∗ What will help us to drive the change forward? ∗ How can we capitalize on the “drivers” and minimize the

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constraints? 5. Service Delivery Targets

∗ What results must each division achieve to deliver our long-term objectives?

∗ What targets should each division be striving to achieve next year in order to improve services?

∗ How will we measure whether these targets have been met?

Annex II. Client Service Charters and Social Pacts

1. The Client Service Charter is social pact that helps MABs ensure that service providers in its sector - local authorities, hospitals, schools, or its own divisions - have made agreements with their clients or customers on the levels and quality of services which they can expect. The Social Pact will place obligations on those responsible for delivering services: at the same time, it will also set out the responsibilities of people as clients or customers since they have a role to play in helping providers to improve services.

2. Social Pacts are mechanisms for ensuring that service providers are held accountable. Under them, clients may expect public services to:-

§ publish standards of service § be more open and provide more information § provide for choice and consultation wherever possible § be always courteous and helpful § make amends when things go wrong § give value for money]

Training in core Civil Service Reform Activities for Route 2 Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritisation of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery. As a spearhead of the Government’s reform program, the Performance and Service Delivery Improvement (PSIP) aims at promoting result-oriented performance in ministries, agencies and bureaus (MAB) in exchange for focused capacity building support. Specifically, PSIP requires a set of prior actions from MABs such as review of organizational performance and agreement on indicators, development of action plan for restructuring, capacity building, and performance improvement within an agreed timetable. A fund has been established under the project to provide resources as incentives for MABs to carry out performance and service delivery improvement initiatives on the basis of an agreed action plan. MABs will access resource from the fund through a process-based framework. Individual MABs will apply and be selected for either the Client Service Route of PSIP implementation (focusing on a particular area of improvement) or the Strategic Planning Route (focusing on a comprehensive program of organizational improvement). Task Objective

The objective of this TOR is to provide bulk training for staff in X MABs ( ) in core CSRP functions related to EMCBP and HRM as part of their implementation of PSIP Route 2.


The organizational improvement plan(s) undertaken as part of PSIP Route 2 preparation identified training needs in the following areas areas for achieving performance improvements:

§ EMCP prototypes: budget reforms including new chart of accounts; accounting reforms including double entry, modified cash accounting; new directives for preparing cash flow projections; as well as medium-term strategic planning or the PIP/PEP

§ HRM prototypes: the Results Oriented Performance Evaluation (ROPE); job classification and grading and remuneration policy; recruitment, selection, transfer, and promotion procedures; and HRD planning.

§ Ethics prototypes: Code of Conduct for civil servants; various ethics courses on National Charter of Citizens’ Rights and Responsbilities; and Government-media relations.

§ TMS prototypes: Top management training including leadership development

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§ Other The consultant will provide training in bulk to staff from X MABs ( ) in the above-mentioned areas in line with the training needs assessed under the strategic planning and organizational improvement exercise. The consultant will ensure that participants receive intensive hands-on instruction and develop a level of competence necessary to perform at levels envisaged in the performance improvement plans.

Qualifications

The assignment will require the services of a training provider that can meet the following criteria:

§ Provides training in adequate facilities for public servants (including access to computers, textbooks, and relevant training materials in an agreed upon language of instruction);

§ Uses trainers with qualifications and experience in the skills areas identified above; § A track-record providing in-service training to civil servants in Ethiopia or other countries.


The estimated level of effort will be based on acceptable in-service training norms for the distinct areas noted above. Costs for bulk training will need to be determined through a competitive tendering process.

Mode of payment



Training will need to be carried in a timely manner. Training providers should ensure that participants satisfactory complete relevant courses and receive appropriate certification. Evaluations of courses by the trainees should be undertaken and consolidated into a final report.

Implementation Support for Route 2 Implementation Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology.

The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritisation of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

As a spearhead of the Government’s reform program, the Performance and Service Delivery Improvement (PSIP) aims at promoting result-oriented performance in ministries, agencies and bureaus (MAB) in exchange for focused capacity building support. Specifically, PSIP requires a set of prior actions from MABs such as review of organizational performance and agreement on indicators, development of action plan for restructuring, capacity building, and performance improvement within an agreed timetable. A fund has been established under the project to provide resources as incentives for MABs to carry out performance and service delivery improvement initiatives on the basis of an agreed action plan. MABs will access resource from the fund through a process-based framework. Individual MABs will apply and be selected for either the Client Service Route of PSIP implementation (focusing on a particular area of improvement) or the Strategic Planning Route (focusing on a comprehensive program of organizational improvement).

Task Objective

The objective of this TOR is to provide ongoing implementation support to the Ministry of (or the Authority) to carry out its comprehensive organizational improvement plan as a basis for implementation of PSIP Route 2.


In order to successfully carry out performance improvement activities envisaged under PSIP Route 2, the MAB is seeking consultancy services to undertake the following activities on a day to day basis in line with guidance provided by the CSRP Coordinator in the relevant MAB and the CSRP CO:

§ Technical support on restructuring and performance improvement activities in line with organizational improvement plan

§ Project management activities including preparation of TORs, management of consultancy and training activities, preparation of contracting in/out arrangements including supporting the MAB process transactions related to privatization, autonomization, or corporatization

§ Further diagnostic and assessment work including on work unit incentives, IT, etc.

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§ Interaction with clients including ongoing focus group discussions § Support for monitoring and evaluation of PSIP Route 1 implementation including annual

report preparation for the MAB

Qualifications

The assignment will require the services of local consultants with technical competence in public management and management consulting, a track-record in undertaking change management, knowledge of various modern management techniques, IT-based solutions, and approaches to facilitation. In addition, the following qualif ications will be required:






Estimated levels of effort will be determined based on the specifics of the organizational plan. Consultants may be hired on a retainer, fee basis.

Mode of payment


Job Classification, Grading, and Pay Policy Consultancy The objective of the project is to improve the scale, efficiency, and responsiveness of public service

delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of

financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritisation of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

Task Background The Government of Ethiopia’s Civil Service Reform Program (CSRP)—under the Human Resource Management Pillar—has historically placed significant emphasis on modernizing human resource policies and practices in order improve the efficiency, effectiveness, and integrity of the civil service. In preparing for the “full implementation” phase of the Program, the Government will continue to develop Resource Management and Control policies (inclusive of expenditure and personnel management) that promote an enabling environment conducive to improved operational efficiency and

output performance (see Annex I). As part of its personnel management policies, the Government recognizes that sustainable improvements in performance require a motivating wage and grading system for civil servants. A recent across-the-board nominal salary increase of approximately 18-20% in nominal terms, effected in the FY02 budget, has alleviated problems of the inadequate pay. However, structural deficiencies in the pay and grading system—and their implications for the productivity of the civil service—persist at the federal and regional-levels. These continue to contribute to increasing incidence of moonlighting, poor work performance, and in some cases, petty

bribery. The Government is seeking the assistance of an international expert to help identify affordable options for effecting a structural pay reform in the context of the Macroeconomic Fiscal Framework (MEFF) and the rolling three-year Public Expenditure Program (PEP).

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Task-Related Issues Structural reform of civil service pay remains as much a priority now as it was at the start of the launch

of the GOE’s reform program. Coordinators of the HRM and Service Delivery Sub-programs also acknowledged that the ultimate success in implementation of the draft Civil Service Proclamation, new code of conduct, and National Service Delivery Policy depends in larger part on civil servants being paid competitive salaries. Specifically, the HRM Sub-program, currently being implemented by the FCSC, is supporting two sub-projects designed to addressed the pay issue. The Remuneration and Conditions of Work sub-project has undertaken a series of market comparator and family budget surveys to determine private-public sector wage differentials as well as the

proximate level of a ‘minimum living wage’ in Ethiopia. The remuneration surveys are complete and indicate that private sector wages are on average about 125% higher than those in civil service. The differentials are higher for technical staff. At the same time, findings suggest that the pay of civil servants at the lowest grades is not sufficient to meet even a quarter of the requirements for household subsistence. While the sub-project team is awaiting the completion of the job evaluation exercise to develop a comprehensive pay policy proposal, it is put forth an initial recommendation that civil service salaries be increased to 85% of private sector comparators over the next five years. The team is

also considering an approach that would increase compensation by introducing various benefits including medical insurance, transportation, representation allowances, as well as preferential access to land and credit. The mission stressed the need to cost any recommended pay increases within wage bill ceilings that derive from macroeconomic projections. This also implies the need for the FCSC to work closely, at a technical level, with MOFED in the development of a medium-term pay policy. The second sub-project implemented by the FCSC, the Job Classification and Grading (JCG) exercise, involves reviewing and revising the job classification and grading system within the civil service to allow for greater flexibility in personnel management (as intended by the decentralized civil service

system created by the new civil service proclamation), merit-based promotion, competitiveness in wages vis-à-vis private sector comparators, and career paths. A local firm completed the initial diagnostic survey of jobs across the civil service and has recommended twenty one new job groupings with revised grading structures. A variety of workshops with civil servants and professional associations have been held

Task Description

The Consultant will be employed by the Government to review the existing diagnostic work on public sector pay and employment; help develop a standardized methodology for a medium-term wage policy; and assist in proposing an affordable, medium-term public sector pay policy for consideration by the Council of Ministers in the context of the FY04 budget:

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• Review of diagnostic work and ongoing initiatives: The Consultant will conduct a rapid assessment of the diagnostic work as well as the various incentive schemes undertaken to date. The objective of this review is to assess the methodology used for the JCG and the labor market surveys and the implications of these studies for wage increases within the civil services. The

Consultant will provide options for the Commission to refine existing work and will incorporate feedback received during ongoing workshops on job classification and in the case of labor market surveys, draw on other available analyses.

• Develop methodology for medium-term wage policy: The Consultant will assist the Commission in developing a methodology for classes of workers based on both internal job relativities identified under the JEG exercise as well as external relativities identified by the labor market comparator surveys. In addition, the Consultant will be responsible for helping Government counterparts develop methods for carrying out sensitivity analyses of the fiscal

implications of various wage policy proposals. • Medium-scenarios for reforming pay and grading systems: The Consultant will work with the

Commission to develop various scenarios for reforming pay and grading at the federal level in the context of the macroeconomic fiscal framework.

• Manual for developing pay and employment reform strategies: At the end of the assignment, Consultant will develop a manual for the carrying out JCG, labor market surveys, and finally, wage reform scenarios over the medium-term. A dissemination workshop should be held with

regional authorities to explain the process and methodology used by the Commission.

