document of the world bank for official use...

1

Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 64720-BF

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT

IN THE AMOUNT OF SDR 37.3 MILLION (US$ 60 MILLION EQUIVALENT)

TO

BURKINA FASO

FOR A

LOCAL GOVERNMENT SUPPORT PROJECT

October 5, 2011

Public Sector Reform & Capacity Building Unit (AFTPR) AFCF2 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective August 31, 2011)

Currency Unit = CFAF CFAF 499 = US$1

US$1.60936 = SDR 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS AIP AMBF APE APL AME ARBF ARD ARMP ASCE CAM CAS

Annual Investment Plan Association des Municipalités du Burkina Faso/Municipalities Association of Burkina Faso Association de Parents d´Elèves /Parent Teacher Association Adoptable Program Loan Association des mères éducatrices Association des Régions du Burkina Faso/Regional Association of Burkina Faso Agences Régionales de Développement/Regional Development Agencies Autorité de régulation des marchés publics/Public Procurement Regulatory Authority Autorité Supérieure de Contrôle d’Etat Commission d'attribution des marchés/ Tender Commission Country Assistance Strategy

CBO CDP CDR CGCT

Community-Based Organization Congres pour la Democratie et le Progres/Democracy and Progress Party Commission de Règlement des Différends Code Général des Collectivités Territoriales/General Code for Local Governance

CIFE Circuit Intégré des Financements Extérieurs/Integrated Circuit for External Financing

CND COGES COPEGOL CPAR CR CRAL CSMOD CVD

Commission Nationale de la Décentralisation Comité de Gestion/Local Management Committee La Compétition Pour l’Excellence dans la Gouvernance Locale/Competition for Excellence in Local Governance Country Procurement Assessment Report Commission de réception/Acceptance Commission Commission de Règlement Amiable des Litiges Cadre Stratégique de Mise en Œuvre de la Décentralisation/Strategic Framework for the Implementation of Decentralization Conseils Villageois de Développement / Village Development Councils

DA DAF

Designated Account Direction de l´Administration et des Finances /Department for Administrative and Financial Affairs

DEP DGB

Direction des Etudes et de la Planification /Directorate of Research and Planning Direction Generale du Budget/ Budget Directorate

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DGCT DGF DGE DGMP DGLPAP DPL DREBA DRED DRS EA EIS EMP

Direction Generale des Collectivités Territoriales/General Department for Local Authorities Dotation générale de fonctionnement/Grants for recurrent expenditures Dotation générale d'équipement/Grants for investments Direction générale des marchés publics/ General Department for Public Procurement Directeur General Libertés Publiques et des Affaires Politiques/General Department for Public Liberty and Political Affairs Development Policy Loan Direction régionale de l’éducation de base Direction régionale de l’économie et du développement Direction régionale de la santé Environnemental Assessment Environmental Impact Study Environmental Management Plan

ENAM ENAREF

Ecole Nationale d’Administration et de Magistrature/National Public Administration School Ecole Nationale des Régies Financières

ESMF Environmental and Social Management Framework EU European Union FA FPDCT GDP

Financing Agreement Fonds Permanent de Développement des Collectivités Territoriales Gross Domestic Product

IDA IDF IDP

International Development Association Institutional Development Framework Institutional Development Plan

IE IGF IFMIS

Impact Evaluation Inspection Générale des Finances Integrated Financial Management and Information System

IFR JSDF

Interim Financial Report Japanese Social Development Fund

M&E Monitoring and Evaluation MATDS Ministere de l’Administration Territoriale de la Decentralisation et de la

Securite/Ministry of Territorial Administration and Decentralization and Security MDG M&E MEF MIS

Millennium Development Goal Monitoring and Evaluation Ministère de l’Economie et des Finances/ Ministry of Economy and Finance Management Information System

MOH Ministry of Health NGO OHADA

Non-Government Organization Organisation pour l'Harmonisation en Afrique du Droit des Affaires

