Language: ENGLISH

Original: French

AFRICAN DEVELOPMENT FUND

PROJECT : Public Finance Modernization Support Project

(PAM-FP)

COUNTRY : Democratic Republic of Congo

APPRAISAL REPORT Date: October 2011

Appraisal Team

Team Leader: A. C. TOTO SAME, Principal PFM Expert, OSGE.1

Team Members:

Mrs. S. WAKANA, Principal Economist, (ORCE)

Mr. D. MARINI, Procurement Expert, CDFO

Mr. V. LOSSOMBO, Financial Management Expert, CDFO

Mr. S. OUSMANE, Consultant, OSGE.2

Mr. O. BEKALE, Operations Officer, OSGE. 1

Sector Director: Mr. I. LOBE NDOUMBE, Director, OSGE

Regional Director: Mrs. M. KANGA, Director, ORCE

OIC: Mr. A. COULIBALY, OSGE.1

Regional Office: Mrs. S. WAKANA, Acting Resident Representative CDFO

Peer Reviewers

Mr. A.I. MAHDI, Chief Financial Analyst OSGE.2

Mr. T. GUEZODJE, Principal Macro-economist ORWB

Mr. K. LUMBILA, Senior Economist OSGE2

Mr. R.A. DOFFONSOU Senior Country Economist ORWA

M. T. DAYO, Macro-economist BFFO

TABLE OF CONTENTS

Project Brief .............................................................................................................................. iii

Project Summary ....................................................................................................................... iv

Results-based Logical Framework ............................................................................................. v

Project Implementation Schedule ............................................................................................. vii

I – Strategic Thrusts and Rationale ............................................................................................ 1

1.1. Project Linkages with Country Strategy and Objectives ............................................. 1

1.2. Rationale for Bank’s Involvement .............................................................................. 1

1.3. Aid Coordination ......................................................................................................... 4

II – Project Description .............................................................................................................. 6

2.1. Project Components ..................................................................................................... 5

2.2. Technical Solutions Adopted and Alternative Explored ........................................... 10

2.3. Project Type ............................................................................................................... 10

2.4. Project Costs and Financing Arrangement ................................................................ 10

2.5. Project Target Area and Beneficiaries ....................................................................... 12

2.6. Participatory Approach for Project Identification, Design annd Implementation ..... 12

2.7 Bank Group Experience and Lessons Reflected in Project Design .......................... 13

2.8. Key Performance Indicators ...................................................................................... 13

III – Project Feasibility ............................................................................................................. 13

3.1. Economic and Financial Performance ....................................................................... 13

3.2. Environmental and Social Impact .............................................................................. 14

IV – Implementation ................................................................................................................ 14

4.1. Implementation Arrangements .................................................................................. 14

4.2. Monitoring ................................................................................................................. 16

4.3. Governance ................................................................................................................ 17

4.4 Sustainability ............................................................................................................. 18

4.5. Risk Management ...................................................................................................... 18

4.6. Knowledge Building .................................................................................................. 18

V – Legal Framework .............................................................................................................. 19

5.1. Legal Instrument ....................................................................................................... 19

5.2. Conditions Associated with Bank’s Intervention ...................................................... 19

5.3. Compliance with Bank Policies ................................................................................ 19

VI – RECOMMENDATION ................................................................................................... 19

LIST OF ANNEXES

Annex I. Country’s Comparative Socio-economic Indicators ................................................. 20

Annex II. Table of Bank Portfolio in DRC as at 4/10/10 ......................................................... 21

Annex III. Map of Project Area ............................................................................................... 22

Annex IV: Summary Table of Donor Operations .................................................................... 23

LIST OF TABLES

Table 1.1: TFP Involvement in Planning and Public Finance Management in the Provinces

Table 1.2: Aid Coordination

Table 2.1: Project Components

Table 2.2: Project's Overall Cost Estimate by Component [in UA thousand]

Table 2.3: Project's Overall Cost Estimate [in UA thousand]

Table 2.4: Project Cost by Expenditure Category [in UA thousand]

Table 2.5: Expenditure Schedule by Component

Table 4.1: Monitoring Milestones and Feedback Loop

Table 4.2: Risks and Mitigative Measures

This report was drafted by A. C. TOTO SAME, Principal PFM Expert, OSGE.1, P. MARINI, Procurements Expert

CDFO, V. LOSSOMBO Financial Analyst, CDFO and O. SOMALI, Consultant, OSGE.2 following a post-appraisal

mission to the DRC from 20 June to 2 July 2011. The report was also enriched by discussions with Mr. M.

TANGARA, Acting Resident Representative and inputs from Mr. O. SOMALI, Consultant OSGE.2. Questions on

this report should be referred to Mr. I. LOBE NDOUMBE, Director, OSGE (Ext. 2077), Mrs M. KANGA, Director

ORCE, (Ext. 2060) and Mr. A. COULIBALY, OIC, OSGE.1 (Ext. 3536).

i

CURRENCY EQUIVALENTS August 2011

UA 1 = USD 1.56366

USD 1 = UA 0.658

USD 1 = CDF 910

Fiscal Year From 1 January to 31 December

Weights and Measures

1 metric tonne = 2204 pounds

1 kilogramme (kg) = 2.2 pounds

1 metre (m) = 3.28 feet

1 millimetre (mm) = 0.03937 inch

1 kilometre (Km) = 0.62 mile

1 hectare (ha) = 2.471 acres

Km² = square kilometre

m3 = cubic metre

m² = square metre

m = linear metre

Mm3 = Millions of cubic metres

m3/h = cubic metre per hour

l/s = litre per second

l/day/inhab. = litre per day per inhabitant

ii

ACRONYMS AND ABBREVIATIONS ADF African Development Fund

BTC Belgian Technical Cooperation

CIDA Canadian International Development Agency

COREF Public Finance Guidance and Reform Committee

CPC Provincial Coordination Committee

CPLCP Provincial Poverty Reduction Committee

CSMOD Strategic Decentralization Implementation Framework

CSP Country Strategy Paper

CTAD Technical Decentralization Support Unit

DFID Department for International Development

DTE Decentralized Territorial Entities

ESIA Environmental and Social Impact Assessment

ETCD Exclusive of Taxes and Customs Duty

EU European Union

HIPCI Heavily Indebted Poor Countries Initiative

IMF International Monetary Fund

KFW Kreditanstalt für Wiederaufbau

LC Local Currency

MDG Millennium Development Goals

MTEF Medium-Term Expenditure Framework

MTR Mid-Term Review

MUA Million Units of Account

ORCE Countries Department Centre Region

PAIM Multi-sector Institutional Support Project

PAM-FP Local Economic Governance Support Project

PAP Priority Action Programme

PAP-CB Priority Action Programme – Capacity-building

PARER

Project to Provide Institutional Support for the Economic Recovery and

Reunification Support Programme

PARSAR Agricultural Sector Rehabilitation Support Project

PEFA Public Expenditure and Financial Accountability

PMDE

Project to Rehabilitate and Strengthen the Ingra Hydro-electricity Power Plant

and Kinshasa Network

PMURIS Multi-sector Emergency Project to Rehabilitate Socio-economic Infrastructure

PRGSP Poverty Reduction and Growth Strategy Paper

PRONAREC National Capacity-building Programme

PRSP Poverty Reduction Strategy Paper

PSRFP Strategic Public Finance Reform Plan

PUAICF Programme to Mitigate the Impact of the Financial Crisis

RAP Public Administration Reform

SENAREC National Capacity-Building Secretariat

TFP Technical and Financial Partner

UA Unit of Account

UCOP Project Coordination Unit

UNCDF United Nations Capital Development Fund

UNDP United Nations Development Programme

UPPE-SRP Steering Unit of the PRGSP Design Process

WB World Bank

iii

PROJECT BRIEF

DONEE : Democratic Republic of Congo

EXECUTING AGENCY : Project Implementation Unit

Financing Plan

Source Amount (UA) Instrument

ADF

10,000,000

Grant

TOTAL COST 10,000,000

Key ADB Financial Information

Loan/Grant Currency

Unit of Account

Type of Interest* NA

Interest Rate Margin* NA

Commitment Fee* NA

Other Costs* NA

Maturity NA

Grace Period NA

FRR, NPV (baseline case) NA

ERR (baseline case) NA

*if applicable

Duration – Milestones (Expected)

Concept Note Approval

August 2010

Project Approval February 2012

Effectiveness March 2012

Last Disbursement 2015

Completion 2015

Last Reimbursement NA

iv

PROJECT SUMMARY

Programme

Overview

After several years of political instability and armed conflicts, the Democratic Republic of

Congo (DRC) is heading towards the gradual restoration of social peace, ushering in conditions

for a gradual improvement of the macro-economic environment. However, the country’s

institutional capacity, especially to manage public finances, has been weakened. Thus, the

2006-2008 Poverty Reduction and Growth Strategy Paper (PRGSP, extended to 2011), which is

Government’s reference framework for promoting good governance, has two priorities: (i)

consolidate reforms engaged to modernize fiscal management; and (ii) help the provinces to

tackle constraints that hamper local economic and financial governance, especially those linked

to their weak capacity to mobilize local revenue and execute budgetary expenditure. The Public

Finance Management Support Project (PAM-FP) amounting to UA 10 million falls within this

context. The aim of PAM-FP is to contribute to improve economic and financial governance by

strengthening tax administration in order to: (a) consolidate fiscal reforms initiated; and (b)

strengthen local public finance governance in three provinces.

Needs

Assessment

Years of political instability in DR Congo weakened institutional capacity for economic and

financial management in central Government departments and provincial services. This weak

capacity compounded public finance governance problems and continues to impede the

efficient implementation of the country’s development strategy. These years of political

instability also weakened revenue collection capacity, mostly in the provinces where the

administrative infrastructure of devolved structures was either badly damaged, obsolete or

virtually non-existent. It is essential for the country to address the challenges of economic and

financial governance at both central and provincial levels, particularly those linked to

inadequate capacity to mobilize domestic revenue and execute budgetary expenditure.

However, the country’s domestic resources are not commensurate with the scale of these

challenges. This is where the support of technical and financial partners, especially the Bank, is

important.

