1 NIGERIA: STATE GOVERNANCE AND CAPACITY BUILDING PROJECT PROJECT DATA SHEET Date: November 27, 2007 Country: Federal Republic of Nigeria Project Name: State Governance and Capacity Building Project ID: P074447 Task Team Leader: George Larbi Sector Manager: Anand Rajaram Acting Country Director: Galina Sotirova Environmental category: B Borrower: Federal Government of Nigeria Responsible agency: Bauchi, Cross River and Kaduna State Governments and Federal Ministry of Finance Revised estimated disbursements (Bank FY/US$m) FY FY05-07 FY08 FY09 FY10 Annual 1.2 6.7 9.8 0.9 Cumulative 1.2 7.9 17.7 18.6 Current closing date: March 2010 Revised closing date [if applicable]: Indicate if the restructuring is: Board approved X RVP approved _ Does the restructured project require any exceptions to Bank policies? Have these been approved by Bank management? Is approval for any policy exception sought from the Board? __Yes x No __Yes x No __Yes x No Revised project development objective/outcomes [If applicable] The objective of the project is to: Strengthen capacity in the relevant participating states for: (i) multi-year fiscal planning, expenditure policy and budgeting (ii) timely auditing and reporting (iii) effective and transparent public procurement management (vi) transparency in personnel registry and payroll controls (v) effective tax registration and assessment measures in Bauchi and Kaduna states and (vi) enhanced delivery of civil service training. Does the restructured project trigger any new safeguard policies? Yes. The Environmental Category was changed from C to B (OP/BP 4.01). Revised Financing Plan (US$m.) Source Local Foreign Borrower IBRD/IDA Others Total 0.00 9.70 0.00 9.70 0.00 8.90 0.00 8.90 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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NIGERIA: STATE GOVERNANCE AND CAPACITY BUILDING PROJECT
PROJECT DATA SHEET Date: November 27, 2007 Country: Federal Republic of Nigeria Project Name: State Governance and Capacity Building Project ID: P074447
Task Team Leader: George Larbi Sector Manager: Anand Rajaram Acting Country Director: Galina Sotirova Environmental category: B
Borrower: Federal Government of Nigeria Responsible agency: Bauchi, Cross River and Kaduna State Governments and Federal Ministry of Finance Revised estimated disbursements (Bank FY/US$m) FY FY05-07 FY08 FY09 FY10 Annual 1.2 6.7 9.8 0.9 Cumulative 1.2 7.9 17.7 18.6 Current closing date: March 2010 Revised closing date [if applicable]: Indicate if the restructuring is: Board approved X RVP approved _ Does the restructured project require any exceptions to Bank policies? Have these been approved by Bank management? Is approval for any policy exception sought from the Board?
__Yes x No __Yes x No __Yes x No
Revised project development objective/outcomes [If applicable]
The objective of the project is to: Strengthen capacity in the relevant participating states for: (i) multi-year fiscal planning, expenditure policy and budgeting (ii) timely auditing and reporting (iii) effective and transparent public procurement management (vi) transparency in personnel registry and payroll controls (v) effective tax registration and assessment measures in Bauchi and Kaduna states and (vi) enhanced delivery of civil service training.
Does the restructured project trigger any new safeguard policies? Yes. The Environmental Category was changed from C to B (OP/BP 4.01). Revised Financing Plan (US$m.) Source Local Foreign Borrower IBRD/IDA Others Total
0.00 9.70 0.00 9.70
0.00 8.90 0.00 8.90
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1. INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to introduce changes in the Nigeria State Governance and Capacity Building Project, [Credit No. 4084], [Project ID P074447] and any accompanying amendments to the project’s legal documents. The principal reasons for the changes are to address implementation difficulties, respond to new priorities of the state governments, ensure the productive use of uncommitted funds and enhance overall achievement of the project development objective. The restructuring provides the opportunity to enhance ownership, knowledge sharing and commitment to reforms by engaging the participating states and the Federal Ministry of Finance (FMF) in the restructuring process and reflecting new priorities of state governments. 2. The major modifications being proposed are: (i) refocusing of the project development objective to make it more realistic and achievable within the project time frame, and revision of project results and monitoring framework; (ii) addition of a new component on public procurement reforms, necessary to complement the implementation of other sub-project components, as well as align the project to new priorities in the participating states; (iii) reallocation of credit proceeds to reflect changes in work program priorities; (iv) strengthening project institutional arrangements; and change the Environmental Category from C to B. The expected outcomes of the restructured project will include strengthened capacity for: (i) effective multi-year and policy based budgeting and fiscal planning; (ii) timely auditing and reporting; (iii) effective and transparent public procurement management; (iv) effective tax registration and assessment measures; (v) transparency in personnel registry and payroll controls; and (vi) enhanced delivery of public service training. The restructuring will be expected to accelerate project implementation and disbursement to significantly enhance the achievement of the revised project development objectives.