PACT PAO/PNG

Programme d’Appui des Collectivites Territoriales/Territorial Local Government Support Program Plan Action Operational de PNG/Operation Action Plan of the PNG

PBC PCD

Performance-Based Contract Plan Communal de Developpement/Communal Development Plan

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PCU Project Coordination Unit PDO PEFA PFM PNGT PNG PRD PRCA PRGED PRM PRSC

Project Development Objective Public Expenditure and Financial Accountability Public Financial Management Programme National de Gestion des Terroirs/Community-Based Rural Development Program Politique Nationale Genre/National Gender Policy Projet Poles Regionaux de Developpment/Decentralized Urban Capacity Building Project Projet de Renforcement des Capacités Administratif/Administrative Capacity Building Project Programme de Renforcement de la Gestion de l'Economie et du Développement Personne Responsable des Marchés/Person Responsible for Procurement Poverty Reduction Support Credit

RAP RBF RPF

Resettlement Action Plan Results-Based Financing Resettlement Policy Framework

SCADD Stratégie de Croissance Accélérée et du Développement Durable/Strategy for Accelerated Growth and Sustainable Development

SDR SG

Special Drawing Rights Secretary General

SRFP Stratégie de Renforcement des Finances Publiques/Public Finance Strengthening Strategy

TA TUPP

Technical Assistance Taxe unique sur les produits pétroliers/Tax on Petroleum Products

UNDP WAEMU VPD

United Nations Development Program West African Economic and Monetary Union Vision Prospective de la Décentralisation

Regional Vice President: Obiageli K. Ezekwesili Country Director: Madani M. Tall

Sector Director: Sector Manager:

Marcelo Giugale Anand Rajaram

Task Team Leader: Serdar Yilmaz

5

Table of Contents 1. Strategic Context ..................................................................................................................... 1

A. Country Context ............................................................................................................. 1

B. Sectoral and Institutional Context .................................................................................. 2

C. Higher Level Objectives to which the Project Contributes ............................................ 6

2. Project Development Objective (see Annex 1) ....................................................................... 8

A. Project Development Objective ...................................................................................... 8

B. PDO Level Results Indicators: (see Annex 1) ................................................................ 8

3. Project Description .................................................................................................................. 9

A. Project components ...................................................................................................... 11

B. Project Financing .......................................................................................................... 17

1. Lending Instrument ....................................................................................................... 17

2. Project Cost and Financing ........................................................................................... 17

C. Lessons Learned and Reflected in the Project Design ................................................ 18

4. Implementation ..................................................................................................................... 20

A. Institutional and Implementation Arrangements .......................................................... 20

B. Results Monitoring and Evaluation .............................................................................. 21

C. Sustainability ................................................................................................................ 22

5. Key Risks and Mitigation Measures ..................................................................................... 23

6. Appraisal Summary .............................................................................................................. 24

A. Economic and Financial Analysis ................................................................................ 24

B. Technical ...................................................................................................................... 24

C. Financial Management ................................................................................................. 25

D. Procurement .................................................................................................................. 26

E. Social (including safeguards) ....................................................................................... 26

F. Environment (including safeguards) ............................................................................ 27

G. Governance ................................................................................................................... 28

Annex 1: Results Framework and Monitoring.............................................................................. 30

Annex 2: Detailed Project Description ........................................................................................ 33

Annex 3: Implementation Arrangements ..................................................................................... 43

Annex 4 Operational Risk Assessment Framework (ORAF) ....................................................... 61

Annex 5: Implementation Support Plan ........................................................................................ 65

Annex 6: Team Composition ........................................................................................................ 67

Annex 7: Governance and Accountability in Burkina Faso ......................................................... 68

Annex 8: Decentralization in Burkina Faso: Issues and Challenges ............................................ 71

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Annex 9: Muncipal Audits to Identify Local Government Needs ................................................ 83

Annex 10: Institutional Development Framework Template (sample) ........................................ 88