Task Output The Consultant will assist the Government in submitting a medium-term wage policy proposal for consideration by Council of Ministers. The policy proposal, which should be considered in the context of budget discussions for FY04, will provide various reform scenarios for improving the conditions of work for civil servants overall as well as recommended medium-term salary enhancement targets for

various job classes. All proposals should be costed within macroeconomic -fiscal targets. Once developed and finalized, the methodology and approach used for developing the medium-term pay and employment policy will be prepared in the form of a draft manual to be made available to Regions.

Task Timetable It is envisaged that the Consultant will begin work by April 15, 2002. The consultant will contribute to

the following outputs that Government aims to produce: Review of existing diagnostic work in including JCG and salary surveys May 15, 2002 Costed medium-term wage reform and re-grading scenarios June 15, 2002 Manual for developing pay and employment reform strategies July 15, 2002

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Professional Qualifications The Consultant is expected to possess internationally-recognized qualifications in public sector human resource management at a senior level, and more specifically, experience in the following areas of

public sector management: administrative machinery of government (particularly in Anglophone settings); job evaluation and labor market survey techniques; functional reviews; organizational behavior and change management; and budgeting, cost-benefit, and cost effectiveness analysis. In addition, the Consultant is expected to be familiar or have hands-on experience with administrative/civil service reform, personnel management, and change management issues in developing countries.

Educational Requirements The Consultant should have a PhD/MSc/MBA in Economics, Public Finance, or Public Administration/Organizational Behavior. A minimum of ten years of experience with management and reform of human resource policy in large public or private sector bodies. Knowledge of job evaluation techniques as well as the design of modern personnel systems is a must. Experience in developing countries, especially in Africa, is a plus.

Estimated Task Budget The budget is estimated at $46,000. A breakdown of specific costs are provided below: Fees (@$500/day for 3 months) $30,000 Per diem (@$100/day for 3 months) $ 6,000 Travel $10,000 Total $46,000

Pay Reform Consultancy

Background There are two projects in the CSRP that relate to pay reform for which the FCSC is responsible:-

• remuneration and conditions of service • job classification and grading

Through the remuneration and conditions of service project, a draft policy on civil service pay, benefits and working conditions was developed in November 2001. This was submitted to the CSRP Steering Committee for discussion and it has been broadly accepted, subject to a few minor amendments. The intention is to submit the policy to the Council of Ministers for approval. The draft policy document describes in 25 pages the problems with the existing pay and benefits system, proposes objectives and policy measures to address the problems, and sets out a number of implementation strategies. The main objectives and the strategies for achieving them can be distilled from the document, as summarized in the table below.

Summary of Draft Civil Service Pay Policy

Objectives Strategies 1. Attract and retain professionals • Market related pay (85% of market)

• Separate salary scales where necessary (job families)

2. Motivate employees and improve work effort

• Living wage to lowest paid workers • Regular cost of living adjustments • Improved benefits and allowances • Performance related pay (increments

related to performance and merit pay and bonuses of 50-75% of salary for up to 7% best performing individuals)

3. Relate pay to “job size” (responsibility, complexity etc.)

• Job evaluation

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Recently the FCSC conducted a second market survey of pay levels in the State-owned, non-government and private sectors. 120 benchmark jobs have been surveyed in 50 comparator organizations. Analysis of the results is awaiting resources (from the World Bank?) for computer processing. The job classification and grading project is currently engaged in a job evaluation exercise for the federal civil service, a process which started in 1994. The existing structure of jobs has been rationalized into over 1100 job classes for which job descriptions and specifications have been prepared. This work has been validated during a workshop for officials from Federal Ministries. Both sets of consultants that were engaged recently recommended a salary structure of 18 grades, the same number as in the current structure, in order to accommodate the diversity of jobs within the Federal civil service. Grade definitions were prepared describing the type of jobs in each of the 18 grades. However, the FCSC has rejected the recommendation to have 18 grades, and is currently considering having 25 grades. Such a decision would not be consistent with recent developments in designing pay structures, where the trend is towards broader-banded salary structures with fewer grades. The FCSC has also chosen to dispense with the grade definitions prepared because they are too generalized for the range of jobs to fit each grade. This decision reflects an inherent weakness in the job classification method used; namely, that it is very difficult to write grade definitions that cater adequately to large complex organizations, such as a civil service. Objectives and Scope The objectives of this consultancy are to:-

• Prepare a final version of the civil service pay policy ready for submission to the Council of Ministers

• Design a revised pay structure for the Federal Civil Service consistent with this pay policy

The first objective should be accomplished before the revised pay structure is developed. The key tasks are:-

• Pay Policy. Advise and support the GoE to review and strengthen the draft civil service pay policy;

• Pay scenarios. Direct the preparation of medium and long-term pay scenarios based on

alternative civil service wage bill and employment projections, consistent with the macro-economic fiscal framework, as an input to the pay policy;

• Job evaluation. Advise on the rationalization of job titles and the selection of benchmark jobs

to be evaluated, including “front line” service posts and jobs surveyed in the recent market salary survey; advise/facilitate a job evaluation panel to test the system for the benchmark jobs;

• Market survey. Review the findings of the second market salary survey and obtain further

analyses of the data if necessary;

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• Salary structure. Design a revised salary structure for the Federal Civil Service based on the results of the job evaluation and the market survey. Consider how quickly the proposed structure can be implemented in view of the budgetary constraints;

• Implementation. Develop procedures for grading, re-grading and salary administration

Prior Actions by the Client In order to enable the consultant to make progress quickly, the GoE agrees to carry out the following actions before he/she commences work:-

• Form an inter-agency pay reform team that will direct the consultancy, including experts in civil service pay, government budgeting and spreadsheet modeling, and line managers with service delivery responsibilities

• Determine the procedure for reviewing and approving the pay policy and determine who will

be involved in this process (for instance, a Task Force) • Prepare job descriptions for “front line” service jobs (e.g. teachers, nurses) so that the job

evaluation system can be applied at woreda, regional and federal level • Decide on the job evaluation methodology. There are three options: a) job classification; b)

points rating; c) paired comparisons. The key features of these methods together with their advantages and disadvantages are shown in Table 1. The paired comparisons method is recommended on the grounds of simplic ity, cost and time, and the consultancy budget is prepared on this assumption. The points rating method is, however, a legitimate alternative, which provides an opportunity to introduce a sustainable computer-based system. However, it will take longer to install and it will involve substantially higher costs

• Establish a representative job evaluation panel with members from different Federal ministries

and Regional bureaus who have good first hand knowledge of the jobs to be evaluated. (The panel will ensure that jobs are evaluated in accordance with the “felt fair” principle, thereby promoting broad acceptance of the results)

• Complete the analysis of the second market remuneration survey

Consultant Requirements

• Professionally qualified in Human Resource Management • Capable of performing a “hands on” role, rather than a remote advisory role • Willing to work with a “paper-based” job evaluation system • Experience in public sector pay and job evaluation in other countries essential • Developing country experience preferable but not essential

Budget 80-100 person days, at US$700-1200/day for an individual & more for a professional consultancy firm Probably requires 2-3 visits to Ethiopia, since very unlikely to be completed in 3 months elapsed time

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Chief Technical Advisor. Civil Service Reform Program Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritisation of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery.

Objective

The objective of this TOR is to recruit a resident Chief Technical Advisor (CTA) with the requisite international expertise and experience to support the MCB in planning, coordinating, and monitoring the “full implementation” phase of the CSRP, consistent with the considerable capacity needs of institutional transformation across all spheres of Ethiopia’s federal system. The CTA will be resident in Ethiopia and will report to the State Minister of Capacity Building. Task Background In the mid-1990s, the Government recognized the urgent need to address the wide array of capacity constraints that hindered the performance of public institutions in Ethiopia. Core public management systems at the federal and regional levels were hampered by outdated civil service legislation and working systems; the absence of a medium-term planning and budgeting framework; ineffective financial and personnel management controls; inadequate civil service wages and inappropriate grading systems; poor capacity for strategic and cabinet- level decision-making; and insufficient focus on modern managerial approaches to service delivery. In recognition of these constraints, the Government embarked on a comprehensive Civil Service Reform Program (CSRP) in 1996. Indicative of Ethiopia’s “first generation” capacity building efforts, the CSRP sought to build a fair, transparent, efficient, effective, and ethical civil service primarily by creating enabling legislation, developing operating systems, and training staff under each of the five pillars: (i) Expenditure Control and Management, (ii) Human Resource Management, (iii) Service Delivery and Quality of Service, (iv) Top Management Systems, and (v) Ethics. Successful efforts (for example, budgeting, planning, and accounting reforms) at the federal level were intended to provide prototypes for regional and local authorities.

CSRP Prototyping Phase

The “prototyping phase” of CSRP was implemented over th e 1996-2000 period, albeit with intermittent lags due to poor coordination, particularly during the border conflict. Notable achievements included the development of new legislation (for example, a financial management proclamation, a civil service law, a code of ethics, complaints-handling procedures, and a service delivery policy) as well as operating systems for budgeting, procurement, and some aspects of

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personnel management such as salary surveys and records management. Training in budgeting, planning, accounting, and procurement. Diagnostic work in these areas also progressed.

While commendable, these initiatives have had only modest impact in relieving the institutional and capacity constraints within the Ethiopian civil service. There is little evidence of sustained improvement in output performance at the federal or regional levels. Core functions such as medium-term planning, accounting and auditing, personnel management remain weak. Attempts to develop an affordable, medium-term public sector pay policy were also delayed, and civil servants—despite an across-the-board salary increase in 2001—continue to receive low salaries. Role restructuring and performance improvement across federal ministries and regional bureaus was not undertaken in part because of ized design of the CSRP. Efforts were made to improve governance through an Anti-Corruption Commission, however, its impact on reducing abuse of office, arbitrariness, and malfeasance needs to be established across tiers of government. Lags in undertaking strengthening internal and external audit, as well as legislative oversight functions also did not bode well for Ethiopia’s efforts to improve public sector governance and transparency. Furthermore, lags in the prototyping phase meant that the implementation of CSRP at the regional level were delayed. The opportunity costs in terms of foregone improvements in institutional performance at all three levels of government appear to be considerable.

The New Challenges of Democratic Decentralization

These challenges for the CSRP have been compounded by the immense capacity building demands of the Government’s ongoing program of fiscal and administrative decentralization. Even as the “prototyping phase” of the CSRP got underway, the Ethiopian state was in the throes of unprecedented institutional transformation, which started which started with the creation of a federal state, centered around ethnically-based regions, and then increasingly focused on the empowerment of woredas, which constituted the basic unit of decentralized, democratic government. The regionalization process in the mid-1990s represented the first generation of democratization-related reforms. Since then regional authorities have enjoyed autonomy in fiscal and personnel management, and are shouldering the bulk of responsibilities for service delivery and governance. A “second generation effort’ was launched in 2001 with the deepening of fiscal and administrative decentralization to woredas, inter alia through streamlining layers of regional administration, the transfer of increasing shares of regional resources to local governments through block grants, and the assignment of greater expenditure responsibilities to local government.