Target

Beneficiaries

The project area covers Kinshasa, the taxation centres of West Kasaï, East Kasaï and South

Kivu Provinces as well as 8 combined taxation centres and lastly the Bas-Congo, Province

Orientale and Maniema Provinces. The project’s end beneficiaries are the population of the

whole country, particularly those of directly targeted provinces. The latter will enjoy better

living conditions made possible by macro-economic stability and more efficient budgetary

management that prioritizes pro-poor expenditure. The key targeted intermediate beneficiaries

are: (i) the devolved services of the Ministries of Budget and Finance; (ii) the private sector

which will operate in a better environment as seen (among other things) in a rise in public

procurements at provincial level and shorter payment deadlines, thanks to the computerized

expenditure chain.

Comparative

Advantage and

Bank’s Value

Added

Since resuming cooperation with DR Congo in 2002, the Bank has gained institutional

experience in building public finance governance capacity in fragile States, which proved

useful for this project. Moreover, the project activities are complementary with those of other

partners. The Bank operates in three provinces that have not yet received assistance to set up a

minimum public finance governance platform. The Bank’s value added lies in the synergy of its

operations, characterized by a combination of several instruments (reform support programme

and institutional capacity-building) through PMR-RH approved by the Board in January 2011

and a reform support programme being finalized.

Knowledge

Building

The key knowledge built on this project relates to local governance in a post-conflict country

with weak institutional capacity. Secondly, it concerns managing public finances at the

provincial level in fragile States.

v

Results-Based Logical Framework Country and Project Name : DEMOCRATIC REPUBLIC OF CONGO, PUBLIC FINANCE MODERNIZATION SUPPORT

PROJECT (PAM-FP)

Aim of Project : Contribute to accelerate economic growth and thereby reduce poverty.

RESULTS CHAIN

PERFORMANCE INDICATORS

MEANS OF

VERIFYING

RISKS/

MITIGATIVE MEASURES

Indicators (including ISC)

Baseline Case Target

IMP

AC

T

Impact

Improved capacity to

mobilize domestic

resources.

Total revenue as a

percentage of GDP.

19.1 % in 2010

22% in 2015

Min Fin;

IMF Report

Risks

- Socio-political risks: Insecurity and

political instability.

- The reversibility of Government’s

commitment to public service and decentralization reforms.

OU

TPU

T

Result 1

The tax

administration’s

services are

reorganized and

domestic resource

mobilization capacity

improved.

Total tax revenue as a

percentage of GDP.

12.8 % in 2010

17% in 2015

Reports of the

General Directorate of Taxation/ Ministry

of Finance (MDF).

Reports of the

Ministry of Budget

and the Ministry of Finance.

Mitigation Measures

The country’s commitment to continue

consolidating peace and security.

The commitment of TFPs to support the

appeasement process and improve donor

coordination and their support to the country, especially in terms of capacity-

building

- The continuation of economic and

structural reforms and the IMF

programme.

-PAM-FP will be directly implemented by

the Ministry of Finance, with a self-driven team thoroughly acquainted with Bank

procedures. Procurements will be grouped

into lots; annual procurement plans and monitoring arrangements will be

designed, and the executing agency

subjected to performance obligations.

Result 2

The provincial

administration has

means to efficiently

manage public

finances.

The share of State

resources transferred to

the provinces.

Efficiency in public

finance management in

the three provinces

(Maniema, Bas-

Congo, and Orientale

Province).

10% in 2010

Absence of

procedures and

adequate systems

20% in 2015.

Systems and

procedures are

adequate in 2014.

Component 1

Output 1.1

Capacity of taxation

centres in five

provinces improved

1.1Training of tax

employees from five provinces in tax

collection procedures,

fiscal control, and

audit techniques.

1.1 Number of

employees trained

1.1 All employees of

taxation centres in five provinces are

trained before end-

2014.

1.1 Activity report of

PAM-FP/ DGI Report.

2

OU

TCO

MES

Output 1.2

Modernization of 8

combined taxation

centres

1.2 Eight (8) combined taxation centres (CIS)

modernized.

1.2 The 8 CISs identified are

archaic.

1.2 The 8 CISs identified are

rehabilitated and

equipped before end-2014.

1.2 Reports of the General Directorate

of Taxation (DGI).

vi

Component 2

Output 2.1

Increase in local

revenue

2.1 Local revenue of

the three provinces

increases

2.1 Average

increase (three

provinces) in local revenue

2.1 Average rate

increases by at least

35% from 2011 to 2015

2.1 Report of the

Ministry of Budget

(MB).

Output 2.2

Putting in place of the

expenditure chain in

the 3 provinces.

2.2 Expenditure chain

improves 2.2 Average rate of

expenditure passing through

the expenditure

chain

2.2 Average rate

increases from 0% to 50% from 2011 to

2014.

2.2 Activity Report of

PAM-FP/MDB

Output 2.3

Computerization of the

payroll system in the

three provinces

2.3 Payroll system is

computerized in the

three provinces.

2.3 Payroll system

is manual in the three provinces.

2.3 Installation of a

computerized payroll system before end-

2014.

2.3 Activity Report of

PAM-FP/MDF

Output 2.4

Adoption of an

institutional

framework in the three

provinces.

2.4 Suitable legal and

institutional

framework put in place

in the three provinces.

2.4 Absence of a suitable legal and

institutional

framework in the three provinces.

2.4 Putting in place

of a suitable legal and

institutional

framework in the

three provinces.

2.4 Report of the Ministry of Finance

and COREF

Output 2.5

Application of

budgetary procedures.

2.5 Budgetary

procedures manual

applied

2.5 Ineffective

budgetary procedures

2.5 Budgetary

procedures manual

implemented by end-

2013.

2.5 Activity Report of

PAM-FP. Ministry of Budget (MB).

Component

Component 1: Support in reorganizing and modernizing tax administration.

Arrange buildings to accommodate taxation centres in West Kasaï, East Kasaï, Maniema, South-Kivu and

Orientale Provinces.

Organize training sessions for employees in the Provinces: West Kasaï, East Kasaï, Maniema, South-Kivu and Orientale Provinces.

Modernize 8 combined taxation centres.

Support the operation of bodies tasked with steering and managing the reform in Kinshasa.

Component 2: Support in modernizing local public finance management in the three provinces

Build capacity to manage the public finance reform at the central level (COREF)

Put in place the Minimum Public Finance Platform in Orientale Province.

Implement the Minimum Public Finance Platform in Bas Congo.

Put in place the Minimum Public Finance Platform in Maniema Province.

Component 3: Project Management and Coordination

Provide logistic support to the Project Implementation Unit and provincial PEAs to adequately implement

project components

Finance operating costs linked to implementation at the central and provincial levels Conduct project audits Prepare the completion report.

Component 1: UA 2.65 million

Component 2: UA 5.47 million

Component 3: UA 1.88 million

vii

PROJECT’S TENTATIVE IMPLEMENTATION SCHEDULE Year

Activities / Months J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Prior to start-up

Board presentation

Grant effectiveness

Set up of the Project Ream

Set up of the Project CPP

Preparation, FSRC Users Manual

Project launch mission

Works

Bid invitation-works

Woks implementation Plan - Bas-Congo

Works implementation-REPERE

Works implementation- Orientale

Works implementation DRPO

Equipment and supplies

Bid invitation - IT and office autom, equip,

Software procurement

Bid invitation -vehicules et motocycles

Bid invitation - other equipments

Goods delivery and start-up

Consultants

BD preparation and constit, of SLs

Bid invitation appraisal and aword

Consultancy services

Set up of expenditure chain

Set up of PTS

Strengthening of financial services

Steering of COREF

Training and Miscl.

Training

Operating expenses

Mid-term review

Monitoring/evaluation

Meeting of the steering committee

Audit

Annual audit accounts

Final audit accounts

2012 2013 2014 2015

1

REPORT AND RECOMMENDATION OF BANK GROUP MANAGEMENT TO THE

BOARD OF DIRECTORS CONCERNING THE AWARD OF A GRANT TO THE

DEMOCRATIC REPUBLIC OF CONGO (DRC) FOR THE PUBLIC FINANCE

MODERNIZATION SUPPORT PROJECT (PAM-FP).

Management hereby submits this proposal to award an ADF grant of UA 10 million to the

Democratic Republic of Congo (DRC) to finance the Public Finance Modernization Support

Project (PAM-FP). This is an institutional support operation that will be executed over the

2012-2015 period. PAM-FP is consistent with the country’s development thrusts defined in

the 2006-2008 Poverty Reduction and Growth Strategy Paper (DSCRP) which was extended

to 2011 and whose objective is to consolidate macro-economic stability and growth. The

project is also consistent with the thrusts of the new 2012-2015 PRGSP being finalized.

Moreover, it is in line with the priorities of the Bank’s 2008-2012 Results-based Country

Strategy Paper (RBCSP), which focuses on promoting good governance and pro-poor

growth.

I. STRATEGIC THRUSTS AND RATIONALE

1.1. Linkages between the Project and Country Strategy and Objectives

1.1.1 PAM-FP is in line with the country’s development thrusts as defined in the 2006-

2008 Poverty Reduction and Growth Strategy Paper (extended to 2011), which aims to

consolidate macro-economic stability and growth. The National Poverty Reduction and

Growth Strategy Paper (PRGSP) rests on five pillars: (i) promoting peace and good

governance, including decentralization; (ii) consolidating macro-economic stability and

promoting economic growth; (iii) improving access to social services; (iv) HIV/AIDS

control; and (v) promoting the community dynamics. PAM-FP falls squarely in line with the

first pillar of this strategy and is also consistent with the thrusts of the new PRGSP, being

finalized, which will cover the 2012-2015 period.

1.1.2 Furthermore, the project is consistent with the priorities listed in the Bank’s 2008-

2012 Results-Based Country Strategy Paper (RBCSP) which lays emphasis on promoting

good governance and pro-poor growth, especially under its Pillar I: Support to good

governance based on building Government’s capacity to formulate, implement and monitor

macro-economic and sector policies, and make public finance management more transparent.