Annex 11: Procurement Plan ....................................................................................................... 89

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PAD DATA SHEET

Burkina Faso

Local Government Support Project

PROJECT APPRAISAL DOCUMENT

Africa Region Public Sector Management and Governance (AFTPR)

Date: October 5, 2011 Country Director: Madani M. Tall Sector Director: Marcelo Giugale Sector Manager: Anand Rajaram Team Leader(s): Serdar Yilmaz Project ID: P120517 Lending Instrument: Adaptable Program Loan

Sector(s): Sub-national government administration (100%) Theme(s): Decentralization (100%) EA Category: B

Project Financing Data: Proposed terms:

[ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other:

Source Total Amount (US$M) Total Project Cost:

Borrower:

Total Bank Financing:

IBRD

IDA

New

Recommitted

$ 65 Million

$ 5 Million

$ 60 Million

$ 60 Million

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Borrower: Burkina Faso

Responsible Agency: Prime Minister’s Office

Contact Person: Idrissa Sore, Associate Project Coordinator Telephone No.:+226 50324898 Fax No.:+226 50324898 Email: [email protected]

Estimated Disbursements (Bank FY/US$ m)

FY FY12 FY13 FY14 FY15 FY16 FY17

Annual 2.2 11.8 17.2 18.6 10.3 0

Cumulative 2.2 14.0 31.2 49.7 60.0 0

Project Implementation Period: January 1, 2012-December 31, 2016 Expected effectiveness date: January 1, 2012 Expected closing date: December 31, 2016

Does the project depart from the CAS in content or other significant respects?

○ Yes X No

If yes, please explain:

Does the project require any exceptions from Bank policies? Have these been approved/endorsed (as appropriate by Bank management? Is approval for any policy exception sought from the Board?

○ Yes X No ○ Yes ○ No ○ Yes X No

If yes, please explain:

Does the project meet the Regional criteria for readiness for implementation?

X Yes ○ No

If no, please explain:

Project Development Objective The proposed project seeks to harness emerging government commitment to local government reforms by supporting the implementation of critical aspects of fiscal and administrative decentralization in six of the 13 regions of Burkina Faso. The primary objective of the project is to strengthen the central government’s capacity for decentralization and the institutional capacities of municipalities (“communes”) in six regions, and to improve accountability linkages between local policy makers and citizens in said municipalities.

mailto:[email protected]�

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Project Description Component 1 - Establishing the foundations of robust administrative and fiscal intergovernmental institutions ($9.8 million). This component will support the central government agencies to further develop a transparent and rule-based intergovernmental fiscal framework and robust intergovernmental administrative systems. It will support the government in making a gradual shift from existing ex ante controls to ex post monitoring, as the capacity of communes increases to exercise their discretion. It will provide support to a high level policy making process (Vision Prospective de la Decentralisation-VPD) and assist the Ministries of Economy and Finance and Territorial Administration, Decentralization and Security to develop their coordination and managerial capacity. Component 2 - Strengthening capacity of municipalities to manage local development ($37.98 million). To address capacity constraints at the local government level, the project will provide support to local communes to address their core institutional development requirements for socio-economic development through institutional development grants. Annual grant allocations to each commune will, in part, be based upon the commune’s performance in establishing their institutions.

Component 3 - Improving accountability linkages between local level policy makers and citizens ($5.94 million). This component aims to empower local councils and populations by strengthening their capacity to participate in local decision making processes related to their socio-economic development and monitor local authority performance. At the same time, it aims to support local councilors in their oversight and representative function and to strengthen the capacity of local communes to communicate with local populations and account for their performance. The component will also reward communes in all 13 regions that demonstrate excellence in engaging communities in local development decision-making processes, through the provision of small grants on a competitive basis, and will ensure that the practices are disseminated as a motivation to other communes.