Since its launch, it is has been increasingly evident that, to be sustainable, this second wave of democratic decentralization will require a deepening of the CSRP including the promotion of modern personnel policies and practices, implementation of expenditure and financial management prototypes, support for role restructuring and performance improvement for regional bureaus and woredas, as well as strengthening of fiduciary and ethical standards across all spheres of government, and especially woredas. Put simply, the second wave of democratic decentralization has made the original priorities and objectives identified under the CSRP all the more salient, and the need to rapidly complete prototyping and initiate “full (nation-wide) implementation” all the more urgent.

The Government’s Current Strategy In responding to the emerging challenges associated with state transformation, the Government established the Ministry of Capacity Building to plan, coordinate, and monitor a National Capacity Building Program (NCBP), comprised of a variety of subprograms that are critical to Ethiopia’s overall poverty reduction strategy. The establishment of the MCB and the launch of its National Capacity Building Program (NCBP) has given new impetus to the CSRP.

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Under the guidance of a State Minister for Capacity Building, the CSRP is being restructured, designed, and prepared for the launch of an intensive “full implementation” phase across the federal, regional, and local levels of government. The Government have moved quickly to prepare the CSRP for its “full implementation” across regions and levels of government. Noteworthy initial steps include the establishment of focal points responsible for implementation of reforms in federal, regional, and local institutions, and a series of workshops undertaken to sensitize the political leadership and civil servants across the country about the objectives, design, and expected results of the CSRP. In addition, the MCB has sought to strengthen coordination and change management (from line ministries, regional bureaus, woredas and municipalities); complete all prototypes (particularly in human resource management and accountability); restructure the original five pillars into three core sets of activities (Resource Control and Management, Accountability and Transparency, Performance and Service Delivery Improvement); develop a process change modality that demands accountability (from line ministries, regional bureaus, woredas and municipalities) to CSRP objectives in exchange for capacity building support; and set up rigorous monitoring arrangements. It is envisaged that this approach—financed under the Project and the proposed Public Sector Delivery Capacity Building Program—would promote civil service performance in terms of financial and human resource management, responsiveness to citizens’ needs, strategic prioritization of public resources, efficiency of program implementation, and enhanced accountability. The new architecture—designed during the preparation of —to facilitate rapid, nation-wide implementation, is described below.

• High-level Coordination and Change Management. Following the reorganization of Government in 2001, the State Minister in the newly established Ministry of Capacity Building (MCB) has been given the responsibility for coordination, change management, and oversight of the CSRP. In addition, the Government has established clear accountabilities for CSRP implementation among heads of ministries and agencies across the civil service along with implementation units or focal points in civil service institutions at the federal and regional levels.

• Resource Management and Control. Resource Management and Control activities would

include the consolidation and roll-out of both expenditure management (originally supported under the EMCP pillar) as well as human resource management and control systems (originally under the HRM pillar) supported under the prototyping phase of CSRP. While several aspects of Resource Management and Control reached an advanced stage of protoyping (for example, accountin g, budgeting, and planning reforms with the support of USAID, EU, and UNDP), other areas such as human resource management require additional assistance.

• Performance and Service Delivery Improvement. The experience of other reforming

governments suggests that line agencies respond when they are given an incentive (such as access to capacity building resources) to carry out restructuring and performance improvement programs. The CSRP Coordinating Office (CO) is moving quickly to develop the PSIP as a way of not only demanding accountability from ministries, agencies, and bureaus (MABs), but also empowering them to deepen implementation of performance improvement measures. Specifically, PSIP would require that MABs take certain prior actions such as reviews of legislative mandates, roles, functions, and accountability relationships; an analysis of organizational performance; and the development of a performance and service delivery improvement plan for restructuring, capacity building, and achievement of performance targets within an agreed upon timetable. Once its PSIP is approved, an MAB would be able to leverage financing from MCB to support implementation. It is envisaged that such an approach would better integrate the goals of the original five pillars of CSRP—EMCP, HRM, TMS, Ethics, and Service Delivery.

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• Accountability and Transparency. These activities would involve strengthening mechanisms for fiduciary accountability such as external audit, parliamentary oversight, anti-corruption, and the development of the accounting and auditing profession. Also critical to this set of activities is the strengthening of systems and development of innovative techniques for monitoring fiscal and output performance at various levels of government by public, privat e, and civil society institutions. These include expenditure or input tracking surveys, cost efficiency studies, service delivery report cards, anti-corruption and governance surveys, as well as other instruments for measuring the fiduciary and operation al performance of public institutions at the federal, regional, and local levels.

As indicated above, the Government remains committed to bring about fundamental change in public institutions at the federal, regional, and local levels. In the Government’s view, effective implementation of the CSRP across spheres of Government will require clear communication across spheres of government of the new CSRP architecture and coordination framework including accountability relationships with other lead institutions such as MOFED, the FCSC, and their regional equivalents. In addition, there will be need to emphasize coordination and synchronization of CSRP design with the other critical elements of the Public Sector Delivery Capacity Building Program (PSCAP) such as the District-Level Decentralization, Urban Management, Tax System Reform, Justice System Reform, and elements of the ICT Programs.

Over the course of implementation and PSCAP preparation, the MCB will also focus on planning and developing appropriate implementation arrangements for completion of prototyping, and the design of support modalities across spheres for government to facilitate the “full (nation-wide) implementation” of CSRP. Various approaches to knowledge transfer and training will also be required for public servants in key areas of the CSRP (such as public sector accounting personnel, budget officers, personnel officers, managers) in order to support the development of robust working systems and the evolution of effective public sector organizations across spheres of government. It is therefore envisaged that a richer combination of international and indigenous expertise will be required to support the myriad initiatives, described above, that will be necessary to bring about the required transformation from a traditional administration, which is rigid, rules-driven, input-focused, and hierarchical, to a modern system that values flexibility, performance-orientation, proactive management, as well as a more collegial and professional organizational culture.

Scope of Work 3. The CTA’s scope of work will therefore consist of the following short- and medium-term tasks listed in order of priority:

(a) Support for Transition Strategy: The CTA’s immediate priority will be to support the State Minister of MCB in transitioning relevant institutions across Government from the “prototyping” phase to the “full implementation phase” of CSRP. Tasks will include helping the State Minister:

o Build an inter -ministerial core team—comprising lead institutions , existing expatriate and Ethiopian experts, as well as members of the proposed international advisory group—in line with the new CSRP architecture in order to prepare for the launch of the “full implementation” phase;

o Reconstitute and strengthen the CSRP Coordinating Office with clear lines of accountability and reporting relationships with federal ministries and regions, an efficient and well-organized staff, and strong linkages with the larger PSCAP initiative;

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o Develop within the CSRP CO a clearing house of information on Ethiopian and international experiences with public management reform in order to more systematically incorporate lessons from experience in to the design of the “full implementation;”

o Develop an Information, Education, and Communication (IEC) strategy to better communicate CSRP objectives, plans, initiatives across various tiers of government as well as to donors, civil society, and the media;

o Develop a transitional monitoring or Early Warning System to raise “red flag” warnings for the State Minister on key issues that may arise during implementation, including the implementation of an initial performance benchmarking exercise (under the Performance Tracking Facility) of Ministries, Agencies, and Bureaus (MABs) and possibly woredas as well.

(b) Implementation Support and Quality Assurance: An equally important responsibility for the CTA will be to provide implementation support for prototyping activities financed under the Project including those related to Coordination and Strategy Management, Resource Management and Control, Performance and Service Delivery Improvement Program, and Accountability and Transparency. This includes ensuring proper vetting of TORs, efficient procurement, continuous oversight and monitoring (in conjunctions with the M&E Department of the MCB).

A key indicator of the CTA’s early success will be the implementation of the -financed activities in order to facilitate rapid scale up of CSRP under PSCAP. Along with the inter -ministerial core team, the CTA should provide a regular quality control/quality assurance service on consultancies undertaken under . In order to undertake these activities, the CTA may need to identify additional needs in terms of local and foreign consultants to support the -financed efforts.

(c) Design and Preparation of PSCAP: In the next 12 months, the CTA, working with the inter-ministerial core team will support the preparation and design of various elements of the PSCAP operation. This will involve close coordination with the World Bank team and interested donors, as well as regional and local officials interested in receiving capacity building support under PSCAP.

(d) Ongoing Implementation Support Under PSCAP: Over the medium-run, the CTA will continue to support implementation of the CSRP elements in the context of PSCAP. It is envisaged that a much more intensive focus on regional and local level implementation will be required. Ongoing implementation support activities undertaken by the CTA, in conjunction with the inter-m inisterial core team, should include the following activities:

o Establishment of inter -bureau transitional teams within regions and identify ways of building indigenous strategic and change management capacity in Ethiopia;

o Roll out of IEC activities to regions and woredas to prepare them for CSRP and PSCAP implementation in general, including support for leveraging support under the agreed upon modalities under PSCAP;

o Monitoring of PSCAP implementation across spheres of government including continues benchmarking of performance;

o Support for ongoing operational research and learning on reform process to identify of good practice examples as well as “red flagging” of problems and bottlenecks through the Early Warning System described above.

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Qualifications The assignment will require a high level of technical competence on issues of public sector management, significant experience in diverse country settings, and a sensitivity to Ethiopia’s particular capacity building and institutional reform needs. The CTA should therefore possess the following qualifications:

o PhD/MSc/MBA in Economics, Public Finance, Public Policy, or Public Administration/Organizational Behavior or equivalent, with a track-record of intellectual and professional leadership in one or more public management fields including expenditure and financial management, civil service reform, performance improvement and measurement; restructuring and functional review; as well as change management;

o A minimum of fifteen years of practical and/or managerial experience in a public sector setting including significant experience implementing complex public management reforms in a developed or developing country, and a proven track record of implementation in one or more public management fields (preferably on large donor-financed change programs);

o Strong negotiating and communication skills, and a high degree of credibility evidenced preferably by effective dealings a ministerial levels;

o Excellent change management skills and strong commitment to sharing expert ise and experience in order to develop others

o Innovate and creative in problem solving

o Prior experience in federal settings and/or in Ethiopia is desirable.

Estimated Level of Effort

The CTA will be employed under a renewable contract on a long term, residential basis. During Phase 1, which will cover a period of 12 months, the CTA provide support for the transition strategy, implementation support of immediately following effectiveness, and support for preparation of PSCAP. Subject to satisfactory performance, the contract will be extended for Phase 2, covering another two years, subject to annual performance evaluations by the State Minister.