2. BACKGROUND AND REASONS FOR RESTRUCTURING
3. The State Governance and Capacity Building Project was approved on June 16, 2005 and became effective in October 1, 2005. It is scheduled to close in March 2010. Since effectiveness, the project has experienced significant delays in implementation of project activities and slow disbursement resulting principally from: (i) delays in setting up fully operational and effective project implementation units and support arrangements in each of the states; (ii) initial lack of understanding of project design, commitment and ownership of the project; (iii) serious lack of capacity (including in basic procurement) coupled with a reluctance of government to engage expertise outside the public service; and (v) inadequate oversight, support and coordination arrangements. The project is classified as a problem project. The principal reason for restructuring is to address the above sources of delays and enhance the achievement of the project development objectives. The second reason is to improve ownership by responding to new reform priorities of the new state governments. The third reason is to respond to some gaps in project design that have emerged in the course of implementation, particularly the exclusion of some key stakeholders (e.g. the Bureau of Internal Revenue and the Public Accounts Committee of State House of Assembly) from some activities.
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4. In the past 8-9 months, the Bank and the Federal Ministry of Finance (FMF) have intensified joint implementation support missions at about 6-8 weeks’ intervals and both implementation and disbursement is picking up slowly. An implementation stock-taking workshop was held in March 2007 to re-engage project teams from all three participating states and the National Project Coordinating Unit (NPCU) at FMF. Key stakeholders in all three states have been involved in the restructuring discussions during supervision missions in April-May and July 2007. A final mini-workshop was held on September 2007, which focused on the new public procurement component. These engagements have improved understanding of the project and there is evidence that commitment at various levels of Government is improving. Project teams continue to be trained. Initial reluctance to engage expertise from outside the public service has been largely addressed and procurement packages (Request for Proposals) for short-listed consulting firms to support implementation of all sub-project component activities have been issued with the first set of contracts expected to be signed by late November, 2007. Some progress is being made in selected public financial management sub-components, including preparation of new chart of accounts in Cross River and Kaduna States, preparation of audited annual accounts of the participating states within 8-9 months. Bauchi and Kaduna States have started work on draft public finance legislation. In Cross River State, work on the facility upgrading at the Management Development Institute (MDI) and the Judiciary (model court) have commenced with expected completion by early December, 2007. Revision of the rules of civil procedure is also completed in Cross River State. 5. New administrations came into office at the end of May 2007 at both the federal and state levels and the changes to the project are partly to respond to new reform priorities, whilst addressing the causes of implementation difficulties to enhance effectiveness of the project. The restructuring would enable progress to be made in implementing the current project in the three pilot states and provide lessons for the design of a second state governance and capacity building project to support other states in Nigeria, as well as provide further support to the three pilot states to continue reforms.
3. PROPOSED CHANGES
6. The proposed changes include: (i) refocusing of the project development objectives to make them more realistic and achievable, and revision of project results framework and monitoring arrangements; (ii) minor adjustments to existing sub-component and activities, to address gaps in the capacity of some key stakeholders; (iii) the addition of a new component, necessary to align the project to the new reform agenda and priorities in the participating states, as well as complement the implementation of other sub-project components; (iv) reallocation of credit proceeds to reflect changes in work program priorities and enhance the productive use of credit proceeds; (v) strengthening the institutional framework to address sources of delay in project implementation; and change the Environmental Category from C to B. A description of the revised project components, and the re-allocation of financing are provided in Annexes 1, and then 3 and 4 respectively. The revised project results framework and monitoring arrangements are presented in Annex 2. The procurement plan up to December 2008, is provided in Annex 5 and shows activities to be funded from the credit in the next 18 months.
(i) Proiect development obiective:
7. The original project development objective (PDO) was to: “Enhance the efficiency and accountability in the management o f financial and human resources in the participating states in line with the state poverty reduction strategies”. This i s quite ambitious for the current project and not wel l focused. While affirming the project’s support to the PRS, the original PDO has therefore been simplified and made more focused and realistic and will now read as follows:
“Strengthen capacity in the relevant participating states for: (i) multi-year fiscal planning, expenditure policy and budgeting (ii) timely auditing and reporting (iii) effective and transparent public procurement management (vi) transparency in personnel registry and payroll controls (v) effective tax registration and assessment measures in Bauchi and Kaduna states, and (vi) enhanced delivery o f c iv i l service training.
(ii) Adjustment o f existing. components.
8. following activities:
These adjustments will address some gaps in project design by including the
Core R e f o r m P r o g r a m
(a) Revision o f the Public Finance Legislation component to include sensitization o f Executive Council members as part o f the dissemination process. Initial dissemination was limited to the members o f the State House o f Assembly (SHoA).