Component 4 - Project management and evaluation ($9.65 million). This component will provide project management support to the Ministry of Territorial Administration, Decentralization and Security (MATDS) in project implementation and support regular project evaluations as well as procurement and safeguards reviews, and financial reporting and auditing.

Safeguard policies triggered?

Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

x Yes ○ No ○ Yes x No ○ Yes x No ○ Yes x No ○ Yes x No ○ Yes x No x Yes ○ No ○ Yes x No ○ Yes x No ○ Yes x No

Conditions and Legal Covenants:

10

Financing Agreement (FA) Reference

Description of Condition/Covenant Date Due

FA, Section 5.01 Adoption of Project Implementation Manuals (PIM), acceptable to IDA.

Effectiveness

FA, Section 5.01 Operationalization of the Project Coordinating Unit acceptable to IDA

Effectiveness

FA, Schedule 2, Section I.A

Existing Steering Committee, chaired by Secretary General of the Prime Minister to be maintained for Project oversight

Ongoing

FA, Schedule 2, Section I.C

Sub-grants under Components 2 and 3 (IDP and competitive grants) to be made on the basis of criteria and procedures and on terms and conditions agreed with IDA

Ongoing

FA, Schedule 2, Section I.D

Recipient to prepared and implement Annual Work Programs approved by IDA

Prepared by November 30 of

the preceding year FA, Schedule 2, Section I.D

Recipient to open a Counterpart Funds Account into which counterpart funds in amounts agreed with IDA are to be deposited quarterly and used for Project expenditures

First deposit 3 months after Effectiveness

FA, Schedule 2, Sections I.C, I.E

Recipient to ensure Safeguard Instruments (Environmental Assessment, Environmental Management Plan, Resettlement Action Plan) for activities required pursuant to the EMP/RPF are prepared, disclosed and approved by IDA prior to implementation of the activities

Prior to commencement of related activities

FA, Schedule 2, Section II.B

Recruitment of external auditors with ToR and qualifications and experience acceptable to IDA.

3 months after Effectiveness

FA, Schedule 2, Section III.E

Carrying out of an annual procurement audit of the Project by auditors with TOR, qualifications and experience acceptable to IDA

6 months after the end of each

calendar year

FA, Schedule 2, Section I.A

Recipient to appoint to the PCU (i) an environmental and social safeguards expert; (ii) a M&E expert, and (iii) an accountant, with qualifications, experience and TOR acceptable to IDA.

3 months after Effectiveness

1

1. Strategic Context A. Country Context

1. Strong economic growth and a stable political environment have not resulted in positive development outcomes in Burkina Faso. President Blaise Compaore has held the presidency since 1987, leading the Congres pour la Democratie et le Progres (CDP) party through successive electoral victories. In June 1991 the IV Republic Constitution was approved in a referendum paving the way for multi-party elections. Presidential elections in 2005 and legislative elections in 2007 were ruled as relatively fair and free by the majority of international observers. The results of these elections confirmed the continued dominance of the President’s party (CDP). This long-term political stability combined with important economic reforms has enabled higher than average growth rates (5.5% per year since 2000) for Burkina Faso relative to the sub-region. In turn, these gains have provided opportunities for an increase in public expenditures on health, education and water and sanitation as well as for more targeted social service provision. However, population growth rate remained high around 3.2% annually. Therefore, the impact of economic growth on poverty reduction and service delivery has been quite marginal. Burkina Faso continues to be ranked among the poorest countries in the world with 43.7% of the population living below the poverty line in 2009. Poverty remains a predominantly rural phenomenon with the incidence of rural poverty at 49.5% as compared with the incidence of urban poverty at 23.7% in 2009. In 2010 its Human Development Index was 0.305, giving the country a rank of 161 out of 169 countries.