1.2. Rationale for Bank’s Involvement

1.2.1 The DRC is a fragile State. The havoc wreaked by several years of conflict

weakened the administration’s physical and functional capacity at the central and provincial

level, thereby impeding the efficient implementation of Government’s poverty reduction

strategy. The Congolese authorities are working to normalize the situation and have made

significant progress in this regard. However, much remains to be done to sustainably take the

country out of its fragile situation since it continues to face daunting challenges. These

include especially consolidating social peace, making the macro-economic framework more

stable, speeding up growth to create jobs likely to address unemployment and improving the

lives of the populations. To address these challenges, the Government plans to, among other

things, focus on improving public finance management and the business climate with a view

to promoting private investments. Despite progress made in public finance, serious

2

weaknesses persist in terms of efficient resource allocation and budget implementation. Poor

control of the staff strength and the practice of global non nominative envelopes affect

payroll consistency. Revenue protection is also still a major challenge due to many

malfunctions compounded by the plethora of regulations and stakeholders and the

institutional weaknesses of Government departments concerned. To remedy these

weaknesses, the Government adopted a Strategic Public Finance Reform Plan in March

2010. The Bank’s intervention falls within this context. It will adopt an integrated approach,

characterized by a combination of instruments, namely: (i) a reform support programme; and

(ii) an institutional building support project (PAM-FP).

1.2.2 The Bank’s intervention is an integrated response and a way to help the Government

to tackle the above challenges, seen in the preparation of a reform support programme. The

general objective of the programme is to contribute (through better economic and financial

governance) to setting up conditions for accelerated, private sector-driven growth capable of

creating jobs. It requires strengthening social inclusion through economic growth that can

have an impact by reducing poverty and inequalities. The programme’s key objectives are

to contribute to: (i) strengthening public finance management and reducing the risk of

corruption; and (ii) modernizing the legal and regulatory framework in order to improve the

business climate and generate private investments capable of creating jobs. Through PAM-FP

(an institutional support operation), the Bank will contribute to effectively implementing the

reforms envisaged under the proposed reform support programme’s first component, which

is based on the 2010-2015 Public Finance Reform Strategic Plan (PSRFP), and outlines

Government’s vision and objectives for public finance management as well as the key

reforms it plans to implement in this regard.

1.2.3 Furthermore, Government decided – as part of its implementation of the 2010-2015

Public Finance Reforms Strategic Plan (PSRFP) adopted in March 2010 – to put in place a

harmonized public finance management minimum platform in all provinces with the

support of TFPs. During a donor workshop in October 2010, emphasis, with regard to

provincial public finance support, was on the need for operations to henceforth be guided by

the concern to put in place the said minimum platform. The platform comprises four blocs

namely: (i) constitution of provincial and local taxation; (ii) provincial expenditure

management, which is sub-divided into three sub-blocs (support the establishment of the

public expenditure chain in the provinces and in the Decentralized Territorial Entities (DTE),

install a computerized provincial payroll and procurement procedure; (iii) planning,

budgeting and monitoring/evaluation support, and lastly; (iv) establishment of a legal and

regulatory framework in the provinces and DTEs. The Bank’s intervention under PAM-FP

will make it possible to continue the re-organization and modernization of the Tax

Administration and set up the public finance minimum platform in Bas-Congo, Orientale and

Maniema Provinces. These are the only three provinces not yet covered by the support of the

other TFPs in the above areas. Thus, at Government’s request and with the support of this

PAM-FP, all the provinces will be fully covered, as shown in Table 1.1 below. The Reform

and Public Finance Guidance Committee (COREF), which brings together representatives

from the Ministries of Finances and Budget, and sixteen sector ministries especially the

Ministry in charge of decentralization, is tasked with coordinating the introduction of the

minimum public finance management platform in the provinces.

3

Table 1.1:

TFP Operations in Public Finance Planning and Management in the Provinces1

(Based on the Minimum Platform’s Matrix of Activities Prepared in February 2011)

TFP Provinces Covered

Public Finance Management 3 Planning (2011-2015 PRSP-PAP)

World Bank 4 Katanga, Bandundu, South Kivu, West Kasaï*

5 UNDP 6 Equateur, North Kivu, East Kasaï 7 Katanga, North Kivu, South Kivu,

Bandundu, Maniema, West Kasaï

8 European Union 9 Kinshasa, North Kivu.

10 Belgian Cooperation 11 Kinshasa

12 USAID 13 Maniema, East Kasaï, West Kasaï, Bandundu, Katanga, South Kivu

14 ADB 15 Bas-Congo, Oriental and Maniema

Note: The intervention areas are the same for all TFPs since the objective is to implement the minimum platform. The Bank will support the three provinces not covered by other TFPs. The provincial distribution of coverage is based on the partners’ choice of action in agreement

with the Government, depending on their operations in the country and the accessibility of the provinces. At the request of the Government

and other TFPs, the Bank will cover Maniema, Bas-Congo and Orientale Provinces for a hitch-free rollout of the public finance minimum platform in the whole country. Since the matrix of activities under the minimum platform was only approved in February 2011, it is

still too early to assess its implementation.

Source: COREF (2010), TFPs’ commitments are detailed in Annex IV.

1.2.4 In 2003, Government launched the Tax System Modernization Programme

consisting in: (i) re-organizing and modernizing the tax administration, by reconfiguring

taxation services into three levels based on taxpayer turnover; (ii) revising laws and

regulations, especially modifying the turnover tax ahead of the introduction of value added

tax (VAT); (ii) improving tax management by putting in place a new tax identifier (NTI); (iii)

modernizing customs procedures; (iv) introducing one-stop shops in some customs posts; and

(v) computerizing customs offices. The tax system reform introduces a system whereby

taxpayers are managed based on the tax stake and the principle of a single tax interlocutor.

Thus, big taxpayers are managed by the Large Tax Unit (DGE) and medium taxpayers by

Taxation Centres which must be established in every provincial headquarters, large

urban centres and localities with high tax potential, to consolidate Government’s capacity

to mobilize domestic tax revenue. For their part, small businesses are managed by combined

taxation centres (CIS)2 which replace the former jurisdictional taxation services. In

maintaining structural reforms under PAM-FP, the main need is to continue putting in place

Taxation Centres in the provinces and modernizing 8 Combined Taxation Centres (CIS).

1.2.5 Although the Constitution provides the formula for distributing tax revenue collected

by the central Government, this provision is not yet effective3. The main reason is that the

State itself has serious cash-flow constraints stemming from the weak resource mobilization

capacity of Government revenue services both at the level of the capital (Kinshasa) and

devolved structures. This is seen in the country’s total tax revenue which represented only

12.8% of GDP in 2010, (against the minimum level of 17% of GDP required for WAEMU

countries). This explains why total transfers to the provinces are hardly up to 10% of national

revenue instead of the expected 40%4, showing that taxation centres in the provinces need

strengthening.

1 See also Annex IV summarizing donor operations in this area. 2 The Large Tax Unit (DGE) launched its activities since March 2003, while only two Taxation Centres are operational to date – the first

in Kinshasa since 2004 and the second in Lubumbashi since July 2008. 3 This distribution should be as follows: 50% of national revenue remains at the central level, 40% is transferred to the provinces and 10%

goes to the National Equalization Fund to finance provincial investments. 4 However, this figure does not include education, health and agriculture staff salaries which the central Government continues to pay on

behalf of the provinces.

4

1.2.6 The internal revenue of the provinces (derived mainly from land tax and income tax)

is low due to the weak revenue-collection capacity of provincial structures. Provinces have

set up their own revenue services to administer and grow their internal resources. Bas-Congo

created a Provincial Revenue Supervision and Collection Service (REPERE), while Orientale

set up the Provincial Revenue Directorate (DRPO). These structures not only collect revenue

payable to the province but also supervise such revenue. This means that they monitor on

behalf of the provincial government, all tasks executed by the devolved structures of State

Revenue services. However, provincial financial services have scant resources to operate,

which explains the low level of revenue they collect.

1.2.7 Public finance management is virtually non-existent or poorly known at local level

where financing is mainly limited to the payment of civil servants’ salaries and capital

expenditure is very marginal. The current public finance management system at provincial

level is characterized by: (i) the absence of a suitable legal and institutional framework; (ii)

inefficient budgetary procedures; (iii) absence of revenue collection procedures and

structures; (iv) absence of a reliable and rational payroll system; and (v) absence of a

computerized expenditure chain. All partners recognize that the installation of a results-based

system for managing provincial and local public finances is a logical consequence of the

financial autonomy vested in the Provinces and the Decentralized Territorial Entities in DR

Congo, by virtue of Sections 3 and 171 of the 18 February 2006 Constitution. As a result, the

Public Finance Modernization Support Project falls in this overall context and is

complementary to a reform support programme.

1.2.8 Three factors explain why the Bank should step in now. The first is the need to

support the implementation of both the Public Finance Reform Strategic Plan (PSRFP)

adopted by Government in 2010 and Government’s Programme to Modernize the Tax

Administration and System. The second is helping to put in place the local public finance

minimum platform aimed at strengthening financial governance at the provincial and local

level. The third is PAM-FP’s complementarity to the reform support programme. Through

PAM-FP, the Bank will contribute to effectively implement reforms that are also under the

reform support programme, especially the component related to the continued re-organization

of the services of Tax Administration in the Democratic Republic of Congo.

1.3. Aid Coordination

1.3.1 Aid coordination is important for a country like the DRC whose external assistance

needs are immense in view of the challenges it has to tackle. This coordination is

indispensable to create synergy and tap complementarities among development partners in

order to help the country to efficiently meet these challenges. At the moment, aid

coordination is through thematic consultative groups bringing together the public sector, civil

society and TFPs. These groups meet regularly to monitor the implementation of reforms.

Policy dialogue is conducted through the Country Assistance Framework, which brings

together the heads of missions.