(b) Revision o f the External Audit Component to include strengthening the capacity o f Public Accounts Committee (PAC) o f the SHoA. The PAC i s part o f the accountability mechanism in a state and has a critical role to play in reviewing and enforcing the Auditor-General’ s report.
(c) Under the Human Resource Management and Training Enhancement sub- component, a new activity o f functional review in pilot ministries i s added to complement other activities under this component.
(d) In Cross River State, the Bureau o f Internal Revenue (BOIR) will be added as one o f the agencies to be included under the Budget and Treasury Management Information System (BATMIS). BOIR i s key to internal revenue generation. The project will provide equipment, software and training to BOIR staff. With the relocation o f project oversight to the State Planning Commission (SPC) as the part o f the changes, the project will provide logistic support and capacity building to the relevant staff in monitoring and evaluation (M&E) in order to improve project oversight and coordination by the SPC and the State Project Coordinating Unit (SPCU).
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State Specific Reform Program
(e) Under the State-specific reform component for Bauchi and Kaduna a new activity to strengthen the capacity o f the state public service training institutes will be added. The case for inclusion stems from the fact that these public service training institutes are relevant to capacity building in the civ i l service. Support will be in the form o f staff training, equipment and furniture for the College o f Administration and Business Studies (CABS, Bauchi) and the Staff Development Center (SDC, Kaduna). This new activity will be funded from the unallocated credit proceeds for each state. In Bauchi and Kaduna the state governments have committed to financing the physical renovation o f the training institutes in their 2008 budget.
Under ‘Modernization of taxpayer identification system ’, tax payer education and enlightenment i s necessary to improve both the tax base and compliance. Tax payers’ education i s therefore to be added as a new activity to complement other activities under this sub-component.
Coordination and Support at National level
(g) Adjustment to Federal Ministry o f FinanceNPCU component: To enable the National Project Coordinating Unit (NPCU) to provide effective support and coordination to the states, i t s sub-component i s being adjusted to allow for improved capacity to provide supervision, consultancy services and other support to the states. This wil l be financed through credit re-allocation from the unallocated funds.
(iii) New proiect sub-component
9. Public Procurement Reform: A new project sub-component will finance support to public procurement reforms in all three states. This i s a priority for the new state governments and follows similar reforms underway at the Federal Government level. Since the States in Nigeria have substantial autonomy under the National Constitution, procurement reforms are the prerogative o f the States. This implies that the public procurement reform process at the Federal level has to be initiated at the State level as well.
(a) The objective o f this component i s to achieve similar goals as at the Federal level in terms o f institutional and legal framework, due process o f public procurement for goods, works and consulting services, broader participation o f the private sector and transparency. The new component will significantly enhance the achievement o f the project development objective by improving efficiency, and transparency in the use o f public financial resources. It will support the setting up and capacity building for a state public procurement agency (SPPA) in each o f the participating states. The proposed procurement reforms will complement the public financial management reforms supported by the State Governance and Capacity Building Project. This in turn will facilitate consistency in procurement fiduciary management among Federal and State Governments which i s essential to avoid conflicting procurement arrangements and confusion in contractual obligations in the country. The new
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(vi) Change in Environmental Category
12. The environmental category for the State Governance and Capacity Building Project has changed from C to B. This is because of renovation of selected existing buildings and other minor civil works being executed in the project. However, the project is not expected to have significant adverse environmental impacts on human populations or environmentally important areas. The potential impacts are likely to be small-scale and site specific consistent with category B projects. In addition, the ESMF which is prepared has an annex that contains the general environmental and social clauses that will bind the building contractors/project officials towards respecting environmental and social diligence.
Safeguard Policies:
13. One safeguard policy is triggered by this project. This is Environmental Assessment (OP/BP 4.01). Accordingly ESMF which is the appropriate safeguard instrument has been prepared, reviewed, approved and disclosed in country and at Info Shop.
(vii) Project cost and financing plan: 14. The overall cost of the project remains unchanged at SDR 12 million (about $18.6 million at current rates) with 100% IDA financing. The total allocation for each state also remains unchanged. However, as noted above, the adjustments to existing components and the addition of new component and activities would require re-allocation of credit proceeds with the objective of improving disbursement and the productive use of the credit. This will change project cost by component and project cost by category as summarized in Annexes 3 and 4 respectively. This will require amendments to the relevant sections of the Development Credit Agreement (DCA), including schedule 1 A.
4. ANALYSIS
15. The economic and financial analysis provided in the Project Appraisal Document’s Annex 9 remains valid and therefore unchanged.