2. Despite favorable public expenditure trends, Burkina Faso is unlikely to meet most of the Millennium Development Goals (MDG), particularly those related to literacy, health and sanitation.1 Although expenditure in all three sectors has increased,2

1 Stratégie de Croissance Accélérée et de Développement Durable (SCADD), 2010. An MDG costing assessment conducted in 2008 demonstrates that attainment of the MDGs will require a threefold increase in spending, which will in turn require efficiency gains and better targeting of social service delivery.

education, health and water and sanitation sectors remain adversely affected by a marked urban bias combined with regional and, in some cases, gender inequalities. In education, the country has made significant progress towards universal basic education, with basic enrollment improving from 40% in 2000 to 72.5% in 2007. Burkina has also improved its record on secondary education. Basic education enrollment has improved from 40% in 2000 to 72.5% in 2007. However, the ratio of teachers to students is unchanged at 48 students per teacher level and girl’s access remains low, at a ratio of 87:100 for basic education and 74:100 at the secondary school levels. Ninety per cent of school age children are in school in urban areas, whereas only 51% are enrolled in school in rural areas. In the health sector, assisted childbirth has registered an increase from 34% in the year 2000 to 70% in 2009 and is above the regional average of 44%. Similarly, the rates of pre-natal and postnatal consultations have significantly increased and the level of vaccination has increased from 56% in 2000 to 100% in 2009. However, geographical inequalities in terms of coverage remain significant and are worsening. Child and elderly mortality rates are quite high, most notably in the Center North and Center regions and the sanitation system is not as effective as those in neighboring countries. Thirty-eight percent of children are malnourished, and under-five mortality is still relatively high at 184 deaths per 1,000 live births. In the water and sanitation sector, the government has made particularly noteworthy progress in improving access to potable

2 For example, in education, expenditures reached 5.6% of GDP in 2007 from 3.8% in 2000 and in health expenditures reached 1.8% of GDP in 2008 from 1.3% in 2000.

2

water with the development of the national MDG program for water and sanitation (PN-AEPA). In 2009, access to potable water rose to 72% in urban areas (from 55% in 2005) and 56% in rural areas (from 40% in 2000). On the other hand, coverage of sanitation services was 23% and 10% in urban and rural areas respectively in 2009. While access in urban areas has increased significantly, the real challenge is now to address disparities, including gender inequalities, in rural areas and small towns.

3. Partly reflecting public discontent over Burkina’s development outcomes, the country recently underwent a political crisis which could adversely impact development in the country. Between February and May 2011, a tide of civil unrest swept across the country. Initially triggered by the alleged police killing of a student, Justin Zongo - students, the military, the judiciary and small traders mounted sustained and often violent protests over particular grievances. The accumulation of grievances and the influence of events in North Africa and the Ivory Coast generated a groundswell of public discontent. With this has come an emerging national discourse around critical issues including the unequal redistribution of resources and rising cost of living and political governance concerns regarding the Executive’s monopolization on power, the perceived lack of accountability and culture of impunity and dissatisfaction with the performance of local governments. The President and ruling party have experienced a rupture in the stability and control that they have maintained for the last two decades and concomitantly, non-state actors have engaged in uncharacteristically proactive and vocal dissent. While changes in ministerial appointments and measures to introduce tax, salary, governance and cost of living reforms appear to have calmed the waters, the fissure exposed in the regime’s control could have ongoing repercussions for political stability and economic development in the country.

4. Following the recent political crisis, the newly composed Government has reiterated its commitment to governance reforms. Given that the gaps and regional disparities in basic services remain substantial, and the sense that these disparities are contributing to social and political unrest, the government has acknowledged the need to respond effectively to citizen demands and has committed to furthering governance reforms. In this context, the government has recognized the urgent need for progress to be made in strengthening the national and sub-national governance institutions to improve the lives of poor and predominantly rural populations. Decentralization therefore represents a potentially important reform for restoring positive momentum to Burkina’s development trajectory.