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Performance Tracking Facility—Preparation of Operational Manual

The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The overall development objective of CSR is to promote civil service performance in terms of financial, human and material resources management and control, responsiveness to citizen’s needs for service delivery, strategic prioritisation of public resources, efficiency in program and project implementation, and enhanced accountability and transparency. Effective implementation of these components is envisaged to greatly contribute to the public sector capacity building initiative in terms of enabling federal, regional and local (rural and urban) level public institutions to improve their performance and service delivery. As part of the preparation of the project, the State Minister for Capacity Building in the Ministry of Capacity Building, Government of Ethiopia seeks short-term TA support to prepare a draft report on options for financing and using various tracking instruments to benchmark the performance of public institutions including Ministries, Agencies, Bureaus (MABs) and local governments in the context of the Performance Tracking Facility under the Accountability and Transparency components of the CSRP. The report should also recommend an approach for undertaking an initial phase of performance tracking in the context of the CSRP, the PRSP, and other key Government programs; the approach should also include a road map for the preparation of an Operational Manual for more systematic support in the use of various tracking instruments to generate performance-related information and the development of accountability processes and mechanisms to ensure appropriate feedback of such information into the core planning, budgeting, and prioritization process of government at the federal, regional, and local levels. Task Background

The Government of Ethiopia’s Civil Service Reform Program (CSRP) has placed significant emphasis on improving public service delivery at all levels of government. Specifically, through its National Service Delivery Policy, the Government has sought to introduce an appreciation for client-orientation, cost recovery techniques, integrated management of related services, performance benchmarking, and accountability for results across civil service institutions. Expectations of the civil service in terms of its interactions with citizens has been further clarified in the context of the draft National Charter on Citizens’ Rights and Responsibilities. It is envisaged that the development of institutional charters on an agency-by-agency basis would further detail the service standards that citizens and beneficiaries could reasonably except from specific civil service institutions (for example, the Ministry of Health or the Social Security Agency). The importance of these performance-oriented activities has been further highlighted under the Government’s Poverty Reduction Strategy Paper (PRSP), which gives priority to the monitoring of poverty-related expenditures, service outputs, and key development outcomes. Task Issues In preparing for the “full implementation” phase of the above-mentioned CSRP activities, the Government is completing the development of Accountability and Transparency prototypes under the Credit. An important element of prototyping in this area is the dispersion of basic techniques

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in benchmarking and performance tracking, as well as the development of streamlined modalities for encouraging the use of such techniques by civil service institutions and their clients (including civil society organizations). Support under the performance tracking facility is expected to establish performance benchmarks against which progress can be measured, and encourage citizens as well as civil society institutions at the federal, regional, and woreda/municipal levels to engage in participatory processes and thereby enhance the accountability and transparency of public institutions. In developing countries where information and evaluation systems are still emerging, a range of monitoring and evaluation techniques have increasingly employed to benchmark expenditure and service delivery performance. Three in particular—expenditure tracking surveys, cost efficiency surveys, and client scorecards—have been supported by the Bank and other donors in a wide array of settings. These three sets of M&E methods are especially relevant to Ethiopia’s current priorities of ensuring effective use of public resources at the federal, regional, and local levels; establishing unit costs for essential services; and gauging client satisfaction with frontline delivery. In addition to helping meet the data requirements of the PRSP, the annual budgeting and medium-term planning processes, these performance tracking methods—if institutionalized as regular monitoring processes involving government and civil society institutions—should assist in the Government’s plans to deepen the results-orientation of the CSRP. In addition to building the capacities of government and non-governmental institutions to carry out these types of performance techniques, the Government faces the ancillary challenge of developing a streamlined implementation modality to rapidly provide technical assistance, training, and financing at the federal, regional, and local levels to indigenize such performance tracking techniques in ways that provide an incentive public actors to improve performance. Options including the contracting out of M&E services to Ethiopian survey firms and universities will need to be explored in order to leverage existing capacities in the short to medium-run. Finally, feedback mechanisms for channeling evaluative data through regular planning and budgeting processes at all levels of government will need to be developed in order to provide an incentive for federal ministries, regional bureaus, as well as local governments (woredas and municipalities) to improve their expenditure and output performance. Task Output The Consultant will be employed by the Ministry of Capacity Building (MCB) to produce the following outputs pursuant to the design of the Performance Tracking Facility, which is financed under the CSRP Component of the Project.

• Report on Options for Benchmarking Public Institutional Performance. The Consultant—based on consultations with key stakeholders—should prepare a draft report on options for financing and using various tracking instruments to benchmark the performance of public institutions including Ministries, Agencies, Bureaus (MABs) and local governments in the context of the Performance Tracking Facility under the Accountability and Transparency components of the CSRP. The report should also recommend (i) an approach for undertaking an initial phase of performance tracking in the context of the CSRP, the PRSP, and other key Government programs; (ii) governance arrangements for the review, appraisal, and monitoring of performance tracking proposals from government institutions and civil society; and (iii) a suggested road map for the preparation of an Operational Manual for systematic support of these benchmarking exercises through a Performance Tracking Facility (PTF).

• Workshop of Stakeholders on Performance Tracking/Benchmarking. Once the draft report is

prepared, the Consultant should help organize a workshop the early September with key stakeholders (from government and civil society) to discuss the options in the draft report including the specific types of instruments that will be required for Performance Tracking

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Facility, financing options, oversight and governance arrangements. A timetable for an initial performance benchmarking exercise and the preparation of the Operational Manual.

• Preparation of an Operational Manual for the Performance Tracking Facility. Subject to

satisfactory completion of the above-mentioned outputs, the Consultant will be retained to undertake the preparation of an Operational Manual (OM) for management of the Performance Tracking Facility (PTF) under the Project. The OM for the PTF will be based on the experience of the initial benchmarking exercise and will provide guidelines for the financing and use of various tracking instruments to generate performance-related information and the development of accountability processes and mechanisms to ensure appropriate feedback of such information into the core plann ing, budgeting, and prioritization process of government at the federal, regional, and local levels. Also critical to the OM will be finalization of governance arrangements for the review and approval of benchmarking proposals received from various government and civil society institutions (including possible appraisal and steering committees necessary for streamlined financing and implementation support for benchmarking exercises proposed under the PTF).

Task Timetable It is envisaged that the Consultant will begin work by August 1, 2002 for 1 month to draft the report and organize the workshop. Subject to successful completion of the workshop, the Consultant will return to Ethiopia on or around October 1 to complete the preparation of the operational manual to guide implementation of the Facility under Component 1 of the Credit.

Qualifications The Consultant is expected to possess internationally-recognized qualifications in public sector management at a senior level, and more specifically, experience in strengthening monitoring and evaluation systems in the context of large scale public sector reform programs. A minimum of ten years’ experience with institutional strengthening or capacity building initiatives, participatory monitoring and evaluation, and familiarity with PRSP processes. The Consultant should have a PhD/MSc/MBA in Economics, Public Finance, or Public Administration/Organizational Behavior or equivalent. Experience in Africa is a priority, and previous experience in Ethiopia is a plus .

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SAMPLE TERMS OF REFERENCE – DLDP & URBAN

Core Capacity for Local Governance

Background The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The long-term objective of the district-level decentralization program (DLDP) is to continue deepening the devolution of power to the lower tiers of regional governments, to institutionalise decision-making processes at the grass-roots level with a view to enhancing democratic participation, promote good governance, improve public sector for service delivery and contribute to sustainable development and poverty reduction. With and enabling environment for democratic change firmly established, there will be structural changes in a large number or rural woredas and public sectors leading to the transformation of self reliant, viable development centres with enhanced capacities. A number of the country’s regions are now prepared to start building capacity for local governance on a broad basis, including training of municipal workers in a variety of basic skills. In each region a number of public and private training/educational institutions are available with a variety of curricula including short courses, full time studies and on-the-job training. Objective The objective of this TOR is to engage consultancy services to define options for the delivery of basic training in local governance skills in selected regions in Ethiopia. Scope of Work The project includes four “windows” of demand driven assistance: 1) policy and legislative development and reform; 2) deepening capacity for local governance and service delivery; 3) local government restructuring; and, 4) pilot infrastructure rehabilitation investments. Each window of assistance is governed by clear rules of access specified in an Operational Manual (OM). The second window (deepening capacity) will include funding and assistance for regions that wish to propose broad or “bulk” training programs for local government workers in basic skill areas such as accounting/bookkeeping, planning, management, human resource development, etc. While the primary objective of the second window of the project is the direct development of capacity within local governments, a corollary objective is to build capacity of the service/training providers as well, including both public and private sector organizations. Most regions in Ethiopia have more than one potentially relevant service provider and, therefore, to the extent possible it will be desirable to encourage delivery capacity among a variety of sub-nationally based providers. The consultants’ scope of work will, therefore, consist of three primary tasks:

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1. Needs and Delivery Assessment- several regional governments participating in the project have already proposed significant local government capacity building and training activities. The consultant will work with UDSS in the Ministry of Federal Affairs (MFA) (and through MFA to the Ministry of Capacity Building) and with selected regions to systematically define the local government training needs arising in the selected regions (assumed to be the four “advanced” regions). Inter alia of this work, the consultants will identify all existing training manuals and/or programs of relevance, including for instance the USAID-support Decentralization Support Activity on budgeting and financial management, previous efforts supported by GTZ, and prior work carried out by UDSS, among others. The consultant will also assess the institutions, both private and public, in each of the regions that are capable of providing the required capacity building through various formal and on-the-job means. The results of this activity will be a) consolidated and prioritized analysis of the “bulk” training needs for local and regional officials, by region, and b) an analysis of the capacity of training and educational institutions in each region to meet these needs.

2. Support Modalities- the consultants will work with UDSS to determine the options

through which THE PROJECT could support the required capacity building. Several options will be defined and examined, including direct contracting through prequalified regional institutions, matching grants and or scholarships to be availed by selected individuals at institutions of their choice, and any other feasible options. The consultants will clearly identify the pros can cons of each approach in consultation with the regions and MFA.

3. Implementation Arrangements- based on discussions with GOE and the Bank team as to

the preferred delivery option(s), the consultants will a) prepare Operational Manual guidelines for managing the delivery process, b) precisely define the management arrangements that will be necessary in UDSS and at the regional level, and c) prepare TORs and job descriptions (with budget estimates) for required management staff and for any further consultancies that may be required, for instance, in the areas of curriculum development.

Qualifications This assignment will require the combined efforts of one international and one national expert, both of whom will be very familiar with all aspects of training and capacity building. The international expert will have at least 10 years of experience in the design and delivery of capacity building programs for local governments in a variety of settings. Previous experience in Ethiopia will be a plus. The national expert will be very familiar with training institutions in Ethiopia and with the ongoing efforts in the country to improve sub-national governance capacity. Estimated Level of Effort About two person months of input will be required from each of the experts with all work to be completed by ____________.