1.3.2 In line with the principles of the Paris Declaration, PAM-FP was developed and

prepared closely with all partners, especially the EU and the World Bank. Furthermore, as

part of the implementation of the 2010-2015 Public Finance Reform Strategic Plan (PSRFP),

the Government decided to put in place a harmonized public finance management minimum

platform in all provinces with the support of TFPs. During the workshop that brought

5

together partners in October 2010, the need was emphasized for their interventions to be

henceforth guided by the concern to put in place this minimum platform. PAM-FP (which is

complementary to the interventions of the other TFPs) will cover the three remaining

provinces, thereby contributing to implementing the minimum platform.

Table 1.2

Aid Coordination: Governance Thematic Group and Stakeholders

THEMATIC WORKING GROUP LEAD

Security (Army and Police) 16 EDSEC & EDPOL

17 Justice and Human Rights 18 European Union

19 Local and Decentralized Governance 20 UNDP

21 Economic Governance and Public Finance 22 European Union

23 Elections and Parliament 24 UNDP

25 Business Climate and the Private Sector 26 French Development Agency (AFD)

27 Media and Culture 28 French Embassy

29 Statistics, Prospective Studies and Energy 30 ADB

31 Community Dynamics 32 Japan

Source: Government (2011)

1.3.3 Information collected during consultations with the other development partners was

taken into account in defining project objectives and components. The targeted support is

complementary to Bank interventions and those of key partners actively involved in

economic and financial governance and local development, especially the World Bank, the

UK Department for International Development (DFID), the UNDP, the European Union

(EU), Belgian Cooperation, French Cooperation, German Cooperation (GTZ), the Canadian

International Development Agency (CIDA) and Sweden.

II. PROJECT DESCRIPTION

2.1. Project Objectives and Components

2.1.1 The end objective of the project is to contribute to enhancing domestic resource

mobilization capacity. The specific objective of the project is to continue the re-organization

of the Tax Administration’s services, better resource allocation and more efficient public

finance management in three provinces – Bas-Congo, Orientale and Maniema – by putting

in place the minimum local public finance platform. The project has two key components

presented in the following table:

6

Table 2.1

Project Components

# Name of

Component

Estimated

Cost

Description of Components

1

Support in

reorganizing and

modernizing tax

administration

UA 2.65 M

(i) Rehabilitation of buildings to accommodate 5 taxation centres under the authority

of the Central Administration (West Kasaï, East Kasaï, Maniema, South-Kivu and

Orientale Provinces).

(ii) Training of employees in provinces: 5 taxation centres under the Central

Administration (West Kasaï, East Kasaï, Maniema, South-Kivu and Orientale

Provinces).

(iii) Modernization of 8 combined taxation centres.

(iv) Support in building the capacity of the Tax Reform Directorate.

2

Support in

modernizing local

public finance

management in three

provinces

UA 5.47 M

(i) Strengthening of COREF’s capacity

(ii) Putting in place of the minimum platform in Orientale Province.

(iii) Implementation of the minimum public finance platform in Bas Congo.

(iv) Putting in place of the minimum public finance platform in Maniema.

3 Project management

and coordination UA 1.88 M

(i) Support in project implementation

(ii) Project audit.

Detailed Project Description

2.1.2 Component 1: Support in re-organizing and modernizing tax administration

Key Challenge of Component 1: The main challenges confronting the tax administration

are: (i) the need to provide these Government departments with material resources

necessary for the effective implementation of institutional and organizational reforms.

The havoc wreaked by several years of conflict in the DR Congo weakened the physical

and functional capacity of central and provincial Government departments. The premises

of most tax administration services are in dire need of rehabilitation or modernization; (ii)

the need for urgent action to build internal resource mobilization capacity at the central

level and in the devolved structures of financial services; and (iii) the need for a realistic

programming and better coordination of the implementation of constitutional provisions

governing the transfer of resources to the provinces and the establishment of provincial

financial services. With tax revenue representing only 12.8% of GDP in 2010, resource

mobilization was not commensurate with the significant economic growth recorded by

the country. Responsible tax behaviour should be improved and revenue mobilization

capacity strengthened particularly in the provinces, where administrative infrastructure of

devolved structures is virtually absent or completely dilapidated.

Government’s Tax Administration Reform and Modernization Programme has two

main thrusts, namely: (i) the reform of structures; and (ii) the reform of regulations. The

reform of structures was concretized by the signing of Decree No. 017/2003 of 2 March

2003 to set up the General Directorate of Taxes, as amended and supplemented by Decree

No. 04/099 of 30 December 2004.

The reform of structures aims to re-organize the tax administration into: (i)

strategic services tasked with guiding, coordinating and supervising (central

Administration and urban/provincial directorates); and (ii) operational services

responsible for the day-to-day management of taxes. The reform introduces a

system whereby taxpayers are managed according to tax stakes based on the

principle of single tax interlocutor. Thus, big taxpayers are managed by the Large

7

Tax Unit (DGE) and medium ones by taxation centres, which must be set up in

provincial capitals, large urban centres and localities with a high tax potential.

Lastly, small businesses are managed by combined taxation centres (CIS) which

have replaced the former tax jurisdictions. The Large Tax Unit launched its

activities in March. In contrast, only two taxation centres are operational to date –

the first in Kinshasa since 2004 and the second in Lubumbashi since July 2008.

The reform of regulations comprises the following two thrusts: (i) tax

procedures, regulations governing the tax status of small- and medium-sized

enterprises; and (ii) indirect taxation. The first two thrusts of this reform were

concretized by the enactment of Law No. 004/2003 of 13 March 2003: Reform of

tax procedures, as amended and supplemented by Law No. 06/003 of 27 February

2006, and Law No. 06/004 of 27 February 2006 to lay down tax regulations

governing the professional income levy and internal turnover tax of small- and

medium-size enterprises.

The indirect tax system is characterized by a cascading of the turnover tax, a very

narrow tax base and a multitude of tax exemptions. The VAT Law and Customs

Code were enacted in August 2010 by way of enabling powers. While VAT

effectiveness is planned for January 2012, the new Customs Code has been in force

since February 2011. The World Bank’s Governance Capacity-Buiding Programme

(PRCG) already covers initial training for all workers of the General Directorate of

Taxes and in-depth training intended for employees who will be involved in VAT.

These training sessions will be preceded by the training of trainers conducted by the

International Monetary Fund (IMF).

Component 1 Activities: In continuing the strengthening of structures begun in 2002, the

support listed under PAM-FP mainly comprises setting up taxation centres in the

provinces and modernizing some combined taxation centres (CIS). This mostly involves:

(i) rehabilitating buildings accommodating taxation centres in West Kasaï, East Kasaï,

Maniema, South Kivu and Orientale Provinces; (ii) strengthening the capacity of taxation

department workers in the above five Provinces; (iii) modernizing 8 CISs; and (iv)

supporting the operation of bodies that steer and manage the tax reform process.

Key Expected Outcomes of Component 1: (i) The tax administration operates under

better conditions; (ii) tax collection capacity is strengthened; and (iii) the internal resource

mobilization capacity increases alongside an increase of tax revenue to 17% of GDP in

2015.

8

2.1.3 Component 2: Support in modernizing the management of local public finances

in three provinces

Key Component 2 Challenges: Generally, the provincial administration lacks

internal resources for an orderly implementation of Government action. No

decentralized administration per se exists as yet at the provincial and local level. The

central government covers over 90% of the bills of State services in the current

provinces. The new provinces and Decentralized Territorial Entities lack their own staff

and property, and continue to use the staff and movable and immovable property of the

central authority. The provincial government relies almost exclusively for its operation

on the devolved services.

Provincial revenue services have scant resources for their operation, which dims

prospects for increasing the little resources they collect. Furthermore, the current

system of public finance management at the provincial level is characterized by: (i)

inefficient budgetary procedures; (ii) the absence of revenue collection procedures

and structures; (iii) the absence of a reliable and rational payroll system; and (iv)

the absence of a computerized expenditure chain.

Component 2 Activities: This involves implementing the minimum public finance

management platform at the provincial and local level by: (i) introducing a

computerized expenditure chain in line with the provisions of the new expenditure

procedures manual and connecting it to the central Government; (ii) installing a

computerized payroll system; (iii) strengthening the capacity of provincial revenue

services; (iv) further equipping provincial divisions of the Budget and the Public

Service tasked with the expenditure chain and payroll computerization; and (v)

strengthening the tax collection capacity of revenue services in the three provinces by:

(a) procuring means of transportation to facilitate access to collection points and hence

broaden the tax base; (b) computerizing the processing of tax files which is now done

manually with the risk of delays, errors and fraud; (c) rehabilitating and equipping

existing buildings to make them more functional; (d) opening revenue services in the

other large towns; and lastly (e) training employees, especially tax inspectors and

controllers, to fight tax evasion, under-taxation and fraud.

Key Expected Outcomes of Component 2: The implementation of the local public

finance management component will make it possible to address the following

constraints: (i) poor coherence between public finance management at the central level

and in the three provinces, and inadequate control of expenditure in the provinces; (ii)

low revenue in the three provinces; (iii) the use of manual procedures to execute public

expenditure; and (iv) lack of control of the payroll.

9

2.1.4 Component 3: Project Management and Coordination

Managing and monitoring project implementation: The Project Implementation Unit

(PIU) will manage and coordinate the project. To make it efficient, the project must

provide the necessary equipment for the proper operation of its central structure and the

provincial PIUs to be set up in the three provinces. In carrying out its mission, the

Project Implementation Unit will work closely with COREF which, pursuant to its

mandate, steers and coordinates the implementation of public finance reforms in the

country, especially in the three provinces concerned by the project.

Component 3 Activities consist in: (i) installing a computerized project accounts and

financial management system based on an updated procedures manual; (ii) putting in

place the project’s monitoring/evaluation system; (iii) submitting regular technical and

financial reports; (iv) regularly organizing and participating in project coordination

meetings; and (v) conducting an annual audit of project accounts.