B. Sectoral and Institutional Context 5. In the two decades since the adoption of the 1991 Constitution, which established a system of local government founded upon territorial units,3 the government has demonstrated growing commitment to developing a framework for decentralization as a means of addressing the country’s key development challenges. The 1991 Constitution articulates a vision for the formation of a local government system and citizens’ participation in local governance.4 Since then, the government has taken incremental steps in passing legislation enabling the implementation of the decentralization process.5

3 Article 143 of the 1991 Constitution stipulates that “Burkina Faso is organized in territorial collectivities.”

A major result was achieved in 2004 with the

4 Articles 144 and 145 of the 1991 Constitution stipulate that “The creation, suppression and division of territorial collectivities shall be defined by law” and “Democratic participation of populations to the administration of territorial collectivities shall be organized by law.” 5 There are several laws enacted: (i) Loi n°003/93/ADP du 7 mai 1993 portant organisation de l’administration du territoire au Burkina Faso; (ii) Loi n°004/93/ADP du 12 mai 1993 portant organisation municipale; (iii) Loi n°005/93/ADP du 12 mai 1993 portant statut particulier de la province du Kadiogo et de la Commune de Ouagadougou; (iv) Loi n°006/93/ADP du 12 mai 1993

3

adoption of the General Code for Local Government (Code Général des Collectivités Territoriales--CGCT), defining the legal and regulatory framework for the implementation of decentralization. It created 13 regions and 302 rural municipalities, which brought the total number of municipalities to 351, covering the entire country.6

6. While the structural framework for decentralization is in place, progress towards the actual implementation of decentralization has been slow and local authorities are constrained by limited discretion to exercise their mandates. In part this is a feature of the design of the CGCT, which assigns service delivery responsibilities to local governments according to the principles of subsidiarity and progressiveness. The subsidiarity principle implies that activities are assigned to the level that can best carry them out. The progressiveness principle means that responsibilities are transferred gradually to local governments as their capacity increases. The CGCT specifies the distribution of competencies between the two levels of sub-national government. Regions are the anchor for development coordination and planning. They are responsible for delivering specific services, including secondary schools and second-level health centers. Municipalities (communes) are responsible for building and managing most basic socioeconomic infrastructures, such as kindergartens, primary schools and clinics. Among the 11 competencies mentioned for devolution to local governments in the CGCT,

Countrywide democratic elections were held at the municipal level in 2006. That same year, the 13 regions constituted their elected representative bodies as local authorities. This was a turning point in the process of decentralization, which set in place the possibility for transferring authority to the new locally elected political authorities. In 2007, the CGCT was complemented by a presidential decree, issued to provide a Strategic Framework for the Implementation of Decentralization (Cadre Stratégique de Mise en Œuvre de la Décentralisation--CSMOD). Drawing on this framework, in 2008 and 2010 the government approved two three year strategic plans to implement decentralization reforms (Plan d’actions triennal du Cadre Stratégique de Mise en Œuvre de la Décentralisation 2008-2010 & 2010-2012).

7 only four were initially transferred to the urban municipalities.8

7. The central government in Burkina Faso remains the senior partner in the intergovernmental relationship, retaining control over the vast majority of state resources. Total municipal revenues are only a small share of total government revenues and expenditures.

In rural municipalities and regions, the transfer of responsibilities was supposed to take place within three years after the 2006 local elections. Due to the existing capacity constraints at the local level this process has been slower than expected. In 2009, limited functions related to four of the 11 competences identified under the Code were transferred to rural municipalities. The slow pace of implementation is also in part linked to the tutelle model inherited in Burkina from the French administration, which has been relied upon heavily by the central government to exert ex ante control over local government decisions, thereby limiting their discretion and enabling central interests to retain authority.