Medium Term Capacity Building Advisor. District Level Decentralisation Program Introduction The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The long-term objective of the district-level decentralization program (DLDP) is to continue deepening the devolution of power to the lower tiers of regional governments, to institutionalise decision-making processes at the grass-roots level with a view to enhancing democratic participation, promote good governance, improve public sector for service delivery and contribute to sustainable development and poverty reduction. With and enabling environment for democratic change firmly established, there will be structural changes in a large number or rural woredas and public sectors leading to the transformation of self reliant, viable development centres with enhanced capacities. Objective The objective of this TOR is to recruit a medium term Capacity Building Advisor (CBA) with the requisite international expertise and experience to support the MCB in planning and coordinating the “full implementation” phase of the District Level Decentralisation Program (DLDP) under PSCAP, in a manner consistent with the considerable capacity needs of institutional transformation across all spheres of Ethiopia’s federal system and with other existing support activities. This includes assistance in key policy refinements, strategy development and implementation programming and support. The CBA will be resident in Ethiopia and will report to the State Minister of Capacity Building. Task Background In the mid-1990s, the Government recognized the urgent need to address the wide array of capacity constraints that hindered the performance of public institutions in Ethiopia. In particular, government has recognized that its rural development priorities need to be backed by a strategy to enhance the capacity of rural Woreda’s. The DLDP has thus been established as a component of the National Capacity Building Program to build the capacity of Woreda’s in a manner that complements the process of democratic decentralisation in Ethiopia. The objective of the MCB is to design and prepare national capacity building policies and programs to ensure the creation of necessary capacity, and to support regions in capacity building activities. The DLDP supports regions in the ongoing decentralisation process through enhancing Woreda capacities for democratic participation, effective governance and planning, and improved service delivery in support of sustainable development and poverty reduction. The DLDP has and continues to review Woreda capacity building needs, and to support capacity building activities in the four regions where decentralisation is proceeding rapidly. It intends to extend these support measures to all regions, under the auspices of PSCAP and on the basis of its ongoing review of capacity building requirements. However, the scaling up support implied by this

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commitment, and the institutional weaknesses in some of these regional governments, the DLDP needs to carefully prioritize sequence and program its support activities over the medium to long term.

To date the DLDP has identified eight areas of capacity building support required by Woreda’s across Ethiopia. These are:

(a) Capacity building for Woreda functional assignments and organizational structures: Although the legal basis and commitment to devolve power to Woreda’s has been established, the procedural and substantive framework has not been fully elaborated. This has led to discontinuities emerging between and within sectors. Further development of the policy and legal framework for functional assignments, particularly the articulation of detailed functional mandates to avoid the duplication of responsibilities and appropriate transition strategies, are required

(b) Manpower transfer: The process of personnel decentralisation requires greater definition of the organizational structure, funding framework, skills requirements, duties and responsibilities of decentralized Woreda staff

(c) Provision of basic office infrastructure: Although standardized Woreda office infrastructure needs have been identified, and pooling arrangements introduced, the availability and quality of administrative infrastructure limits the ability of many Woreda’s to perform their duties effectively. Innovative short and medium term strategies to provide basic administrative infrastructure support are required.

(d) Training: qualification and in-service training requirements for Woreda officials, and basic training requirements for kebelle and Woreda political leadership and communities have been identified, ranging from providing information on policy frameworks to professional and leadership skills upgrading. Bulk training in expenditure management and control has already been offered. However, additional focused training needs have also been identified in priority areas of budget preparation and presentation, financial control and administration, pre-implementation and implementation procedures and systems, personnel and property administration, sectoral planning and implementation, participation systems, and leadership and management of specific reform areas and policies. Training systems, materials and procedures all require further development.

(e) The refinement of the Woreda block grant formula, own and shared revenues: Although a basic block grant has been introduced for Woreda’s a number of challenges have affected its initial implementation. Further studies are required to assess the effects of the interim formula, to develop mechanisms to balance equity and efficiency priorities, refine associated budgeting guidelines for Woreda’s and integrate other revenue sources in an effective manner, including incentives for own revenue mobilization and mechanisms for revenue sharing. Federal advisory services on these reforms will provide economies of scale in systems development, given that all regions are implementing block grants.

(f) Financial planning and management systems: Simple budget preparation, presentation and expenditure control manuals have been produced for Woreda’s and regional governments. Some elaborated manuals have also been produced for payment, accounting, reporting, monitoring, supervision and inspection to ensure effective use of intergovernmental transfers at local level. At present Woreda’s use a single entry accounting system, although the intention is to refine this over the medium term alongside the introduction of a multi-

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year planning and budgeting cycle. Considerable further work is required to elaborate these systems within the intergovernmental budgeting process.

(g) The development of minimum standards and service indicators: Basic minimum standard of service indicators and norms have been drafted to guide Woreda responses to the decentralisation of services. These require further refinement within a performance management framework, at both regional and Woreda levels.

(h) The promotion of grassroots participation in planning, prioritization and decision-making: A draft framework manual to enhance community participation has been drafted, but further refinement of and training on participatory methodologies is required. In particular, approaches are required to harmonize macro-economic parameters and federal and regional priorities with expressed community needs at Woreda and kebelle level.

Phasing of implementation

In the short term the DLDP has targeted its support to consolidating decentralisation and capacity building in the four regional governments and 430 Woreda’s of Tigray, Amhara, Oromia and SNNP, and to initiate its strategies in the remaining five emerging regions (Afar, Somali, Benshgul-Gumz, Gambela and Harari). Over the medium term this program will be significantly scaled up to include all 524 rural Woreda’s in Ethiopia. The government is seeking to substantively converge operational activities in established and emerging regions by 2006.

Scope of Work The CBA’s scope of work will therefore consist of supporting the DLDP in the following short- and medium-term tasks listed in order of priority:

(i) Supporting the review and refinement of the framework for functional assignments to local governments: The CBA’s immediate priority will be to support the State Minister of MCB in reviewing, refining and entrenching the emerging system of functional assignments to municipalities and Woreda’s. Tasks will include helping the State Minister:

• Analyzing and reporting on the legal basis for and actual outcomes of functional and revenue assignments from regional governments to municipalities and Woreda’s.

• Identifying and reporting on gaps, inconsistencies and risks in the emerging system of these functional assignments.

• Recommending procedural and substantive changes to these functional assignments, including the formulation of appropriate federal, regional and Woreda-level policy, legislation, guidelines and circulars

• Developing a targeted communications strategy to clearly guide the ongoing changes and developments to the system of functional assignments by sector ministries and regional government bureau’s.

(j) Drafting a monitoring and evaluation strategy paper: Government intends to mitigate the risks of decentralized service delivery through introducing guidelines and performance monitoring systems on minimum service norms and standards. A key short term output for

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the CBA is the development of a concept paper on monitoring and evaluation systems, including:

• The definition of appropriate minimum service standards and associated indicators, relative to government priorities and data constraints.

• The definition of appropriate monitoring, evaluation and feedback mechanisms.

• The identification of capacities required at all levels to effectively implement these systems, and an associated strategy to do so.

(k) Refining, prioritizing and programming the Rural Woreda Capacity Building Program: A key medium term output for the CBA is to assist the MCB, and specifically the DLDP, to develop its capacity building strategies for implementation under PSCAP. This activity requires detailed coordination with the activities of the CSRP and UMP, as well as with regional governments. Specific tasks include:

• Analyzing and synthesizing information on Woreda level capacity building requirements and procedures, specifically that emerging from rapid assessments conducted at Woreda level, and integrating this into the overall DLDP capacity building program design

• Producing an assessment report on existing capacity building systems, programs and implementation arrangements at federal and regional levels

• Refining, prioritizing and sequencing existing DLDP capacity building strategies and implementation arrangements based on federal, regional and local needs

• Coordinating DLDP capacity building priorities with other federal and regional initiatives, particularly the CSRP and UMP

• Reviewing, refining and redrafting the existing CSRP, UMP and other capacity building prototypes for expenditure management, personnel management, office infrastructure provision, training, service delivery specification and restructuring, and performance improvement in terms of their applicability to rural Woreda level capacity building interventions

• Programming and costing a prioritized and coordinated DLDP capacity building program for implementation under PSCAP

(l) CBDSD Implementation Support and Quality Assurance: An equally important responsibility for the CBA will be to provide implementation support for prototyping and coordinating activities financed under the CBDSD Project. This includes those related to the CSRP and UMP, in as much as the overlap with DLDP activities, and those activities related to the preparation of the PSCAP program. Functions will encompass ensuring proper vetting of TORs, efficient procurement, continuous oversight and monitoring (in conjunctions with the M&E Department of the MCB).

A key indicator of the CBA’s early success will be the implementation of the CBDSD-financed activities in order to facilitate rapid scale up of DLDP under PSCAP. The CBA should provide a regular quality control/quality assurance service on consultancies

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undertaken under CBDSD. In order to undertake these activities, the CBA may need to identify additional needs in terms of local and foreign consultants to support CBDSD-financed efforts.

(m) Ongoing Implementation Support to Federal and Regional Governments: For the period of the contract the CBA will provide ongoing implementation support to the implementation of the DLDP in terms of the CBDSD. It is envisaged that a much more intensive focus on regional and local level implementation will be required. Ongoing implementation support activities undertaken by the CBA, in conjunction with the MCB, should include the following activities:

• Support and quality control in the rapid assessment of Woreda’s, specifically in identifying ways of building indigenous strategic and change management capacity in Ethiopia;

• Roll out of IEC activities to regions and Woreda’s to prepare them for CSRP and PSCAP implementation in general, including support for leveraging support under the agreed upon modalities under PSCAP;

• Monitoring of PSCAP implementation across spheres of government including continued benchmarking of performance;

• Support for ongoing operational research and learning on reform process to identify of good practice examples as well as identify problems and bottlenecks.

Qualifications The assignment will require a high level of technical competence on issues of public sector management in a rapidly decentralizing environment, significant experience in diverse country settings, and sensitivity to Ethiopia’s particular capacity building and institutional reform needs. The CBA should therefore possess the following qualifications:

• PhD/MSc/MBA in Development Planning, Public Policy, or Public Administration/Organizational Behavior or equivalent, with a track-record of intellectual and professional leadership in one or more public management fields including management of multi-sector decentralisation programs, design and development of capacity building programs in a decentralized environment, expenditure and financial management, civil service reform, performance improvement and measurement; restructuring and functional review; as well as change management;

• A minimum of fifteen years of practical and/or managerial experience in a public sector setting including significant experience implementing complex public management reforms in a developed or developing country, and a proven track record of implementation in one or more public management fields (preferably on large donor-financed change programs);

• Experience of World Bank and donor program management, procurement and reporting requirements;

• Strong negotiating and communication skills, and a high degree of credibility evidenced preferably by effective dealings at ministerial levels;

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• Excellent change management skills and strong commitment to sharing expertise and exper ience in order to develop others

• Innovate and creative in problem solving

• Prior experience in federal settings and/or in Ethiopia is desirable.