Box 1: Role of COREF

Aware of the importance of managing a reform, the Government made appropriate

institutional arrangements in 2009, especially by setting up the Public Finance

Reform Guidance Committee (COREF). COREF is responsible for impelling,

facilitating, coordinating and monitoring the implementation of reforms, while the

various ministries and bodies ensure the thorough preparation and daily

implementation of reform components falling within their respective areas of

jurisdiction. Besides, the Government included training, information and

communication activities in this programme to limit the risk of misunderstandings

and resistance that are inherent in reforms of such scope. COREF brings together

representatives from the Ministries of Finance and Budget as well as sixteen sector

ministries including the Ministry in charge of decentralization, tasked with putting

in place the minimum public finance management platform in the provinces.

10

2.2. Technical Solutions Adopted and Alternatives Explored

The technical solution adopted for this project was presented in paragraphs 2.1.1, 2.1.2 and

2.1.3. The country’s RBCSP clearly identifies the main obstacles to poverty reduction in the

DRC and proposes a set of coherent measures to revive growth and reduce poverty. The

Strategic Public Finance Reform Plan (PSRFP) and Government’s Tax Administration

Reform and Modernization Programme were also clearly defined. However, their

implementation might be impeded by weak national capacity. Therefore, it is imperative to

strengthen institutional capacity in economic and financial governance. To support

Government’s reform efforts, the Bank resolved to provide support to Congo, through its

integrated approach under this project and the reform support programme.

2.3. Project Type

This project is an institutional support financed by an ADF grant. This type of intervention

was chosen because of its relevance to implement capacity-building activities in provincial

administrations with limited experience in project implementation. Since it is complementary

to the proposed reform support programme, PAM-FP will also contribute to the effective

implementation of reforms envisaged under the proposed reform support programme,

especially the component having to do with continuing the reorganization of the Tax

Administration in the DRC. The Bank’s intervention is part of an integrated approach

characterized by a combination of instruments, namely: (i) a reform support programme; and

(ii) an institution building support project (PAM-FP).

2.4. Project Cost and Financing Arrangement

2.4.1 The total cost of the project, inclusive of taxes and customs duties, is estimated at UA

10 million, of which UA 6.78 million in foreign exchange (68%) and UA 3.21 million in local

currency (32%). ADF will bear 100% of the project cost, inclusive of customs duties and

taxes. Since the DRC is a fragile State, no counterpart contribution is required from the

Government. This arrangement stems from the analysis of the country’s financing parameters

for cost sharing and payment of taxes and duties, the still fragile status of public finances, the

country’s low tax revenue level (about 12.8% of GDP) as well as the fact that project

implementation will lead to additional loss of tax revenue since PAM-FP will be exempted

from taxes and customs duties. These costs also include a 10% provision for physical

contingencies and an 8% provision for price escalation per year. Below is a summary table of

the project’s total cost by project component:

11

Table 2.2

Project Cost Estimate by Component [in UA thousand]

COMPONENTS Total Cost in USD Thousand Total Cost in UA Thousand % For.

Exch. For. Exch. LC Total For. Exch. LC Total

A. SUPPORT IN RE-ORGANIZING AND

MODERNIZING THE TAX

ADMINISTRATION

3,358.3 378.7 3,737 2,147.7 2,42.2 2,389.9 90%

B. SUPPORT IN MODERNIZING LOCAL

PUBLIC FINANCE MANAGEMENT IN

THREE PROVINCES

5,119.7 2,146.3 7,266.1 3,274.2 1,372.6 4,646.8 70%

Strengthening capacity to manage public finance

reform at the central level (COREF) 555.3 349.5 904.8 355.1 223.5 578.6 61%

Support in improving public finance

management in Orientale Province. 1,619.8 676 2,295.8 1,035.9 432.3 1,468.2 71%

Support in improving public finance

management in Bas Congo Province. 1,753.4 581.6 2,335 1,121.3 371.9 1,493.3 75%

Support in improving public finance

management in Maniema Province. 1,191.2 539.3 1,730.5 761.8 344.9 1,106.7 69%

C. MANAGEMENT AND COORDINATION 494.3 1,729 2,223.3 316.1 1,105.7 1,421.8 22%

TOTAL BASE COST 8,972.3 4,253.9 13,226.3 5,738 2,720.5 8,458.5 68%

Physical contingencies (10%) 897.2 425.4 1,322.6 573.8 272.1 845.9 68%

Price escalation (8%) 735.7 348.8 1,084.6 470.5 225.1 695.6 68%

PROJECT TOTAL COST 10,605.3 5,028.2 15,633.5 6,782.4 3,217.7 10,000 68%

Note: The exchange rates used are indicated in the introduction of this report (page (i)) [UA 1 = USD 1.56366]

2.4.2 The Bank’s financing is UA 10 million, of which UA 6.78 million in foreign

exchange and UA 3.21 million in local currency. Project costs by source of financing,

expenditure category and expenditure schedule are presented in the following tables.

Table 2.3

Project Cost Estimate [in UA Thousand]

SOURCE OF FINANCING

Total Cost in USD Thousand Total Cost in UA Thousand

In % For. Exch. For. Exch. LC Total

For.

Exch. LC Total

ADF 10,605.3 5,028.2 15,633.5 6,782.4 3,217.7 10,000 68%

Total Project Cost 10,605.3 5,028.2 15,633.5 6,782.4 3,217.7 10,000 68%

Table 2.4

Project Cost by Expenditure Category [in UA Thousand]

EXPENDITURE

CATEGORIES

Total Cost in USD Thousand Total Cost in UA Thousand In %

For.

Exch.

%

Total For. Exch. LC Total For. Exch. LC Total

Works 3,547.83 396.2 3,944.03 2 268.93 253.38 2,522.31 90% 25%

Goods 3,831.74 50.56 3,882.30 2,450.50 2.33 2,482.83 99% 25%

Services 959.14 1,270.82 2,229.97 613.40 812.72 1,426.12 43% 14%

Operation 633.61 2,536.32 3,169.92 405.22 1,622.04 2,027.26 20% 20%

TOTAL BASE COSTS 8,972.32 4,253.90 13,226.22 5,738.05 2,720.47 8,458.52 68% 85%

Physical contingencies

(10%) 897.23 425.39 1,322.62 573.80 272.05 845.85

68% 8%

Price escalation (8%) 735.73 348.82 1,084.55 470.51 225.12 695.63 68% 7%

TOTAL PROJECT

COST 10,605.28 5,028.11 15,633.39 6,782.36 3,217.64 10,000.00 68% 100%

12

Table 2.5

Expenditure Schedule by Component [in UA Thousand]

COMPONENT

Total Cost in USD Thousand Total Cost in UA Thousand

2012 2013 2014 2015 Total 2012 2013 2014 2015 Total A. SUPPORT IN

RE-ORGANIZING

AND MODERNIZING

THE TAX

ADMINISTRATION 4,316.2 0.0 0.0 0.0 4,316.2 2,760.3 0.0 0.0 0.0 2,760.3 B. SUPPORT IN MODERNIZING

LOCAL PUBLIC

FINANCE MANAGEMENT IN

THREE

PROVINCES 5,946.8 1,300.5 697.2 665.2 8,604.8 3,803.1 831.7 445.9 425.4 5,506.1 C. PROJECT

MANAGEMENT

AND COORDINATION 1,239.4 373.9 529.1 570.1 2,712.5 792.6 239.1 338.4 364.6 1,733.8 TOTAL PROJECT

COST 11,502.3 1,674.4 1,226.3 1,235.2 15,633.5 7,356.0 1,070.8 784.3 790.0 10,000.0

2.5. Project Area and Beneficiaries

2.5.1. Target Beneficiaries: The project area covers Kinshasa, the taxation centres of

West Kasaï, East Kasaï and South Kivu, 8 combined taxation centres and lastly, Bas-Congo,

Orientale and Maniema Provinces. Project end beneficiaries are the population of the whole

country, especially those of provinces directly targeted. The latter will enjoy better living

conditions enabled by macro-economic stability and more efficient budget management that

prioritizes pro-poor expenditure. The key targeted intermediate beneficiaries are: (i) the

devolved services of the Ministries of Budget and Finance; and (ii) the private sector, which

will operate in a better environment reflected in more public procurements at provincial level

and shorter payment deadlines - thanks to the computerized expenditure chain.

2.6. Participatory Approach for Project Identification, Design and

Implementation

2.6.1 Consultations were organized during the project identification and preparation

phases, and involved discussions between the Bank and stakeholders. The stakeholders are

the authorities of central ministries (Decentralization and Regional Development, Planning,

Budget and Finances), officials of Bas Congo, Orientale and Maniema Provinces and the

officers of COREF and the Decentralization Technical Support Unit (CTAD). These

consultations with partners were continued during the appraisal mission through combined

dialogue as part of the reform support programme’s preparation process, jointly with the

preparation of PAM-FP. Thus, the mission consulted beneficiary institutions on the project

design. It met civil society organizations (CSOs), the association of women’s organizations

networks5, the private sector

6 and TFPs. Their views (on accelerating the decentralization

process, developing responsible tax behaviour and strengthening financial governance in the

provinces) were considered during the design and formulation of project components.

5 CAFCO (Standing Consultative Framework on the Congolese Women)

6 FEC (Federation of Businesses of Congo).

13

2.7. Bank Group Experience and Lessons Reflected in Project Design.

2.7.1 Lessons drawn: Since resuming cooperation with the country in 2002, the Bank has

initiated a series of operations to build good governance capacity in the public sector.

Although these operations were part of recent capacity-building projects (PAIM in 2002 and

PARER in 20037), the Bank has no interventions yet dedicated to local governance in the

DRC. The lessons drawn from PAIM implementation (detailed in Annex B1 of this appraisal

report’s technical annexes) were considered during the project design. These key lessons,

based on the completion report, are a necessity for future operations. They include: (i) better

targeting of beneficiary structures and enhanced coordination of capacity-building

interventions; (ii) greater stakeholder participation; and (iii) appropriate measures to mitigate

threats to the sustainability of project outputs.

2.7.2 Consideration of lessons: The above lessons were leveraged into the project design.

As mentioned earlier, PAM-FP was prepared closely with bilateral and multilateral partners

operating in the DRC. With regard to risk management, PAM-FP aims to strengthen public

finance management systems as this will lessen the risk of corruption and poor management

of public funds. Apart from measures intended to mitigate the identified governance (section

4.3) and other residual risks (section 4.5), Government’s commitment to carry through

reforms in central and provincial Government departments was underlined. Lastly, after

project completion, the recurrent expenses of beneficiary structures, estimated at USD 1.7

million, could easily be defrayed by the expected increase in local revenue collected by

provincial revenue services.