portant statut particulier de la Commune de Bobo-Dioulasso; (v) Loi n°007/93/ADP du 12 mai 1993 portant régime électoral des conseillers de village, de secteur communal, de département et de province. 6 Today, Burkina Faso has 13 regions, 49 urban municipalities – two of which (Ouagadougou and Bobo-Dioulasso) have a specific status – and 302 rural municipalities. At the deconcentrated level, there are three tiers of territorial administration with 13 regions, 45 provinces, and 350 departments. 7 These eleven functions are defined in Articles 80 through 105 of the CGCT as (i) land, (ii) communal development and physical planning; (iii) environment and natural resources management; (iv) planning and economic development; (v) health and hygiene; (vi) education, literacy, and vocational training; (vii) culture, sports, and leisure; (viii) civil defense, assistance, and social protection; (ix) funeral services and cemeteries; (x) water and electricity; and (xi) marketplaces, slaughterhouses, and fairs. 8 They are (i) culture, youth, sports, and leisure; (ii) pre-schooling, primary education and literacy; (iii) drinking water distribution and sanitation; (iv) health.

4

In 2009, they were only 4.32% of total government revenues and 3.47% of total government expenditures (see Annex 8). There is also a significant gap between revenues flowing to urban and rural communes. In 2009, urban commune governments’ per capita revenue raising capacity of CFAF 4,527 (around USD 9.9) was 4.1 times higher than rural communes’ capacity of CFAF 1106 (around USD 2.4).

8. It is too early to assess the impact that recent political unrest will have upon the government’s commitment to implement decentralization reform. Recognizing that decentralization is about sharing power and resources, it is both an opportunity to respond to citizen demands (and thereby defuse a political threat) as well as a risk to central political authority. The government has so far signaled its willingness to take the opportunity and face the risks. Between 2010 and 2011, the former Prime Minister actively engaged in the decentralization agenda. In January 2011 a new Minister was appointed to the Ministry of Territorial Administration and Decentralization and Security (Ministere de l’Administration Territorial de la Decentralisation et de la Securite--MATDS), who is committed to provide high level support for accelerating decentralization. Post-crisis, the new Minister of MATDS was retained and the new government has reiterated its commitment to governance reforms. However, in practice, the government has shown a preference for a relatively conservative approach to the scope, pace and nature of decentralization. This decision is ultimately a political choice which can and should be informed by the implications that it will have upon development outcomes.

9. From a developmental perspective, decentralization presents an important opportunity to address regional inequalities and improve service delivery by dealing with the administrative and institutional constraints underlying Burkina’s weak human development outcomes. While the government has committed important resources to the development of service delivery systems, the quality and efficiency of public expenditures remain poor.9 Decentralization can be instrumental in simultaneously streamlining the expenditure processes, addressing regional inequalities, and devising policies and programs that better address the needs of the local populations, in particular the most vulnerable groups. In addition, decentralization can create opportunities to bring disadvantaged groups, including women,10

10. In the present country and sectoral context, decentralization requires empowering local governments and local communities to influence local development. To stimulate effective decentralization and accelerate local economic development, efforts need to be directed towards (i) giving greater scope to local populations to hold local officials accountable and to shape the local agenda; and (ii) endowing local governments with greater capacity to implement local development agendas. From a development point of view, while these two steps are modest, it is

into decision-making processes.

9 Public Expenditure Review Report No. 50354-BF. 10 In July 2009, the Government of Burkina Faso adopted a National Gender Policy (PNG) to reduce gender inequalities across all sectors of social, economic and political life. The first triennial Operational Action Plan of the PNG (PAO/PNG) seeks to implement activities under the following 5 pillars: Pillar 1: Promoting a culture of gender equality. Pillar 2: Promoting gender equality in access to and control of resources and revenues. Pillar 3: Promoting the institutionalization and integration of gender within institutions and Government bodies at all levels. Pillar 4: Developing synergy of action and partnership with all actors involved in the promotion of Gender in Burkina Faso. Pillar 5: Strengthening the capacity of actors; institutional coordination and piloting mechanisms set up for the implementation of the PAO/PNG. With respect to promoting gender equality, the Government of Burkina Faso has recently set an affirmative action measure according to which at least 30% of either sex is expected to be represented in the 2012 municipal and legislative elections.