Estimated Level of Effort

The CBA will be employed under a renewable contract on a medium term residential or intermittent basis. During Phase 1, which will cover a period of 4 months, the CBA will provide support to the development and coordination of capacity building strategies, develop a benchmarking concept paper, review functional assignments, provide general implementation support for the project, and support for preparation of PSCAP. Subject to satisfactory performance, the contract will be extended for Phase 2, covering another four months, subject to a performance evaluation by the State Minister.

Indicative Budget The estimated cost of employing the CBA for 110 working days, assuming a daily rate of $350, is $38 500 Additional costs for travel and per diems, spread out over the next six months are $10 000. The total indicative budget for the resident advisor is thus $48 500. Funding is available for this purpose.

Pilot Local Government Fiscal/Financial Analyses

Background The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The long-term objective of the district-level decentralization program (DLDP) is to continue deepening the devolution of power to the lower tiers of regional governments, to institutionalise decision-making processes at the grass-roots level with a view to enhancing democratic participation, promote good governance, improve public sector for service delivery and contribute to sustainable development and poverty reduction. With and enabling environment for democratic change firmly established, there will be structural changes in a large number or rural woredas and public sectors leading to the transformation of self reliant, viable development centres with enhanced capacities. Objective The objective of this TOR is to engage consultancy services to carry out an analysis of intergovernmental fiscal relations and revenue mobilization potential with two pilot municipalities and regions. Scope of Work The consultant will provide assistance primarily to the Urban Management Capacity Building Project (UMCBP) office (formerly known as Urban Development Support Services, UDSS) within the Ministry of Federal Affairs (MFA) and, through this office to regional and local governments. The consultant will work directly with two municipalities in two selected regions to carry out the following work:

A. Intergovernmental Fiscal and Financial Framework Analyses Any decentralization process involves certain risks. One of the main risks is that service delivery responsibilities assigned to sub-national governments may not be matched by local resources to pay for the delivery of those services. For this reason it is a common best practice, early in the decentralization process, to undertake an analysis of the capacity of sub-national governments to finance the expenditure responsibilities assigned to them. Local Authority Expenditure Assignment and Resource Analysis

This analysis comprises three main steps.

a. Definition of Expenditure Responsibilities. The expenditure responsibilities of sub-national governments must be estimated both by type of service and in the aggregate. The common methodology is to determine a unit cost for provision of a particular service in a particular jurisdiction (taking into account local settlement patterns, geography etc.), and then to apply the

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demographic data for that jurisdiction to determine the overall cost of provision to the sub-national government. The assumed standards, for the purpose of estimation, at which the services are provided are those that are specified in relevant local or national legislation, e.g., all citizens are entitled to access to sources of safe drinking water either on-plot, or at a specified maximum distance from any dwelling unit. Similar standards usually exist for all other critical services, including human and solid waste disposal, emergency vehicular access by road, public commercial and service facilities, public transport, housing, etc. It is, therefore, a fairly simple matter to arrive at a reasonable estimate of the expenditure responsibilities of any sub-national government to provide, or cause to be provided, services to its citizens at levels prescribed by law and/or accepted standards of public health and safety.

The scope of work in this regard will be to estimate, for the two pilot municipalities, the cost of providing prescribed services, including operations, maintenance and overheads by type of service. These estimates will be aggregated with the normal running costs (e.g., the costs of general administration) of each local authority to provide an estimate of the annual expenditure responsibilities required to meet the minimum accepted standards. This process will only produce estimates, but they will be of utility in reasonably describing the responsibilities of the selected authorities.

b. Estimation of Optimized Own Source Revenues. A common feature of most multi-tiered systems of governance (although significant exceptions have occurred in centralized socialist systems, for instance) is that local authorities—particularly urban local authorities—are granted powers to raise local revenues in order to pay for provision of local services. In order to measure the potential gap between local expenditure responsibilities, established through the work in a. above, and locally available financial resources, it is necessary to estimate the optimal revenue bases of the local authorities. Three sub-steps are involved in this process:

• An estimate will be prepared of the revenue potentially available to each local authority

from existing legally authorized rates, tariffs, fees, etc. To establish the theoretical optimum local revenue yield, the team must review all existing revenue sources, estimate the yield from each source if collection efficiency and pricing is optimal (several sub-assumptions will be required in this respect), and the yields from all existing local sources are then aggregated to define the theoretical optimum. These estimates must take into account the affordability of residents to be useful.

• The second sub-step involves reviewing possible additional local sources of revenue that

are not currently utilized, and carrying out the same analysis as above. It is possible, but not likely, that no significant, acceptable additional sources of potential local revenue can be identified.

• The final sub-step is more speculative in nature, and involves assessing expenditures made

within local authority jurisdictions by other public (usually central) agencies for services that are the responsibility, as defined in a. above, of the local authorities. In some cases where the decentralization process is still incipient, significant central agency resources may be identified as suitable for assignment to local authorities in keeping with their defined responsibilities.

The sum of the three sub-steps described above will provide a reasonable estimate of the optimal local revenues a local authority may reasonably be expected to generate or access. c. Calculating the Fiscal Gap. By doing simple math with the results from a. and b. above, it is

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possible to estimate the gap—if any—between the assigned expenditure responsibilities of the local authorities and their (estimated) optimized own source revenue bases. This calculation should be carried out for each major service and in the aggregate for the entire authority. If the assigned expenditure responsibilities of the local authorities exceed the optimal revenue they may generate to pay for those services, then fiscal gaps are defined. Local authorities may be able to cover such gaps through a system—formal or informal—of internal cross subsidies, e.g., taking profits from one or more trading or remunerative accounts to pay for losses in other services. However, when this is not possible and local authorities are—by virtue of the expenditure responsibilities assigned to them by higher tiers of government—at risk of continuing deficit operations, then solutions, usually of an intergovernmental fiscal nature, must be identified.6 Failure to identify solutions will ensure failure of service delivery, thereby defeating the efficiency and equity objectives of decentralization.

The analyses outlined above will be synthesized to provide; a) a clear picture of the fiscal and financial situation in the sample municipalities, b) profiles of each of the pilot local authorities, and c) alternative scenarios, identifying risks and remedies either generally or for specific services. The study should identify both the general need for fiscal support to councils, if any, and the specif ic services that may urgently require such support. This work should serve several very useful additional purposes: • The study will bring greater clarity to the specific expenditure responsibilities of, particularly,

those local authorities with constrained financial and human resources. This type of analysis is often of great utility to struggling local authorities that may have an imperfect grasp of their strategic objectives. Often this heightened clarity will assist local authorities to reorganize their efforts and move beyond the “muddling through” scenario to more efficient and focused operating models.

• By clearly defining local responsibilities, unit delivery costs and optimized local revenue bases,

the study will provide the basis for a performance monitoring system that is both practical and easy to update. On this basis, a baseline monitoring for the municipal sector in Ethiopia may be established. Such a sectoral monitoring system would provide GOE and regions with a powerful tool to provide incentives for improved performance, efficiently target subsidies, and very specifically address local capacity constraints.

Skills Required and Estimated Level of Effort A senior municipal finance expert, preferably with hands-on municipal financial management experience, and no less that 10 years of appropriate international experience will be required. This individual should have significant experience in the preparation and implementation of Bank-assisted municipal investment and reform projects. At least one, and perhaps two, national experts will be recruited separately to participate in this work. About two person months of work will be required during the period ______________.

6 The alternative is to reduce either the scope or standards of services that are required to be provided by local authorities. In practice, these reductions are often enforced in an ad hoc way across the board leading to general deterioration of services, in turn engendering taxpayer resistance, and leading to the economically unproductive conditions found in many developing cities and towns.

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Assistance in Pilot Infrastructure Rehabilitation Design

Background The objective of the project is to improve the scale, efficiency, and responsiveness of public service delivery at the federal, regional, local level services; empower citizens to participate more effectively in shaping their own development; and promote good governance and accountability. This objective will be achieved by scaling up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas—(i) Civil Service and Expenditure Management Reform; (ii) District-Level Decentralization; (iii) Urban Management; (iv) Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. The long-term objective of the district-level decentralization program (DLDP) is to continue deepening the devolution of power to the lower tiers of regional governments, to institutionalise decision-making processes at the grass-roots level with a view to enhancing democratic participation, promote good governance, improve public sector for service delivery and contribute to sustainable development and poverty reduction. With and enabling environment for democratic change firmly established, there will be structural changes in a large number or rural woredas and public sectors leading to the transformation of self reliant, viable development centres with enhanced capacities. A key sub-component of the project is to provide financing for a limited number of infrastructure rehabilitation investments to be carried out by municipalities that have the capacity for planning, implementation, and sustain operations and maintenance. The purpose of the sub-component is to pilot a learning-by doing approach to decentralized service delivery that, based on international lessons learned, provides an incentive for local authorities to undertake necessary structural reforms to gain access to capital resources. This sub-component will be available on a demand driven basis, and financing will be accessed through a selection and appraisal process to be detailed in an Operational Manual (OM). Objective The objective of this TOR is to engage consultancy services to assist GOE in finalizing the Operational Manual for the infrastructure rehabilitation sub-component of the project. Scope of Work The consultant will provide assistance primarily to the Urban Management Capacity Building Project (UMCBP) office (formerly known as Urban Development Support Services, UDSS) within the Ministry of Federal Affairs (MFA) and, through this office to regional and local governments. The primary task of the consultant will be to assist in preparation of the OM to include the flowing detailed rules of access:

1. Eligibility criteria for applicants- the minimum organizational capacity requirements for all applicants will be clearly and concisely spelled out.

2. Eligible investments- the types of rehabilitation investments that are eligible for funding will be clearly spelled out.

3. Planning and consultation- the requirements to demonstrate that proposed investments form part of a larger strategic plan that has been produced as a result of effective public consultation processes will be clearly defined.

4. Investment caps- the per capita and per municipality caps on financing will be clearly defined.

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5. Presentation format and required information- the requirements for plans, cost estimates, estimates of economic benefits, demonstration of budgetary resources adequate for operations and maintenance, and all other technical feasibility criteria will be clearly spelled out.

6. Technical appraisal procedures- the procedures for technical appraisal of all applications will be clearly defined and will meet Bank appraisal requirements. These procedures will include constitution of qualified technical appraisal groups (TAGs) that will review and make technical recommendations on all proposals.