2.8. Key Performance Indicators

The logical framework will be the basis of project monitoring/evaluation. The key indicators

for monitoring project impacts over the 2011-2015 period are: (i) the launching of tax

administration re-organization; (ii) the strengthening of tax collection capacity; (iii) the

average increase of the internal revenue of the three provinces; and (iv) the rate of execution

of programmed expenditure passing through the computerized expenditure chain.

III. PROJECT FEASIBILITY

3.1. Economic Benefit

3.1.1 Being an institution building project, PAM-FP is not the kind of productive project

that seeks immediate financial profitability and a return on investments. For that reason, the

financial analysis usually done for projects will not apply to PAM-FP. Building institutional

capacity does not generate cash-flow (expenditure and proceeds) that enables financial

analysis. As a result, considering the project’s specific nature and objectives, only an

economic analysis will reflect the overall economic benefits generated by the project and how

such benefits are distributed among beneficiaries.

3.1.2 The project aims to achieve outputs having medium- and long-term economic

profitability. Thus, by building institutional capacity in tax administration, PAM-FP will

directly contribute to mobilizing domestic resources and increasing public revenue from

7 PAIM: Multisector Institutional Support Project. PARER: Institutional Support Programme of the Economic

Recovery and Reunification Support Projet.

14

12.8% of GDP in 2010 to 17% in 2015. The implementation of the PAM-FP component on

local public finance management will allow for more efficient management of local public

finances in the target provinces and hence help to rationally allocate resources and channel

them optimally in the social sectors. Lastly, better tax and financial governance will

contribute to reviving the private sector and business operators by reducing arrears and

domestic debt.

3.2. Environmental and Social Impact

3.2.1 Environment: Since the project has no negative impact on the environment, it was

classified under environmental category III.

3.2.2 Climate Change: Project activities aimed at building human and institutional

capacity have no negative impact on the environment and climate change.

3.2.3 Gender: Women account for about 3 to 4% of the staff strength of Government

departments at the central and provincial level. They make up 52% of the population of Bas

Congo Province, 51.1% in Orientale and about 51.3% in Maniema. Increasing the resource

level and improving the quality of expenditure allocation will help to offer quality public

health (lower infant mortality rate) and education (higher primary enrolment rate) to the

population of targeted provinces, thereby contributing to improving the living conditions of

women and girls. Provisions will be made in the project procedures manual to allocate 10%

of slots under the training programme to women.

3.2.4 Social: As mentioned above, the project will have a positive impact on women and

girls who represent a sizeable percentage of the poor. Efficient public spending, particularly

in health and education, will help to improve progress towards achieving the Millennium

Development Goals (MDGs). Lower infant mortality, higher primary enrolments and

provision of other basic social services will contribute to reducing poverty in the three

provinces. Lastly, positive impacts are expected from the execution of the project’s own

activities (recruitment of national consultants, on-site training, local procurement of goods

and conduct of development works). These activities will have an impact on growth and

income distribution.

3.2.5 Forceful Relocation: The project will not cause any population displacement.

IV. IMPLEMENTATION

4.1. Implementation Arrangements

4.1.1 Institutional Framework: The project is under the supervision of the Ministry of

Finance – the executing agency. The project implementation institutional framework will

have the following structure: (i) at the central level, the FSF Implementation Unit designated

as the Project Implementation Unit and a Steering Committee; and (ii) at the provincial

level, three Provincial Project Implementation Units, which report to the Central Project

Implementation Unit based in Kinshasa. Provincial units are the field organs of the Central

Unit. The PIU will be directly under the Minister of Finance.

15

4.1.2 At the Central Level: PAM-FP will be implemented by the FSF Implementation

Unit referred to as the Project Implementation Unit (PIU). The PIU will be the operational

structure of project management. It will implement all project components and prepare

periodic progress reports. It will be managed by a full-time Project Manager who will be the

Bank’s main interlocutor during monitoring and supervision missions. Before assuming duty,

s/he will sign a performance contract with the Ministry of Finance, the terms and conditions

of which must be approved beforehand by the Bank. In the day-to-day discharge of his/her

duties, the Project Manager will be assisted by: (i) a procurement officer; (ii) an accountant

or administrative and financial officer (AFO); (iii) an administrative assistant; (iv) a

messenger; and (v) a driver. Training on Bank procurement and disbursement procedures will

be given to the PIU. Evidence of the designation of the FSF implementation unit as

Executing Agency of PAM-FP and designation of its members and focal points in every

Directorate involved in the project to serve as interlocutor to PIU shall be a condition

precedent to first disbursement.

4.1.3 To guarantee the efficient guidance and coordination of PAM-FP activities, a

Project Steering Committee (PSC) will be set up to supervise and monitor project

implementation. The PSC will validate the budgets and progress reports prepared by the PIU.

PSC will comprise: (i) the Director of Cabinet of the Minister of Finance (or his/her

representative), who will chair the Committee; (ii) one representative of the Minister of

Budget; (iii) the Deputy Director of DGI or a representative of DGI; (iv) one representative

of COREF, to oversee quality assurance and ensure that PAM-FP activities are consistent

with the public finance reform strategy adopted by the Government; (v) one representative of

the Ministry in charge of Decentralization; and (vi) one representative of CTAD. The PSC

will take measures it deems necessary for a hitch-free implementation of the project

components and will be contacted on any jurisdictional matter to ensure that project

implementation is smoothly coordinated. The secretariat of PSC meetings will be managed

by the Project Manager at the central level. The establishment of this structure shall be a

condition precedent to first disbursement of the grant.

4.1.4. At the provincial level: A Provincial Project Implementation Unit (PPIU) will be

set up in each province. The PPIU will be the operational structure for managing the project

at the local level and will coordinate and implement all project activities as well as prepare

periodic progress reports on project activities in the province for submission to the Project

Implementation Unit (PIU) in Kinshasa. The project manager at the provincial level will be

assisted by: (i) a procurement assistant to the project manager; (ii) an administrative and

financial assistant who will report to the central accountant; and (iii) a driver. The PPIU will

be trained in Bank procurement and disbursement procedures. Furthermore, focal points will

be designated in every provincial Directorate involved in the project to serve as interlocutor

at PPIU. Evidence of creating three PPIUs (Bas Congo, Maniema and Orientale Provinces)

shall be a condition precedent to first disbursement.

4.1.5 Financial Management: Financial management will be pursuant to Bank

guidelines and requirements, and undertaken by the PIU at the central and provincial level. In

this regard, the central accountant or AFO will be responsible, with support from the

administrative and financial management assistant at the provincial level, for keeping the

project’s financial and cost accounting based on standards in force, and for preparing

periodic financial statements (quarterly and annual). A computerized accounting system will

be put in place at project start-up. A project management expert/public accountant (financed

by ADF resources) will support the PIU in setting up the financial management information

16

system. A consultancy firm will be recruited to prepare the administrative, financial and

accounts procedures manual. Together with the recruited expert, the coordinator will put in

place internal audit procedures for purchases/procurements, protection of capital assets and

bank account transactions (see annex B4).

4.1.6 Procurement Arrangements: Goods, works and services financed by ADF

resources will be procured pursuant to Bank Rules and Procedures for Procurement of Goods

and Works or Rules and Procedures for the Use of Consultants, as the case may be, using

standard Bank bidding documents (BD). A Procurement Plan (PP) will be prepared by the

country and submitted to the Bank, which will ensure that it complies with the grant protocol

and its relevant Rules. The PP will be prepared for an initial period of 18 months and updated

by the Donee every year or whenever necessary. Prior to its deployment, any proposal to

review the PP must be approved by the Bank. Strengthened with a procurement specialist, the

Project Implementation Unit (PIU) will be responsible for the procurement of goods, works

and consultancy services as well as training sessions as detailed in Technical Annex B5.

4.1.7 Disbursements: Disbursements will be made in line with the provisions of the

Bank’s disbursement manual. These will be by direct payment to suppliers and service

providers or by deduction from the special project account. Provision has been made to open

a special account in a local commercial bank acceptable to the Bank to receive part of the

grant resources. Evidence of opening the special account shall be a condition precedent to

first disbursement.

4.1.8 Audit Arrangements: Audits will be conducted annually by an external audit firm

to be recruited on a competitive basis and in accordance with the Bank’s standard terms of

reference. Audits will follow IFAC’s international ISA audit standards and Bank

requirements. Financial statements audited by the independent audit firm will be forwarded to

the Bank not later than six (6) months after the end of the fiscal year concerned.

4.2. Monitoring

4.2.1 The project will be monitored by the Bank through sustained dialogue between the

authorities and the Bank, especially through the Bank Field Office in the DRC (CDFO) and

during half-yearly or quarterly supervision missions of PAM-FP, as the need arises. The

physical implementation of the project is expected to cover 48 months from December 2011

to December 2015. This timeframe is deemed reasonable, considering the nature of capacity-

building activities to be carried out, the action plan of public finance reforms and the time

needed to set up the public finance management systems. The tentative milestones are

presented in the following table:

17

Table 4.1

Monitoring Milestones and Feedback Loop

Schedule Milestones Monitoring Activities / Feedback Loop

Dec.-11 Board approval of the grant Notification to Government

Dec-11 to Jan-12 Grant effectiveness Signing of grant agreement and fulfilment of conditions precedent to first disbursement

Jan-12 Start-up mission Training of project officials

Jan-12 NGA and NSA UNDB; national and regional newspapers

Feb.-12 Compliance with first disbursement conditions

Opening of special account, creation and decision on members of PIU

Feb.-12 Start of first activities

Design of working programme and formation of the Project

Implementation Unit

April-12 Design and launch of BDs

Design by beneficiary structures and the Project Implementation

Unit

May -12 Review of bids and award of contracts

Review by the Project Implementation Unit and approval by the

authorities

June-12 Execution of development works

Performed by contractors, verified by the Project Implementation

Units and focal points

2011-2015 Implementation of other project activities Quarterly and annual progress reports

2012-2015 Supervision missions and mid-term review mission (early 2011) 33 Mission reports

2012-2015 Annual project audits 34 Audit reports

Dec-15 Project completion Completion report

4.3. Governance

4.3.1 Project implementation might encounter governance problems (fraud, corruption)

mainly at the procurement and financial management level. The procurement-related risk will

be mitigated by the following provisions: Bank oversight over the procurement process

through its non-objection opinion on bidding documents and contracts and through project

supervision and procurement audits. For financial governance, see paragraphs 4.1.6 and 4.1.7

for the adequate provisions made for financial management and audit.