5. EXPECTED OUTCOMES
16. The PDO has been modified to make it more realistic and focused. The revised results matrix and monitoring arrangements are summarized in Annex 2. The addition of the new sub-component of public procurement reform will complement public financial management reforms and significantly improve the achievement of the following expected outcomes: strengthen capacity for: (i) multi-year perspective in fiscal planning, expenditure policy and budgeting (ii) timely auditing and reporting (iii) effective and transparent public procurement management (vi) transparency in personnel registry and payroll controls (v) effective tax registration and assessment measures (vi) enhanced delivery of civil service training.
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6. BENEFITS AND RISKS
17. The project is the principal Bank instrument for supporting governance reforms at the sub-national level in Nigeria. The success of the project in the three pilot states is critical in scaling up support for governance reforms to other states. The project will help in strengthening the capacity of the state administrations through provision of significant technical support, whilst contributing to the achievement of their own poverty reduction strategies – the State Economic Empowerment and Development Strategy (SEEDS).
18. There are indications that governance issues, particularly weak public financial management (PFM) and procurement systems are major constraints affecting the effective use of state resources as well as Bank and other donor support. The financial management risk is rated as medium. To mitigate this, all three states have functional PFMUs and the Flexible Accounting System has been implemented. The lack of professionally qualified accountants is compensated by ensuring that the PFMU managers are Chartered Accountants and Project Accountants have received hands-on relevant training. The Bank task team has also increased the frequency of supervision missions, which includes financial and procurement specialists to undertake post procurement reviews and FM reviews. Recent Bank missions to the states assessed FM as moderately satisfactory. The restructured State Governance and Capacity Building project will help to modernize the public financial management and procurement systems, as well as civil service personnel management systems. It will provide an enabling environment for the effective use of the states’ own resources and support by development partners.
19. Weak project management capacity has been problematic and the risk is assessed as substantial. However, steps are being taken to strengthen capacity through the hiring of short-term procurement and M&E consultants that will provide support and on the job training to project implementation units. Project management is also being beefed up by making the position of the project coordinator full time as part of the changes in institutional arrangements. A joint project implementation monitoring framework has been agreed with each state government and will be updated during supervision missions.
20. The elections of May 2007 and coming into office of new administrations were initially seen as potential high risks. With the elections over, the risk is now reduced to medium by the new administrations expressing support to the project and willingness to reform. However, this commitment will be tested in the next 6-12 months when most components are expected to make progress with implementation. Other potential high to medium risks are resistance to change amongst civil servants, especially to BATMIS, and lack of top management commitment to drive through the required reforms. To mitigate these risks change management interventions are built into each sub-component consultancy support and Activity Executing Agencies are more involved in various stages of decision making to improve participation and ownership. Component Champions are also being appointed by the State Governments to drive through reforms in their agencies.
Governance and Capacity Building project will help to modernize the public financial management and procurement systems, as well as c iv i l service personnel management systems. It will provide an enabling environment for the effective use o f the states’ own resources and support by development partners.
17. Weak project management capacity has been problematic and the risk i s assessed as substantial. However, steps are being taken to strengthen capacity through the hiring o f short- te rm procurement and M&E consultants that will provide support and on the job training to project implementation units. Project management i s also being beefed up by making the position o f the project coordinator full time as part o f the changes in institutional arrangements. A joint project implementation monitoring fiamework has been agreed with each state government and will be updated during supervision missions.
18. The elections o f May 2007 and coming into office o f new administrations were initially seen as potential high risks. With the elections over, the risk i s now reduced to medium by the new administrations expressing support to the project and willingness to reform. However, this commitment will be tested in the next 6-12 months when most components are expected to make progress with implementation. Other potential high to medium r isks are resistance to change amongst c iv i l servants, especially to BATMIS, and lack o f top management commitment to drive through the required reforms. To mitigate these risks change management interventions are built into each sub-component consultancy support and Activity Executing Agencies are more involved in various stages o f decision malung to improve participation and ownership. Component Champions are also being appointed by the State Governments to drive through reforms in their agencies.
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ANNEXES
ANNEX 1 : PROJECT COMPONENT DESCRIPTION (REVISED)
NIGERIA: STATE GOVERNANCE AND CAPACITY BUILDING PROJECT
Core Reform Program
The revised project i s designed around three core reform components to be implemented in all three participating states: (1) public financial management reform; (2) public procurement reform; (3) human resource management and training enhancement; and (4) state specific reform program selected by each o f the participating states.
Component 1 : Public Financial Management Reform
Cost: US$lO.23 million equivalent (an average of US$3.41 per state)
As part o f the changes, all public finance components will be brought together under one core Public Financial Management (PFM) Component. Minor adjustments will be made to activities under some sub-components (see section I11 (ii)).