7. Implementing arrangements- the procedures for approval of applications, and subsequently for all aspects of rehabilitation investment implementation in accordance with international best practices and Bank requirements will be fully detailed. To meet the capacity building objectives of CBDSD, implementation of rehabilitation investments must in all cases be carried out by the sub-national authority directly responsible for the specific investment.

8. Monitoring- arrangements by which regional and federal level monitoring and evaluation of rehabilitation investments at the local level will be carried out will be clearly defined.

Skills Required and Level of Effort The consultant will be a municipal engineer with at least 15 years of experience in the design and implementation of Bank-assisted local infrastructure projects in Sub-Saharan Africa. The consultant will also have hands on experience with the demand driven approach to investment financing embodied in the project design, and particularly in designing Operational Manuals for this purpose. Experience in Ethiopia will also be a significant advantage. The level of effort for this work is estimated at about 2 person months during the period ___________. A national expert will be separately recruited to participate in this task.

SAMPLE TERMS OF REFERENCE – PROGRAM SUPPORT

Planning & Programming Directorate (PPD)

The Planning and Programming Department (PPD) will be responsible for the day-to-day running and the overall co-ordination, monitoring and evaluation, reporting and accounting and procurement under PSCAP. Duties and responsibilities at this level will involve:

• Responsible for providing for policy advice related to PSCAP; • Managing PSCAP and implementation of sub-programs; • Working with other Program Directors to establish and maintain capacities for internal

monitoring of implementation of PSCAP, the preparation of Status Reports, and the dissemination of information on the capacity building agenda;

• Providing advisory services and technical resources to beneficiaries and other government units

implementing PSCAP; • Organizing seminars/workshops and other forums on key emerging issues for further knowledge

and understanding of PSCAP and its capacity building agenda; • Identifying and preparing ‘position papers’ on emerging issues and policy options as they relate

to the program for presentation to relevant authorities and where necessary undertake, or commission and supervise, required studies and/or research;

• Acting as a point of contact with donors provide assistance to PSCAP and provide advice on

budgetary/financial issues and other assistance that may be required under the program; • Providing an overall framework within which externally funded PSCAP and its sub-programs

can be optimally implemented; and • Carrying out any other functions aimed at enhancing the capacity building agenda and other

duties that may be assigned by the relevant authorities.

Technical Team (TT) The Technical Team (TT) will comprise directors and staff from PSCAP subprograms (housed in lead agencies such as MCB, MOFED, MOR, MFA) as well as external specialists who will be tasked with supporting the development of the content of the reform program and for ensuring the overall quality and constituency of reform efforts across regions and local governments. Specific Functions of the Technical Team include the following:

• Reviewing the outputs of consultants (i.e. reports, findings, assessments, etc.) prior to approval of payments for the latter;

• Defining equipment specifications and undertaking acceptance tests of equipment procured;

• Developing communication and change management strategies; • Monitoring program activities and preparing technical reports.

• Preparing ‘position papers’ on emerging issues and policy options. Where necessary the team

can be assisted through the commissioning and supervision of the required studies and/or research.

• Disseminating relevant documentation and other publications to members of the Planning and

Programming Directorates to ensure a good flow of information to and between all relevant stakeholders of the program.

• Providing technical advice on the overview framework within which externally funded

programs and projects can be optimally implemented. Where a single program has multiple parts across one subprogram, the technical team will have a particular responsibility for recommending the most appropriate coordination/integration of design, finance, and implementation.

• Advising upon the establishment of adequate procedures for effective operationalization of the

institutional guidelines for planning and implementation;

• Analyzing, summarizing and compiling annual plans;

• Assessing and recommending action steps in improving performance. Such recommendations will be based on the outcome of monitoring and evaluation exercises and information presented in the regular progress reports.

Reporting and Operational Relationships. The head of the team will report to the relevant Program Director. The team will also establish close working relations with the various Planning and Programming Departments and/or units responsible for implementing individual subprograms of PSCAP. Such interaction should build coordination and integration between subprograms and ensure a flow of information to enable adequate compilation of regular status reports on implementation.

Procurement Specialist (International)

Background To ensure an efficient and timely implementation of the project, a Planning and Programming Directorate (PPD) at the Ministry of Capacity Building (MCB) has been delegated to manage, administer and coordinate the project, and more specifically, (a) handle procurement of services and goods, (b) ensure and monitor the proper allocation and distribution of these goods and (c) carry out financial control of all operations. The experience gained by the staff under the Program may benefit the management of procurement under subsequent IDA's operations or other programs of bilateral or multilateral assistance. To implement the program efficiently and in a timely manner, the PPD coordinates the work of all the activities across other federal beneficiaries and regional entities. Other implementing units may have designated staff to work as closely as possible with the PPD during project implementation. The designated staff (a) prepare the technical specifications for the goods and services under the project by their agencies, (b) technically trained in their agencies’ area of specialization and (c) have experience in procurement including transport and storage of goods. In particular, the staffs are expected to be familiar with the procurement practices of their agencies and be able to communicate directly with the agency staff or their procurement agents on all matters related to procurement under the program. With the assistance of the PPD at MCB, the implementing agencies are responsible for (a) finalizing, in consultation with IDA, the list of requirements of their sectors, (b) estimating the procurement timelines and (c) preparing the specifications of the goods and services to be procured under the project. Objectives The objective of the consultancy is to provide support to the PPD at MCB in strengthening its procurement capacity by providing expert advice and training, if needed, in the following areas: Procurement Cycle Management. General quality and timeliness with which the PPD handles each phase of the procurement cycle. The key elements are:

• Procurement planning • Preparation of bidding documents • Management of bidding process from advertisement to bid opening • Bid evaluation • Contract award • Preparation and signing of contract • Contract management during implementation, including dispute resolution methods • General handling of procurement cycle (duration, actors, reviews, etc.,)

Organization and Functions. Organizational structure of the procurement unit, how responsibilities are allocated, its reporting relationships, its decision-making authority and whether it has the adequate capacity to handle the procurement plan for the project in addition to its other routine duties if any. Specific items to be considered are:

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• Organization of procurement unit and allocation of functions • Internal procedural manuals and instructions and historical compliance

Support and Control Systems. Services and control mechanisms that provide checks and balances in the system. The independence and credibility of procurement audits and the quality of internal controls that is critical to the reliability of the system. Specific items to be considered are:

• Procurement oversight and Auditing • Internal technical and administrative controls • Code of professional behaviour and ethics • Special anticorruption initiatives

Record-keeping . Availability, quality, security and completeness of procurement records and files. In addition to overall data on numbers, types, values and dates of contracts awarded and names of awardees, procuring organizations should maintain for all contracts, a record which includes, inter alia:

• public notices of bidding opportunities • bidding documents and addenda • bid opening information • bid evaluation reports • formal appeals by bidders and outcomes • signed contract documents and addenda and amendments • records on claims and dispute resolutions • records of time taken to complete key steps in the process • comprehensive disbursement data (as required by the country's financial management system)

The consultant should also determine to what extent effective procurement-monitoring systems are in use and, if sufficient data exists, it should identify steps in the procurement process where inefficiencies seem to exist and recommend ways bottlenecks might be eliminated. Expertise and Qualifications Required The Procurement Adviser should have at least 10-15 years of experience in procurement management including distribution and storage of goods and will be familiar with IDA's procurement and disbursement guidelines, World Bank's Sample Bidding Documents and technical specifications and market prices of the goods to be procured. The consultant should have ability to provide information and data about market prices and suppliers of goods to be procured under the project. The consultant should be technically qualified with a university or equivalent education, fluent in English. Also, he/she should be familiar with computer software and able to provide basic training to counterparts in generating procurement documentation and in record keeping. It is envisaged that the consultant is familiar with implementation of multi-sectoral projects funded by multilateral donor agencies, various procurement methods and possess relevant experience in storage and distribution of goods under multi-sectoral projects. The estimated length of assignment is ___ months. The consultant will report directly to the Head of the PPD.

Procurement Specialist (National)

Reporting to the Program Director, the Procurement Specialist will be responsible for the design, review and implementation of procurement systems and procedures for PSCAP. The specific duties will entail:

• Preparation of procurement plans and procurement of goods and services for the Unit’s day to

day operations. • Planning and co-ordinating supplies management services for the relevant component parts of

PSCAP in collaboration with other Program Directorates. • Preparation of the General Procurement Notices for publication in the UNDB. • Evaluation of requests for letters of “No Objection” and preparation of requests to the Bank. • Providing advise on procurement related costs e.g. translation, transportation, insurance etc. • Liaising with the various Program Directors responsible for implementing individual

components of PSCAP on project requirements, to ensure timely delivery. • Ensuring compliance with the guideline on Procurement Service, in accordance with

Government and World Bank regulations and as specified in the Development Credit Agreement (DCA).

• Offering advisory services to Component Coordinators for effective and efficient

implementation of the procurement plans. • Carrying out any other duties and assignments related to the reform agenda as directed by the

Program Director from time to time.

Project Accountant Reporting to the Program Director, the Project Accountant will be responsible for the entire financial management, accounting, and disbursement functions of PSCAP. Specific duties will include;

• Maintaining and keeping books of PSCAP and preparing regular financial reports and annual accounts for auditing on timely basis.

• Discharging day to day accounting duties of processing disbursements, expenditure control,

reconciliation of project bank account, processing of SOEs, special account withdrawal applications, initiating payment applications and overall expenditure control systems for PSCAP in consultation with the relevant Head of Accounting.

• Producing financial information and reports on PSCAP for use by project management and

donor agencies. • Ensuring that all financial transactions emanating from PSCAP are in accordance with

Government and World Bank accounting systems, regulations and requirements. • Working closely with the relevant Head of Accounting to ensure that financial transactions

involving the PSCAP accounts are captured in the ledgers and budget books to facilitate preparation of timely and accurate annual financial reports.

• Maintaining a viable financial management system that readily provides information and data

for measuring performance when linked with project outputs. • Maintaining a database for all expenditure incurred under PSCAP and preparing consolidated

expenditure returns on regular basis for use by management and other users. • Developing a financial information system and maintaining accounting records that will

facilitate the adoption of a PMR based accounting and reporting system for PSCAP. • Monitoring and maintaining statistical and financial information on project expenditure on assets

and levels of disbursements per category of expenditure for PSCAP. • Coordinating and maintaining financial data for effective and accurate preparation of project

budgets for incorporation into Government budget and also ensuring that necessary supplementary budgets or reallocations are approved on timely basis.

• Carrying out any other duties and assignments related to PSCAP financial management as

directed by the Project Coordinator from time to time.