4.4 Sustainability

4.4.1 Country commitment and ownership of project and policy justifying support:

As indicated in Section 1 of this report, the project is in line with the 2006-2008 RBCSP

extended to 2011 and the preliminary thrusts of the 2011-2015 PRGSP being validated. As

earlier mentioned, the project was the subject of a financing request from the Government.

Beneficiary institutions took an active part in project preparation and appraisal. Project

activities fall squarely in line with the 2009-2012 economic and financial reforms supported,

among others, by the IMF’s Extended Credit Facility (ECF), implemented satisfactorily

overall.

4.4.2 Apart from measures to mitigate identified governance (Section 4.3) and residual

risks (Section 4.5), Government’s commitment to carry through public administration

reforms at the central and provincial level was underlined. This mitigates the risk that the

project will not be the only action to strengthen the three provincial administrations. During

project implementation, computer hardware and other logistic materials will be procured and

their maintenance will generate recurrent expenses. Such expenditure will be financed by the

project and incorporated in the beneficiary structures’ recurrent budget at the end of the

project.

18

4.4.3 At the end of the project, the beneficiary structures’ recurrent expenditure, estimated

at USD 1.7 million, could easily be covered by the provincial governments with: (i) an

expected increase in local revenue collected by provincial revenue services; (ii) the passing

and implementation of the Finance Law in 2012, which will endow provinces with more

resources by transferring 40% of national revenue to the provinces; (iii) an improvement in

the country’s financial situation after reaching the HIPCI completion point and benefiting

from debt relief; and (iv) better control of public expenditure at the provincial level.

4.5. Risk Management

4.5.1 Arrangements were made to tackle the risk of poor governance (fraud, corruption)

especially in the procurement process, financial management and disbursement conditions.

The risk of reversibility of Government’s commitment to reforms and political instability will

be mitigated respectively by: (i) sustaining and continuing the programme supported by the

IMF’s Extended Credit Facility (ECF); and (ii) consolidating national reconciliation.

Table 4.2

Risks and Mitigative Measures

Identified Risks Risk Rating Mitigative Measures

Reversibility of Government’s

commitment to reforms

Weak The country’s commitment to continue and deepen structural

reforms and the determination of TFPs to continue supporting the

country in carrying out reforms (especially under the IMF

stabilization programme) will cushion the impact of potential

exogenous shocks.

Security and political instability

Weak

The resolve of all political forces in the country to continue working

to consolidate social peace. The commitment of the international

community and the country’s partners to support the peace-building

and national reconciliation process. In this regard, the United

Nations Organization (UNO) Security Council decided in July 2011

to extend the mandate of UN peacekeepers in order to secure the

elections.

Late implementation of project

activities

Average PAM-FP will be directly implemented by the Ministry of Finance,

with a motivated teams acquainted with Bank procedures.

Procurements will be grouped in lots. Annual procurement plans and

monitoring arrangements will be designed. The executing agency

will be governed by performance obligations.

4.6 Knowledge Building

4.6.1 The type of knowledge expected to emerge from implementing this project includes

good practices in budget alignment and public finance management at the provincial level in

fragile States. These practices will be disseminated within Government departments through

documents produced, procedures manuals and training sessions to be organized as part of the

project. The knowledge will be acquired through the following means: progress reports

prepared by the executing agency, project supervision, mid-term and completion reports and

the Department’s “working and discussion papers”. This knowledge and lessons learned will

be disseminated through seminars and OPEV reports.

19

V. LEGAL FRAMEWORK

5.1 Legal Instrument

5.1.1 The financing instrument proposed is a UA 10 million grant to the Democratic

Republic of Congo.

5.2 Conditions Associated with Bank Intervention

A. Condition for Grant Effectiveness

5.2.1 Effectiveness of the Grant Agreement shall comply with the provisions of Section

10.01 of the General Conditions Applicable to Protocol Agreements on Grants awarded by

the African Development Fund.

B. Conditions Precedent to First Disbursement

5.2.2 Apart from effectiveness of the grant agreement, the ADF will only proceed with the

first disbursement if the Donee fulfils the following conditions to ADF’s satisfaction:

Provide evidence of setting up the central PIU and designating its members

and focal points in each Directorate involved in the project to serve as

interlocutor at the PIU (par. 4.1.2);

Provide evidence of setting up the project steering committee (PSC) and

designating its members (par. 4.1.3);

Provide evidence of setting up three PIUs at the provincial level: Bas-Congo,

Maniema and Orientale Provinces (par. 4.1.4);

Provide evidence of opening the special account in a commercial bank into

which the ADF grant resources will be lodged (par. 4.1.7).

5.3. Compliance with Bank Policies

This project complies with applicable Bank policies, especially those regarding project

financial management, procurements, disbursement and eligibility of expenditure to Bank

financing. No waiver is recommended.

VI. RECOMMENDATION

Management hereby recommends that the Board of Directors approve the proposed ADF

grant of UA 10 million to the Democratic Republic of Congo for the purpose and under the

conditions stated in this report.

Annex I

Country’s Comparative Socio-economic Indicators

YearCongo

(DRC)Africa

Develo-

ping

Countrie

Develo-

ped

CountrieBasic Indicators Area ( '000 Km²) 2 345 30 323 80 976 54 658Total Population (millions) 2011 67.8 1,044.3 5,732 1,123Urban Population (% of Total) 2010 36.2 39.9 45.1 77.3Population Density (per Km²) 2011 28.9 34.0 59.9 33.2GNI per Capita (US $) 2010 185 1 565 3 304 38 657Labor Force Participation - Total (%) 2011 39.3 40.1 65.6 60.7Labor Force Participation - Female (%) 2011 40.8 41.0 51.7 52.2Gender -Related Dev elopment Index Value 2007 0.370 0.433 0.694 0.911Human Dev elop. Index (Rank among 187 countries) 2011 187 n.a n.a n.aPopul. Liv ing Below $ 1 a Day (% of Population) 2007-09 59.2 42.3 25.2 …

Demographic Indicators

Population Grow th Rate - Total (%) 2011 2.7 2.3 1.3 0.6Population Grow th Rate - Urban (%) 2010 4.6 3.4 2.4 1.0Population < 15 y ears (%) 2011 12.1 40.3 29.0 17.5Population >= 65 y ears (%) 2011 2.7 3.8 6.0 15.4Dependency Ratio (%) 2010 96.2 77.6 55.4 49.2Sex Ratio (per 100 female) 2011 99.0 99.5 93.5 94.8Female Population 15-49 y ears (% of total population) 2011 22.7 24.4 49.4 50.6Life Ex pectancy at Birth - Total (y ears) 2011 48.3 56.0 67.1 79.8Life Ex pectancy at Birth - Female (y ears) 2011 48.4 57.1 69.1 82.7Crude Birth Rate (per 1,000) 2011 43.2 34.2 21.4 11.8Crude Death Rate (per 1,000) 2011 16.3 12.6 8.2 8.4Infant Mortality Rate (per 1,000) 2011 112.4 78.6 46.9 5.8Child Mortality Rate (per 1,000) 2011 191.7 127.2 66.5 6.9Total Fertility Rate (per w oman) 2011 5.7 4.4 2.7 1.7Maternal Mortality Rate (per 100,000) 2008 670.0 530.2 290.0 15.2Women Using Contraception (%) 2007-09 … … 61.0 …

Health & Nutrition Indicators

Phy sicians (per 100,000 people) 2007-09 11.0 58.3 109.5 286.0Nurses (per 100,000 people)* 2007-09 50.2 113.3 204.0 786.5Births attended by Trained Health Personnel (%) 2007 74.0 50.2 64.1 …Access to Safe Water (% of Population) 2008 46.0 64.5 84.3 99.6Access to Health Serv ices (% of Population) 2007-09 … 65.4 80.0 100.0Access to Sanitation (% of Population) 2008 23.0 41.0 53.6 99.5Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2007-09 3.2 4.9 0.9 0.3Incidence of Tuberculosis (per 100,000) 2010 327.0 294.9 161.0 14.0Child Immunization Against Tuberculosis (%) 2010 85.0 85.3 81.0 95.1Child Immunization Against Measles (%) 2010 68.0 77.9 80.7 93.0Underw eight Children (% of children under 5 y ears) 2007 28.2 30.9 22.4 …Daily Calorie Supply per Capita 2007 1 605 2 465 2 675 3 285Public Ex penditure on Health (as % of GDP) 2008 1.8 5.7 2.9 7.4

Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2009 93.2 100.4 107.2 101.3 Primary School - Female 2009 85.9 90.0 109.2 101.1 Secondary School - Total 2009 37.9 37.7 62.9 100.1 Secondary School - Female 2009 27.2 33.7 61.3 99.6Primary School Female Teaching Staff (% of Total) 2009 26.3 41.4 60.5 81.4Adult literacy Rate - Total (%) 2009 66.8 65.1 80.3 98.4Adult literacy Rate - Male (%) 2009 77.4 74.3 86.0 98.7Adult literacy Rate - Female (%) 2009 56.6 56.2 74.8 98.1Percentage of GDP Spent on Education 2007-09 … 4.7 3.8 5.0

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2008 3.0 7.8 10.6 10.9Annual Rate of Deforestation (%) 2007-09 … 0.7 0.4 -0.2Annual Rate of Reforestation (%) 2007-09 … 10.9 … …Per Capita CO2 Emissions (metric tons) 2009 0.0 1.1 2.9 12.5

Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :

UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

COMPARATIVE SOCIO-ECONOMIC INDICATORS

Congo (DRC)

October 2011

0

20

40

60

80

100

120

140

2003

2004

2005

2006

2007

2008

2009

2010

2011

Infant Mortality Rate( Per 1000 )

Cong o (DRC) Africa

0

200

400

600

800

1000

1200

1400

1600

1800

2002

2003

2004

2005

2006

2007

2008

2009

2010

GNI per capita US $

Cong o (DRC) Africa

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2003

2004

2005

2006

2007

2008

2009

2010

2011

Population Growth Rate (%)

Congo (DRC) Africa

111213141516171

2003

2004

2005

2006

2007

2008

2009

2010

2011

Life Expectancy at Birth (years)

Cong o (DRC)

Africa

Annex II

Table of ADB Portfolio in the Democratic Republic of Congo as on 4/10/10

Project/Sector Amount (in USD Million) Percentage

Disbursed

Key Dates Age

(year) Commitment Disbursed Approval Signature Closing

Agricultural Sector Rehabilitation Support

Project in Bas Congo and Bandundu Provinces

(PARSAR)

25 19.94 80 19/05/04 25/5/04 31/03/12 7

Agricultural Sector Rehabilitation Support

Project in Katanga and the East and West Kasaï

Provinces (PRESAR)

35 27.71 79.18 12/12/05 2/2/06 31/01/13 5.5

Agricultural Sector Study (ESA) 1.85 1.5 81.23 28/06/06 11/10/06 30/06/11 5

Agriculture 61.85 49.15 79.45

Rehabilitation of the Nsele-Lufimi and Kwango-

Kenge roads 52.45 34.02 64.86 19/12/05 29/12/05 31/12/11 6

Air Security Project (PPSA) 88.6 - 0 27/09/10 2/11/10 31/12/15 0.7

Project to Rehabilitate and Strengthen the INGA

Hydro-electricity Power Plants and the Kinshasa

Network (PMEDE)

35.7 - 0 18/12/07 10/4/08 31/12/14 3.6

Rural and Peri-urban Electrification Project

(PEPUR) 69.69 - 0 15/12/10 10/03/11 31/12/15 0.5

Drinking Water Supply and Sanitation Project in

Semi-urban Areas (PEASU) 70 20.88 29.83 6/6/27 9/8/07 31/12/12 4

Infrastructures 316.44 54.91 17.35

Support to Health Development Master Plan in

Orientale Province (PAPDDS) 25 8.27 33.08 17/03/04 25/05/04 31/03/12 7

Socio-economic Re-integration Support

(PARSEC) 15 2.31 15.41 24/07/07 9/8/07 30/06/11 4

Social 40 10.58 26.45

Revitalization/Modernization of Human

Resources (PRM-RH) 20 - 0 19/01/11 4/05/11 31/12/15 0.5

Multi-sector 20 - 0

Total 438.3 114.64 26.15

4.6

Annex III

Map of Project Area

Annex IV

Summary Table of Donor Interventions

Donors Projects/Activities Status Objective Implemeta

-tion

Period

Project

Amount

UNDP Support to Decentralisation and

Local Development

On-going Support to set up a

decentralisation strategy

2010 USD 366 000

Programme to Support Local

Decentralisation (PADDL)

On-going Local participatory

planning; public finance

management; capacity

building of provincial

assemblies

2008-2012 USD 7 700 000

Census of workers without EPSP

in DRC

On-going Promotion of ethics and

good conduct

2009-2010

UNCDF Programme to Support

Decentralisation and Local

Development (PADDL)

On-going Local participatory

planning; public finance

management; capacity

building of provincial

assemblies

2008-2012 USD 2 000 000

DFID Programme to Support

Decentralisation and Local

Development (PADDL)

On-going Local participatory

planning; public finance

management; capacity

building of provincial

assemblies

2008-2012 USD

62 100 000

Promotion of Ethical Values and

Corruption Control

On-going Promotion of ethical

values; Strengthening of

the accounting chain

2008-2012 USD 1 670 618

Projects to Build Capacity and

Governance (PRCG)

On-going Regional economic

planning; Results-based

public finance

management

Automatic payroll and

staffing management

World Bank Support to Identification of Civil

Servants, ESPC Workers and

Cartography

Future Control of 2/3 of the staff 2010-2011 Appraisal on-

going

Support to FP Management (with

EU, USAID and Sweden)

Future Support to public finance

management in Maniema

and the two Kasai

2010-2011 Appraisal on-

going

Project to Support Rejuvenation in

the Civil Service (PARFOP)

Future Payment of retirement

entitlements

Validation of the sector

organic framework

Establishment of the

Pension Fund

Performance-based

reward system

2010-2011 Appraisal on-

going

Belgian

Cooperation

Tschopo PAIDECO On-going Rehabilitation of public

buildings

2008-2010 EUR 3 880 000

PAIDECO BBK On-going Rehabilitation of public

buildings 2008-2011 EUR 8 077 324

Project to Support DRC’s

Legislative System – Provincial

Assemblies Component

On-going Institution building in 5

provincial assemblies

Training of deputies and

2009-2011 1 600 000

staff

Training of deputies and

staff

South Africa

Sud

Census Completed Technical support;

strengthening of census

workers

European

Union

Administrative Governance On-going Support to institution

building in 3 provinces

Rehabilitation and

equipment of

administrative buildings

Building the capacity of

magistrates, criminal

police

2008-2011 EUR

73 000 000

Economic Governance On-going Improve public finance

management

Prepare the PSRFP and

PAP

Institution building;

External and internal

control

2008-2011 EUR

33 000 000

IMFI Financing of Government’s

Economic and Financial

Programme

On-going Vote and application of

the finance law

Computerised payroll

management (PTS)

2009-2012

KFW Peace Consolidation Fund Administrative and social

infrastructure in five

provinces

2009-2012 USD

30 000 000

CIDA Support to the National

Decentralisation Forum

Completed Consultation to define a

strategy for implementing

the decentralisation

20072008 CAD 71 700

France Support to Public Finance

Management

Completed Set up computerised

payroll (PTI)

Strengthen public finance

management capacity

2002-2008 EUR 3 000 000

USAID Support to the Decentralisation

Strategy

On-going Train outreach workers

for the CSMOD

sensitisation and social

communication

2009-2012 USD

30 000 000

Francophonie Support to the Establishment of the

Decentralisation Legal Framework

Completed Production of

compendium of legal texts

on the decentralisation

August 2008

Italy Decentralisation Support Project

(Tuscany Region)

On-going Build the capacity of

deputies and provincial

ministers of North Kivu

and Orientale provinces as

well as the administrative

staff of the Ministry of

Decentralisation.

2009

OUTCOME OF NEGOTIATIONS

Negotiations between the Congolese delegation and the African Development Bank relating to the

proposed operation to finance the Public Finance Modernization Support Project took place in November

4, 2011 by videoconference in the Temporary Relocation Agency in Tunis and the Office of the Resident

Mission of the Bank CDFO in Kinshasa.

These negotiations have been concluded to the satisfaction of the Congolese authorities and the Bank. All

documents necessary for the presentation of the project to the Board (final drafts of the Memorandum of

Grant Agreement, the Disbursement Letter and Minutes of the negotiations) have been reviewed and

approved by both parties.

CORRIGENDUM

The table below replaces Annex II of the Appraisal Report.

AfDB Portfolio in the Democratic Republic of Congo as of 31/03/2012

Project Title

Approval

Date

Effectiveness

Date

Closing

Date

Approved

amount

(mill. UA)

Amount

disbursed

(mill. UA)

% disb.

National Operations

Multi-sector

Projet de mobilisation des ressources de

l’administration publique (PMR-RH)

21-jan-2011 05-mai-2011 31-dec-2015 20,00 1,65 8,25

Water and Sanitation

Programme d’AEPA en milieu rural (PEASU) 06-juin-2007 04-avril-2008 31-juil-2012 70,00 26,86 38,37

Social

Projet d’appui au PDDS en province orientale

(PAPDDS)

17-mars-

2004

16-mars-2005 31-dec-2012 25,00 12,96 51,84

Projet d’appui à la réinsertion socio-économique

(PARSEC)

24-juil-2007 09-août-2007 30-juin-2013 15,00 4,18 27,87

Agriculture

Projet d’appui à la réhabilitation du secteur

agricole (PARSAR)

19-mai-2004 04-fev-2005 30-mars-

2012

25,00 24,74 98,96

Projet de réhabilitation du secteur agricole et

rural dans 3 provinces (PRESAR)

12-dec-2005 02-fec-2006 31-jan-2013 35,00 29,78 85,09

Projet d’appui au développement des

infrastructures rurales (PADIR)

10-nev-2011 20-jan-2012 31-dec-2017 49,46 0,00 0,00

Transport

Projet de réhabilitation de la route Nsele-Lufi 19-dec-2005 29-dec-2005 31-dec-2011 52,45 43,76 83,44

Projet prioritaire de sécurité aérienne 27-sept-2010 02-nov-2010 31-dec-2015 88,60 11,05 12,47

Energy

Projet de réhabilitation hydroélectrique

(PMEDE)

18-dec-2007 10-avril-2008 31-dec-2014 35,70 4,48 12,55

Projet d’électrification péri-urbaine rural (PEPR) 15-dec-2010 10-mars-2011 31-dec-2015 69,69 0,00 0,00

TOTAL 485,51 159,94 33,23

Private Sector Operations

Appui à ADVANS BANK 04-fev-2008 09-avril-2009 31-mai-2013 0,61 0,48 78,69

Multinationales Operations

Agriculture

Programme d’aménagement du Lac Tanganyika 17-nov-2004 24-nov-2006 31-dec-2013 6,79 2,24 32,99

Energy

Interconnexions réseaux électriques NELSAP 27-nov-2008 28-mai-2010 31-dec-2014 27,62 0,00 0,00

Etudes INGA et interconnexions associées 30-avril-

2008

07-août-2008 31-dec-2012 9,15 4,96 54,21

TOTAL 43,56 7,20 16,53