Overall component objective: The objective o f this component i s to help the three states selected as pilots (Bauchi, Cross River and Kaduna) to rebuild basic public financial management systems that meet a minimum standard in terms o f effectiveness and transparency. In addition, the component seeks to promote the standardization o f procedures o f financial management and o f financial data production among the states o f the Federation to allow appropriate data aggregation and analysis, and thereby, facilitate the formulation and implementation o f national fiscal policies.
IDA will finance an integrated package o f technical assistance, equipment and training for the upgrading o f key sub-systems o f public finance management system in each participating state.
Sub-component 1A: Public Finance Legislation
Cost: US$0.2lmilion equivalent (USSO. 07m per state)
The project will finance the drafting, passage and adoption o f a new public finance legislation that meets the standards o f modern financial management in terms o f relevance, comprehensiveness, transparency, and accountability. The new fiscal responsibility bill o f the Federal Government will serve as a guide for the new state public finance legislations. The minor change to this sub-component i s the addition o f the sensitization o f members o f the Executive Council as part o f the dissemination.
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Sub-Component IB: Reform of Budget Preparation
Cost: US$O.93million equivalent (US$0.3lm per state)
The Project will finance the development and institutionalization o f a simplified multi-year budgeting framework (MYBF), medium term sector strategies in l ine with the SEEDS for annual budget preparation, leading to more sustainable budget implementation, less “feast or famine”, and no run up o f short term debt. The objective will be to present to the State House o f Assembly annual budgets which are part o f the MYBF starting from the budget for FY 2009 at the latest. The MYBF, should state policies and priorities, and fiscal objectives clearly in a 3-year perspective for both revenue and expenditure (recurrent and capital). The f i rs t year o f the MYBF, which will include more detailed information, will be the annual budget to be enacted for the corresponding year. In addition, budget monitoring will be enhanced by publishing monthly statements on budget execution by ministries.
Sub-Component1 C: Accounting, Expenditure Control and Financial Reporting Cost: US$O. S4million equivalent (US$0.2Sm per state)
The project will support the strengthening o f the accounting, expenditure control, and financial reporting functions by: (i) implementing the Standard Chart o f Account (SCoA) being developed by the Accountants General and the Accountant General o f the Federation; (ii) overhauling existing processes such as commitment controls and payment authorizatiodapproval; and (iii) improving financial reporting by the ministries and the State Government as a whole.
Sub- Compon ent 1 D: Extern a1 A udit
Cost: US$O. 75million equivalent (US$0.25m per state)
The project will support the strengthening o f the external audit function in each o f the participating states. The Project will help modernize and strengthen external audit procedures and performance. This will include, adjusting the current legislations if necessary, clearing the backlog, and developing the capacity o f audit personnel with the assistance o f experience auditors from the private sector. The minor change to th is sub-component is the addition o f capacity building for members o f the Public Account Committee o f the State House o f Assembly.
Sub-Component 1E: Budget and Treasury Management Information System (BATMIS) Cost: US$ 7.5 million equivalent (US$2.5 million per state)
The project will support the development and implementation o f a small to medium size integrated financial management information system (IFIMIS) focusing on the budget and treasury functions. The objective will be to improve efficiency, transparency and comprehensiveness using modern ICT. The (BATMIS) will be implemented in a phased manner and, when fully in place, will support planning and budgeting, transaction
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processing, and reporting on the use of financial resources. The system will be integrated in the sense that i t will offer a reliable and unified database to and from which all financial data will flow and which will be shared by all users. The BATMIS will be a small to medium- range system using technologies that are simple and user friendly, utilizing o f f the shelf application software packages with appropriate customization. The project will fund both the hardware and software aspects o f the system and provide training to relevant staff to manage and maintain the system.
Component 2: Public Procurement Reform'
US$1.2 million equivalent (US$0.4m per state)
A Country Procurement Assessment Review (CPAR) carried out in 2000 identified major weaknesses in the procurement policy and practices in Nigeria and made appropriate short- term, medium and long-term recommendations to address the shortcomings. The CPAR diagnostic review also covered six States o f the Federation and identified major shortcomings in the procurement policies and practices at this level too. The Federal Government o f Nigeria (FGN) has since 200 1 been implementing a Public Procurement Refonn Program based on the CPAR recommendations. A Procurement Act has been enacted and signed into Law and the relevant procurement tools, such as implementing regulations, national standard bidding documents and national procurement manual, have also been prepared and in the process o f being launched at the Federal level. Nigeria operates a federal system o f government. This means that the reforms being implemented at the Federal level will not be adopted automatically by the State and LGAs (both o f which are big spenders o f public funds). However, it i s significant and encouraging to note that the newly elected administrations in all three pilot states have requested the Bank's support for due process/procurement reforms during implementation support missions in July 2007. The request came at an opportune time when the project i s being restructured.
