Aid Governance and Implementation of Development Programs Bangladesh

Aid Governance and Implementation of Development Programs Bangladesh Development Forum 10 May 2004, Dhaka M. Fazlur Rahman Secretary, Planning Division & Member (SEI & Programming), Planning Commission 1

We recall with appreciation the long history of our Development Partners’ support and cooperation in our development programs. Through our concerted efforts, today we are in a position to jointly share the glory of significant breakthrough in the socio-economic development of Bangladesh. This is manifested by remarkable increase in food production, per capita income, life expectancy, adult literacy, primary school enrolment including gender equity, women empowerment through education, employment and other measures. Similarly we have achieved impressive decline in poverty, population growth rate, infant and maternal mortality and the like. 2

Outline of the Presentation l l l l Project Documentation (PCP, PP) and Approval procedure (harmonization with DPs) Project implementation (new procurement rules and procedure) Adaptation of SWAp Sustainability of the Project Benefit M & E of Outcomes of Projects Financial Information Management (audit, financial reporting) Sector Budget Support and Overall Budget Support Follow-up on GOB-DP Working Groups 3

Project Documentation & Approval Procedure l Issues – Complicated documentation and format: two documents for investment project (PCP, PP) – Time consuming and complex approval and revision procedure – Lack of harmonization with DP format – Inappropriate and incomplete information – Insufficient involvement from agency and field levels 4

l Initiatives undertaken and Progress – Simplifying documentation (content): A single document called ‘Development Project Proforma (DPP)’ will be used for investment project instead of existing PCP and PP. The draft DPP has already been developed to adjust the changing context, focus and priority. l l DPP has 2 chapters (presently 8) DPP requires information on 30 items (presently 67) l DPP contains 4 tables and 3 annexure (presently 9 and 7 respectively) l

– Simplifying approval and revision procedure: The draft of the new approval and revision procedure has been developed. Main features are as followsl l l Project costing up to Tk 200 million will be approved by the Minister for Finance and Planning as against TK 100 million at present. ECNEC will consider the projects which cost more than Tk 200 million. Approved DPP will not require approval of DPEC at line ministry level. Concerned Minister will approve the revised project if the cost exceeds up to 15% of original cost. Minister for Planning will approve if such increase is up to 20%. If the increase is more than 20%, it will require the approval of ECNEC. 6

l l Concerned Minister will approve the TAPP which costs up to Tk 50 million as against the present limit of TK 10 million. TAPP beyond Tk 50 million will be approved by Minister for Planning. No TAPP will be required for TA project for which implementation period is less than one year. – Sharing the streamlining exercise for harmonization with DP: A GOB-DP Joint Working Group has been constituted with Planning Secretary as the Chair. l The Group is now working to finalize a harmonized document of which elements (such as different impact assessment etc) will also be useful to DPs (for appraisal and analysis). l The Group is expected to complete their tasks by this month. 7

– Developing Capacity: After finalization of the new format and procedure, GOB will develop a guideline for operationalizing the procedure. A massive training program will be undertaken (for around 5000 officials from Planning Commission, line ministries, executing agencies including autonomous bodies and local governments) to be completed within two years. NGOs will have the opportunity to take this training. l We will require support from our DPs in this regard. l l Expected Results from simplifying initiatives: – Increase efficiency and flexibility, reduce transaction cost, improve appraisal and decision making. 8

Project implementation l Key Performance – Procurement Issues GOB Rules: Fragmented, Complicated q Centralized authority of decision making q DPs’ Rules, capacity and authority of local office vary q – Project management capacity – Fund disbursement GOB planning for matching fund disbursement in many cases causes delay in implementation q At times, DPs also require unusual time to disburse their fund after signing of agreement q – Recruitment and retention of staff 9

Initiatives undertaken: Procurement l Institutional Reforms for Procurement Capacity Development: Central Procurement Technical Unit (CPTU) has been established in the revenue setup of IMED. CPTU is responsible for carrying out procurement reform and providing technical and professional assistance and training on public procurement issues. l Regulations: The Public Procurement Regulations 2003 have been formulated and made effective from October 2003. l Procedure: The Procedures for implementation of the Public Procurement Regulations 2003 have been issued in March 2004. 10

l The following activities are at the final stage of approval and will be available by May 2004 – Standard bidding Document – Delegation of Financial Powers for approval of procurement contract – Procurement Processing and Approval Procedure l Procurement Management Capacity Development: Around 20 trainers have been trained through in-country and overseas trainings (TOTs). They have, in collaboration with international specialists, trained over 200 officers from 70 organizations. l Enactment of Procurement Law: The preparation of the Draft Law is in progress and expected to be finalized by July 2004. 11