Information, Education & Communication Specialist

The Information Education Communication (IEC) Specialist will be responsible for the development and management of a robust IEC program to inform and educate both the public service and the general public on PSCAP. Specific duties will entail;

• Develop IEC strategies with regard to federal level communication, and work plan. • Serve as the IEC link between the six sub-programs at the federal level • Serve as the IEC link between regions and federal government • Aggregate IEC initiatives of Regions and the Federal Government and prepare a consolidated

budget. • Identify competent organizations to prepare IEC materials at the Federal level. • Monitor, follow-up production and distribution of IEC materials at the Federal and Regional levels. • Supervise IEC consultants as required and implementation of the component. • Arrange periodic process and impact evaluation of communication initiatives. • Identify and document Lessons Learned and Good Practice at all levels and disseminate

appropriately. • Work closely with the ICT sub-program to identify and place content related to the overall

program. • Collaborate with the M&E specialist to collect and disseminate survey/assessment related

information. • Support the PRO as needed

Audit of Project Account Statement Objective. The objective of the audit of Account Statement (PAS) is to enable the auditor to express his/her professional opinion on the financial position of the project at the end of each fiscal year and of the funds received and expenditures for the accounting period ending on that date, as presented by the PAS, as well as his opinion on the SOEs, accounts (books of account) which provide a basis for the financial statement preparation are those established to reflect the financial transactions in respect of, as maintained by implementing agencies - the nominated departments or agencies of the Borrower. Scope . The audit will be carried out in accordance with International Standards on Auditing and will include such tests and controls as the auditor considers necessary in the circumstances. In conducting their review, the auditors should pay special attention to the following: All external funds have been used in accordance with conditions of the relevant legal agreements, with due attention to economy and efficiency and only for the purposes for which the financing was provided. Relevant legal agreements refer to Credit Agreement; Counterpart funds have been provided and used in accordance with the relevant financing agreements, with due attention to economy and efficiency and only for the purposes for which they were provided; Goods and services financed have been procured in accordance with relevant financing agreements; All necessary supporting documents, records and accounts have been kept in respect of all project expenditures; and The financial statements have been prepared in accordance with consistently applied International Accounting Standards. Statement of Expenditure (SOE). In conducting the audit of the PAS, the auditor should pay special attention to those expenditures for which withdrawal applications for project reimbursements were made under SOE procedures. A separate reference is required in the auditor's opinion on the eligibility of the claimed expenditures and hence the extent to which the Bank can rely on SOEs as a basis for loan disbursement. (For SOE procedures see World Bank Disbursement Manual). The review of the SOEs should:

• Determine that the borrower has maintained adequate supporting documentation to support claims for Bank reimbursement of expenditures incurred;

• Assess the adequacy of accounting and internal control systems to monitor expenditures and their validity;

• Verify that expenditures are eligible for financing under the Loan Agreement, with reference to the Staff Appraisal Report for guidance where necessary;

• Identify any ineligible expenditure, and where identified, these should be specifically noted by the auditor.

Project Account Statement (PAS). The PAS should include:

• Summary of Funds received, showing the World Bank, (any Grant funds.......) and counterpart funds separately;

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• a Summary of Expenditures shown under the main project headings and by main categories of expenditures, for the current fiscal year and accumulated to date; and

• a Balance Sheet showing Accumulated Fund of , bank balances, other assets of , and project liabilities if any.

The PAS should include [possibly as an Annex in support of (a) above], a reconciliation between the amounts shown as "received from the World Bank" and the "amount actually disbursed by the World Bank", as confirmed by the Bank. Bank disbursements may have been made to the borrower or directly to a third party (usually to a supplier or consultant). In addition, Bank disbursements may have been made to a commercial bank for expenditures against a World Bank Special Commitment covering a commercial bank's letter of credit. These disbursement procedures require supporting evidence that the funds were used properly according to the loan agreement. The supporting evidence may be in the form of original invoices, contracts, etc. or a Statement of Expenditures (SOE) under the parameters established in the Loan/Credit agreement. The reconciliation should reflect all Bank disbursements i.e. direct to borrower, direct to third party and/or covering a commercial bank's letter of credit. It is important for the auditor to fully understand the operation of the Special Account (funds advanced) in order to appropriately review the reconciliation referred to in the preceding paragraph. (For audit of Special Account see paragraph ... below). There should be an Annex in support of the expenditures using SOE procedures listing indiv idual SOE withdrawal applications by reference number and amount. The total withdrawals under SOE procedure should be added to expenditures financed by the World Bank under other procedures, which together will be equal to total expenditures financed by the World Bank. Audit Report. The annual audit report of Account Statement should include therein a separate opinion on the accuracy and propriety of those expenditures withdrawn under SOE procedures. Account Statements including the audit report (opinion thereon) should be received by the World Bank no later than ... months after the end of the accounting period to which the audit refers. The auditor should submit his report to the borrower's designated agent rather than to any staff member of entity, which agent should then promptly forward two copies of the audited accounts and report thereon to the World Bank. Management Letter. In addition to the audit report, the auditor will prepare a "management letter", to be submitted together with the audit report. In this letter the auditor will:

• Give his/her comments and observation on the accounting records, systems and controls that has been examined during the course of the audit;

• Identify specific deficiencies and areas of weaknesses in systems and controls that have come to his/her attention and make recommendations for their improvement;

• Report on the degree of compliance of each of the financial covenants of the Loan Agreement and give comments, if any, on internal and external matters affecting such compliance;

• Communicate matters that have come to his/her attention during the audit that might have a significant impact on the implementation of ; and

• Bring to the borrower's attention any other matters that the auditor considers pertinent. General. The auditor should be given access to all legal documents, correspondence and any other information he may deem necessary, associated with the audit.

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The auditor should obtain direct confirmation of amounts disbursed and outstanding at the World Bank, and of amounts disbursed under the Grant (if any). Bank Task Managers can assist in obtaining these confirmations. It is highly desirable that the auditor receives a copy of the Bank's Guidelines on Financial Reporting and Auditing of Projects Financed by the World Bank, which summarize the financial reporting and auditing. The auditor should also be furnished a copy of the Bank's Disbursement Manual. Audit of the Special Account (SA). The objective of a SA audit is to enable the auditor to form an opinion on the compliance with Bank's procedures and the balance of the SA, at the fiscal year end. The audit should examine the eligibility and correctness of financial transactions during the period under review and fund balances at the end of such period, the operation and use of the SA in accordance with Credit Agreement, and the adequacy of internal controls. The SA usually comprise:

• deposits and replenishments received from the World Bank; • payments substantiated by withdrawal applications for eligible expenditures in concurrence

with legal documents; • interest that may be earned from the balances and which belong to the borrower; and • the remaining balances at the end of each fiscal year-end.

For this Project, the SA is referred to in Section ....... and Schedule ... of the Credit Agreement. SA statements and auditor's report thereon should be received by the World Bank no later than .....months after the end of the accounting period to which the audit refers.

Program Management Assistance

Objective The objective of this TOR is to engage consultancy services for the establishment and implementation of contracting and project management procedures and systems. Scope of Work The consultant will provide assistance directly to relevant counterpart staff in the Programming and Planning Directorates, in the following key areas:

• Drafting of contract documents and installation of procurement systems required for year 1 implementation including all requests for expressions of interest, requests for proposals, terms of reference, management of the tendering process, etc., all in line with approved GOE and Bank procurement procedures. Indicative TORs for a number of project funded technical assistance activities have already been drafted and these will need to be adapted to the most appropriate contract types in consultation with Bank procurement staff. The consultant will ensure that this expertise is fully transferred to national staff, including on-the-job and other training opportunities as needed;

• Preparation of all procurement, disbursement, and financial management reporting

documentation required for project implementation, and transfer of this expertise and systems to counterpart staff.

• Assistance in documenting and installing processes and formats required for appraisal of

subprojects to be financed under the project. These processes are already well defined in operational manuals for most sub-components of the project.

• Assistance in recruitment procedures for external auditors for the project. • Assistance in all other key project management systems and areas of expertise as required.

Expertise Required The consultant to be employed will have very current, detailed knowledge and practical experience in management of Bank-assisted projects, including all aspects of procurement, disbursements, financial management reporting, and all related management systems and expertise. The consultant will have at least 10 years of management experience in Bank-assisted projects including at least 3 years within the last five years. The consultant will have excellent writing, presentation and interpersonal skills and will be expert in the utilization of COSTAB.

Assistance in Project Design & Implementation Objective The objective of this TOR is to secure international expertise to assist completion of the design of the sub-national training and local government restructuring and empowerment components of the project. Scope of Work The consultant will provide assistance to the MCB and/or other federal ministries and regional agencies as needed. Key support tasks to be undertaken in collaboration with GOE personnel will include:

• Preparation of detailed implementation modalities by adopting the general principles laid out in the Public Sector Capacity Building Program (PSCAP) project implementation plan. The program directly addresses a number of key areas and the first task of the consultant is to assist in adopting various project implementation arrangements and processes within the context of the relevant federal ministry or regional institution.

• Finalization of Operational Manuals, which should spell out specific steps and procedures,

associated with the program’s process approach. Thus, the consultant’s second key task will be the identification of clear and workable arrangements for implementing the activities under the program.

• Delivery Mechanisms- as a demand driven capacity building mechanism, PSCAP must be

designed to respond to the specific needs of various federal agencies, regions and local governments with varying levels of capacity. At the same time, however, GOE places a very high priority on accelerating the rate at which local capacity for sustainable, decentralized service delivery is built. This priority requires that the detailed implementation modalities must be able to respond to core demands common to most regions and municipalities (e.g. municipal management systems reforms and restructuring and land information management systems and capacity) through delivery mechanisms that are efficiently operating at scale, and that are in place and functional very early in the program’s 5-year life commencing in mid-2004. Thus, the consultant’s third key task will be to assist GOE in designing assistance delivery mechanisms, including RFPs and early initiation of required procurement processes, that will ensure delivery from the date of project effectiveness. These immediate delivery mechanisms should be complemented by additional systems that will allow the project to finance specific requirements over time as they arise through both decentralized direct provision and contracting in.

• Additional Support to effective project implementation is the final key task of the consultant.

This work may involve assistance in drafting TORs, examining various des ign options, and assessing institutional reforms.

Skills Required and Level of Effort The consultant must be a senior expert with a combination of at least 15 years of experience in both the preparation of Bank-assisted projects and in local government reform and capacity building projects. The consultant should be very familiar with similar projects in Sub-Saharan Africa, and familiarity with recent developments in Ethiopia would be a substantial advantage.

PROGRAM IMPLEMENTATION PLAN - World Banksiteresources.worldbank.org/.../PSCAP/pip_vol_2.pdf ·...

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Transcript of PROGRAM IMPLEMENTATION PLAN - World Banksiteresources.worldbank.org/.../PSCAP/pip_vol_2.pdf ·...