The main objective o f this new component is to help lay the basis for public procurement reform in the states i.e. to achieve similar goals as at the Federal level in terms o f institutional and legal framework, due process o f public procurement for goods, works and consulting services, broader participation o f the private sector and transparency. The project will support the following activities:
Activity 1: Procurement reform strategy and draft procurement law
Currently, the states do not have a procurement law. The procurement system i s regulated by financial and administrative guidelines and circulars, which are outdated and inefficient. Procurement practices are fraught with a number o f problems including practices such as selective tendering and sole source contracting, limited advertising, no public bid opening, unclear bid evaluation and award criteria, political interference in contract awards, contract ~ ~~ ~
' This i s a new component. A more detailed component description has been prepared.
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price negotiation and excessive advance payments, all these leading to substantial increase in the cost o f procurement to government (estimated in the order o f 20-30% o f the budget). The project will finance (i) assistance in preparation o f procurement reform strategy (ii) preparation o f procurement law (iii) a series o f sensitization seminars and workshops for key stakeholders.
Activity 2: Equip and Facilitate State Public Procurement Agency
Cost: US$426,180 equivalent (US$142,060per state)
The lack o f a regulatory body in the states to provide oversight functions o f the public procurement has resulted into costly procurement, inconsistencies in procurement practices in the MDAs and and inability to separate implementation function from oversight function. A situation that i s not healthy for good public procurement system.
The project will therefore provide technical assistance (i) to set up a functional state public procurement agency (SPPA) in each o f the participating states, (ii) support the creation o f adequate working environment by funding the procurement o f furniture and equipment for the SPPAs (iii) undertake training needs assessment o f the SPPA (iv) develop M I S and website for the SPPA and (v) fund study tours to a couple o f countries to promote better understanding and appreciation o f procurement reform implementation issues.
Activity 3: Capacity Building for Procurement Professional Staff
Cost: US$120,000 equivalent (US$40,000per state).
Currently, the public procurement function i s performed by Administrators who have no background or experience in public procurement. The professional standing o f procurement staff, their sk i l ls and reward system need to be improved to make the State’s procurement more efficient and effective. The project will finance (i) a procurement sk i l ls and capacity needs assessment in six priority implementing entities to serve as a basis to for developing procurement training strategy and curriculum and (ii) training o f ministerial tender boards and procurement units in MDAs.
Activity 4: Public Awareness and Sensitization Program
Cost: US$362,160 equivalent (US$120,720 per state)
Initiating and sustaining successful procurement reforms will require good public education and awareness creation both within the state and non-state sectors. In this context, the project will finance (i) seminars to launch State-wide awareness events that would involve representatives from State Government, Local Government, the private sector and civ i l society, (ii) public awareness meetings with journalists and radio reporters, and announcements on television, as well as publications.
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Component 3: Human Resource Management and Training Enhancement
US$2.342m equivalent (USSO. 760m per state for Cross River and Kaduna and US$O.822m for Bauckq Overal l component objective: The objective o f this component i s to help the three pi lot states (Bauchi, Cross River and Kaduna) to rebuild and modernize their human resource management systems to a level that meet a minimum standard in terms o f effectiveness and transparency.
The component will support states in modernizing human resource management by focusing on the basic functions o f personnel registry management and establishment control and in coordination with Ministry o f Finance. The only new activity added to this component i s functional review o f selected MDAs. Existing activities supported by the project include: (i) staff audits and pay parades; (ii) cleaning and reorganization o f personnel records; and (iii) implementing an automated and integrated human resource management information system (HRMIS) for the c iv i l servants.
The component will also support the implementation o f extensive training program, based on training needs assessments o f the various ministries, departments and agencies (MDAs). This will include: (i) the adoption o f a training policy statement by the State Government; (ii) professional training for officers and middle managers from the central economic ministries and selected sector ministries, covering five key areas o f economic and financial management in which the Project seeks substantial improvements (budgeting, accounting and reporting, payment management, procurement, and human resource and payroll); and (iii) a computer sk i l ls enhancement program for different categories o f c iv i l servants in the eight to ten MDAs associated in the Project. The training will be provided locally by Nigerian training institutions with the assistance o f consultants and Project staff. The change to this component i s the addition o f functional review o f 8-1 0 MDAs to complement other activities.
Component 4: State Specific R e f o r m Programs
Cost: US$1.9 million equivalent During Project preparation and restructuring missions, the states expressed a strong demand for support in areas o f reform not included in the core reform program but which are important to improve governance and service delivery in their particular context. It was agreed that the Project will support additional, but selective institutional reform and capacity building initiatives identified by the states before the beginning o f the Project or during Project execution as the needs emerge. This will consolidate the ownership o f the Project by the state governments.