Recruitment & Retention of Project Staff l Selection of PD upfront and his involvement in the planning process. l Application of desired job responsibilities for optimizing benefits from the consultants. l Simplification and expedited selection procedures for consultants (under new procurement guidelines). l Transfer Principle: generally not to be transferred before 3 years. l Full Time PD for projects which cost more than 100 million. 12

Project Management Capacity l Around 650 officers have received training on ‘Project Management’ under SPPP of IMED. In addition, 18 officers have attended TOT on the same subject. l A study has been undertaken to identify causes of delays in the implementation of projects and to recommend measures to overcome the constraints under SPP Project. This report will be available in June 2004. q Expected results from initiatives to improve Project Implementation position: – Will ensure transparency, reduce corruption and improve efficiency 13

Adaptation of SWAp l The GOB acknowledges the advantages of SWAp in – Increasing sector performance: focusing the poor – Coordination of funding – It requires less time in preparation process (instead of a number of different disjointed projects) – Less management cost l GOB continues its commitment to promoting SWAp (HNPSP and PEDP-II). l Planning Commission took prompt measures to accelerate process for ECNEC decisions on PIP of HNPSP (35 days for final approval by ECNEC ) and Contingency Plan (14 days after submission to Planning Commission). 14

Sustainability of the Project Benefits l Issues – To achieve intended benefits, proper Operation and Maintenance (O&M) of the facilities constructed under any project is required – Ad-hoc nature of planning impedes project facilities to render intended benefits l Initiatives – GOB has decided to increase the budget on Maintenance (e. g. from Tk 3170 million in 2002 -03 to Tk 5200 million in 2003 -04 for RHD and Tk 1650 million in Tk 2002 -03 to Tk 2000 million in 2003 -04 for LGED) – Instead of disjointed projects, GOB will explore developing ‘Master Plan/Project’ under which different DPs will participate for different components to deliver intended benefits. 15

Monitoring & Evaluation of Projects l Issues – Physical and financial progress have been monitored and evaluated through only input-output basis; – Project outcomes (e. g. impact on poverty reduction etc) are neither monitored nor evaluated except in few cases l Initiatives – GOB will explore provision for outcome evaluation after completion of Projects on large scale. An assessment on capacity of IMED to benefit evaluation have recently been done through SPP Project of IMED. – Oversight by Parliamentary Standing Committees – 40 IMED officers received training to strengthen their monitoring, inspection and evaluation capability 16

Financial Management, Audit and Reporting l FMRP targets, among others, ensuring adequate training to related personnel enabling the line ministries formulate budget under this framework. l Budget committees are set up in line ministries and will be supported gradually by FMUs to make informed decision. Budget allocations are to be tested with defined indicators and means of verification to match the policy goals. 17

l The Project Accounting Manual issued by the Finance Division would have an automated reporting system to be developed under WB support for uniform use by all projects. l Audit function has been separated from accounting functions, which is now the responsibility of the line ministries. l C&AG is focusing more on performance audit and systems audit. l Recent DP supported efforts in improving auditing practices and procedures would hopefully meet the requirements of GOB and of the DPs. 18

Financial Supporting and Harmonization l Guidelines as piloted in Finance Division would be replicated for other Divisions as well. l current Medium Term Expenditure Framework, enhance adequate training to the related personnel helping the line ministries to formulate budgets under the framework.

Sector Budget Support & Overall Budget Support l For Aid effectiveness and quick implementation of development interventions, overall budget support is one of the considered options. We are to harmonize GOB and DP procedures for development programs management. To optimize benefits of reforms, we are also to ensure social and cultural cohesion and harmonization of policies and practices. l We have defined and prioritized our development goals in our I-PRSP and ensured mainstreaming poverty alleviation programs in the line ministries. We are strengthening NGO participation and Public Private Partnership (PPP) activities and gaining in economic growth including, inter alia, assets creation at the grass roots level, promoting continuous dialogue with stakeholders under SWAp. 20

Meeting the challenges It is now recognized that benefits of DP assistance can be optimized with enhanced efficiency of use, better targeting, building capacity and sustainability. Therefore, focusing on aid governance and implementation is very important for both GOB and DP. Development is a continuous process and many challenges remain to be addressed. We are to bank on our mutual successes and make determined progress on common goals. We together should work in harmony to address the uncertainties and risks in development horizon and access the windows of opportunities. In this exercise, our PRSP is expected to be a handy tool.

Thank you 22