Sub-component 4A: Modernizing the Tax Payer IdentiJication System in Bauchi and Kaduna States Cost: US$501,550 equivalent (US$229,550 for Kaduna and US$272,000 for Bauchq
As o f FY 2003, internally generated revenues (IGR) constituted only a margin o f the states’ annual revenue (e.g., 8% for Bauchi and 17% for Kaduna). This low share o f IGR and heavy reliance on Federation Account allocation has exposed states to unstable and irregular
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revenue inflows. In response, states have initiated several measures to increase the internally generated revenues, including the provision o f incentives to tax collecting department to retain certain share o f the collected revenue, and engagement o f consultants to strengthen tax collection efforts. Two o f the challenges to these efforts, however, are the narrow tax base and poor record management in tax administration.
Objectives: To increase IGR, the project seeks to help (i) broaden the tax base for state taxes and fees; and (ii) improve efficiency and accountability in tax collection and data management processes.
The project will help to; (i) veri@ and expand the existing tax payer database including through in-house verification and market surveys and assessments; (ii) provide the two states with the basic I C T infrastructure and staff training necessary for maintaining a sound and reliable tax administration database; and (iii) adjust organizational structureshusiness processes and train staff as required by the objectives indicated in (i) and (ii).
Sub-component 4B: Strengthening Capacity of Public Service Training Institutions in Kaduna and Bauchi Cost: US$O.l7Om equivalent for Kaduna and US$O.l395m equivalent for Bauchi
During restructuring missions in May and July 2007, officials in Bauchi and Kaduna made a strong case for support from the project to strengthen the capacity o f their respective public service training institutions. Bauchi and Kaduna state governments have undertaken to h d the physical renovation o f College o f Administration and Business Studies (CABS) and the Staff Development Centre, respectively in their 2008 budget. The project will support the development o f a business plan, training o f trainers for teaching staff and provision o f teaching equipment and some furniture. This sub-component will be funded from unallocated credit proceeds (120,000 SDR per state) and, in the case o f Bauchi, also f rom an existing works category o f 50,000 SDR.
Sub-component 4C: Rehabilitation of the Management Development Institute in Calabar Cost: US$0.493million equivalent
Cross River State opted to rehabilitate the Management Development Inst i tute (MDI) with the objective to enhance the capacity o f the MDI to deliver effective training, especially for the public service. This sub-component will finance the following activities: (a) completion o f the preparation o f a business plan for MDI, (b) facility improvement and equipment and (c) introduce modern training aids, strengthen the library and (d) increase the capacity o f faculty members especially in modern ICT.
Sub-Component 40: Enhancement of Judicial Services in Cross River State US$O. dmillion equivalent
The objective o f the component is to enhance the capacity o f the CRS Judiciary to improve justice service delivery. The project will support two sets o f activities: (a) preparation and initial implementation o f a comprehensive sk i l l s development program for judicial and administrative officers and (b) piloting a modern court administration system by (i)
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developing a model for modern court administration (including organizational staffing structure, upgrading o f facilities and office equipment, provision o f books and reference materials (ii) implementing the model in two pilot courts (one magistrate courts and one high court), and (c) carrying out an assessment o f the implementation model and developing a plan to rollout the model to a larger number o f courts at a subsequent time following this project.
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ANNEX 2: RESULT FRAMEWORK AND MONITORING ARRANGEMENTS
NIGERIA: STATE GOVERNANCE AND CAPACITY BUILDING PROJECT
Project ~ e ~ ~ l ~ p ~ e n t Objectives
Proj eet Outcome Indicators
Strengthen capacity for: (i) multi-year fiscal planning, expenditure policy and budgeting ; (ii) timely auditing and reporting ; (iii) effective and transparent public procurement management; (vi) transparency in personnel
1. Using computerized system for multiyear fiscal planning, expenditure pol icy and budgeting in FY09.
2. Reduction in the time to prepare and publish audited annual report for the account o f the state to less than 5 months.
3 . 70% o f public contracts are published by FY20 10.
. -
registry and payroll controls; (v) effective tax registration and assessment measures; (vi) enhanced delivery o f c iv i l service training 4. 75% o f projected Internally
Generated Revenue in Bauchi and Kaduna states to be collected by FY2010
5. Reduction in the discrepancy between the civ i l service nominal ro l l and clean payroll to less than 5% in FY2010.
6. 75% o f professional c iv i l servants are satisfied wi th training received.
intermediate Outcomes fntesmdiate Outcome Xndicators far each Component
Component 1: Public Financial Management Reform
1 .A. Strengthened statutory framework for public financial management in the participating states
1. B. Implementation o f policy- based budgeting in the participating states
1 .C. Improved accounting,
1. A. Adoption o f revised procedures for commitment control and payment authorization'approval limits
1. B. (a) Development o f medium term sector strategies and MTEF in 8-10 ministries in each participating state
(b) N e w classification used to prepare budget for FY09
1 .C. Reduction in the time it takes to produce monthly financial statements
Use of Project Outcome In forma tion
State Governments and the Bank to use the information to flag implementation progress and challenges o f MBYF and BATMIS.
To assess the progress in implementation.
To assess progress in implementing procurement reform.
Information w i l l be used to gauge effectiveness o f tax registration and database coverage.
To assess the effectiveness o f payroll and nominal controls through the new HRMIS.
To assess the impact o f facilities upgrading and capacity building support to training institutes.
Use of Intermediate Outcome Mun itoring
To ensure fiscal responsibility law and related guidelines are up to date and applied.
To assess effectiveness o f multi year perspective in fiscal planning and budgeting
To assess improvements in
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commitment control and financial reporting systems in selected MDAs o f the participating states
1 Procurement legislation enacted and regulatory unit established by the participating states by end o f FY 09
1 .D. Strengthened capacity for external audit in the participating states
1 T o measure progress on public procurement reforms
1 .E Deployment o f computerized budget and treasury operations in pi lot ministries in the participating states
2 Improvement in 2 (a) Procurement tools such as procurement operations and State Standard Bidding Documents competition prepares and in use by MDAs by
FY09.
to no more than 2 1 days
2 T o assess the cost efficiency and competence level o f public procurement
1. D. Audited annual report for account o f the state submitted to the legislature within 6 months after the end o f the financial year
1 .E. Roll ing out integrated financial management information system to 8-10 key ministries, departments and agencies by FY20 10.
Component 2: Public Procurement Reform
1 Enhanced legal and institutional framework and management capacity for public procurement
fiscal discipline and the efficiency level o f computerized financial management system
The information wil l be used to check the timeliness o f Auditor General’s report and oversight by the PAC.
This information w i l l enable the state government and the project to assess progress in B A T M I S implementation
1. Strengthened controls in personnel related costs in the pi lot MDAs in the participating states
2. Substantial staff ski l ls development in selected MDAs
1. C iv i l service wide payroll parades conducted in participating states in FY08
2. c iv i l servants trained in key technical areas in 8 - 10 pi lot MDAs
100 - 150 professional level
I. The information w i l l be used to check and clean the personnel register and payroll.
2. To assess the type and scope o f skills development in the selected MDAs.
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Component 4: State Specific Reform Program
1. Improved reliability o f tax database and coverage o f tax payers in Bauchi and Kaduna states.
Sub-component 4A: Modernizing Tax Payers Identification System
1. o f registered tax payers in Bauchi and Kaduna states by FY09.
30% increase in the number
2. Improved capacity o f public service training institutions to deliver effective c iv i l service training.
1. This w i l l enable the state government to assess coverage and IGR.
2. o f professional c iv i l servants trained in state training institutions by FY2010.
30% increase in the number
Sub-component 4B and C: MDI Rehabilitation & Strengthening Capacity of Public Training Institutes
3. (a) Improved capacity o f model courts in Cross River State.
2. (a) At least 3 persons qualified in the training o f trainers program in court administration and case management.
3. o f cases in pi lot courts.
(b) 30% reduction in backlog
Sub-component 4D: Judicial Services in CRS
2. capacity o f targeted civ i l service training institutions to deliver training in public service.
To assess improvements in the
3. assess effectiveness o f pilot courts.
The information wil l be used to
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ANNEX 3: ESTIMATED PROJECT COSTS
NIGERIA: STATE GOVERNANCE AND CAPACITY BUILDING PROJECT
Local Foreign Total Percentage Project Cost by Component U S $mil l ion U S $mil l ion U S $mil l ion
Individual States Public Sector Reforms 9.1 8.9 18.0 96.6 Project Coordination, Support & Monitoring 0.5 0.0 0.5 2.5 Unallocated (Activities to be identified) 0.2 0.0 0.2 0.9 Total Baseline Cost 9.7 8.9 18.6 100.0
Total Project Cost Total Financing Required
IDA
Project Cost by Category
Goods Works Services Training Operating Costs Unallocated Total
Total Project Cost Total Financing Required
IDA
9.7 8.9 18.6 9.7 8.9 18.6 9.7 8.9 18.6
Local Foreign Total Percentage US $mil l ion U S $mil l ion U S $mil l ion
QCBS Methods (Firms) Al l Al l Single Source (Firms) Al l Al l CQ Methods (Firms) 4 0 0 First
I C Methods (Individuals) >50 Prior IC Methods (Individuals) <50 Post
Note: QCBS: Quality and Cost Base Selection SSS: Single Selection Method CQ: Consultant Qualification IC: Individual Consultant
Short l i s t comprising entirely o f national consultants: N A 2. Any Other Special Selection Arrangements: NA 3. Consultancy Assignments with Selection Methods and T i m e Schedule