5

possible that they will increase the capacity of local populations to influence decision making processes for resource allocation and to better organize themselves for greater self-provision of missing public goods.

11. Effective decentralization in Burkina also requires a realistic approach to deconcentration of central government functions and tutelle responsibilities.11

Table 1: Control of Local Governments by Central Administration (Tutelle Powers)

Moving from a highly centralized system to a decentralized system in a low capacity environment requires a nuanced and phased approach. In the short term, taking significant capacity constraints at the local level into account, the central government needs to provide better tutelle services to local authorities through deconcentration of MATDS and the Ministry of Economy and Finance (Ministère d’Economie et de Finances--MEF). In the medium to long term, as the capacity of local governments increase there will be no need to exercise these tutelle powers. Currently, the tutelle of the MATDS is carried out by state representatives at the deconcentrated level, by the Governor of regions for (decentralized) regions and the High-commissary of provinces (haut-commissaire de province) for rural and urban municipalities. In addition, for all financial transactions, approval or prior authorization is required from the MEF. Table 1 presents the nature and scope of tutelle functions.

Nature of the Control Scope Comments

Approval Initial and supplemental budgets, Procurement, accounting (comptes administratif et de gestion)

Tutelle authorities shall issue approval/authorization within 45 days. Lack of decision within 45 days is equivalent to consent. Prior

Authorization Borrowing, bequest, grants, allowance, physical planning of the territory

Cancellation All local government decisions, deliberation and regulations

In case of conflicts of interests or illegality, cancellation is pronounced within 45 days after a decision was made by local governments. Passed this deadline, the decision is deemed approved and effective.

Suspension All local government decisions, deliberation and regulations

Suspension cannot exceed 45 days.

Substitution All local governments operations Central government could substitute to local governments if the latter fail to implement decisions set by laws and regulations

Auditing All local governments operations Audits are carried out at the central government’s discretion Source: Adapted from World Bank 2007.

12. In the short term, there is a need for the deconcentration system to function better to avoid delays in local government operations and avoid disruptions in service delivery. Currently deconcentration system does not function well as there is a high level of concentration of civil servants in the center. Most of the civil servants are based in the Centre region where Ouagadougu is located (see Table 2). Although, on average there are 160 people for each civil servant in Burkina, in the Centre Region, this number goes down to 35. On the other hand, in the Sahel region there are 439 people per each civil servant. In order to address this high level of concentration of civil servants (therefore central government tutelle functions), there is a need for deconcentration of the central ministries, particularly MEF and MATDS. The government is committed to deconcentration of these tutelle authorities in the CSMOD. However, the lack of resources for the construction of office buildings and housing facilities and procuring office equipment seem to be preventing the government from implementing deconcentration plans and

11 The tutelle implies a top-down supervisory model entailing an oversight role of the central state vis-à-vis local governments. The tutelle powers are exercised by the MATDS and MEF.

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dissuading civil servants from re-locating. Given that there is no difference in remuneration of deconcentrated staff and central office staff, the government also needs to address relocation incentives and career promotion in order to implement its deconcentration plan. Otherwise, staffing of deconcentrated offices seems not to be a costly proposition as central government agencies are overstaffed in the capital city.

Table 2: Distribution of Civil Servant across regions Region Number of Civil Servants Population Per Capita Boucle du Mouhoun 4,588 1,533,586 334 Cascades 1,834 565,291 308 Centre 52,594 1,836,148 35 Centre-Est 3,720 1,203,289 323 Centre-Nord 4,823 1,277,706 265 Centre-Ouest 4,437 1,261,273 284 Centre-Sud 2,103 681,829 324 Est 3,337 1,288,611 386 Hauts-bassins 5,106 1,562,132 306 Nord 4,088 1,260,455 308 Plateau Central 1,716 740,216 431 Sahel 2,346 1,029,416 439 Sud-Ouest 2,668 659,851 247 Total 93,360 14,899,803 160

Source: European Union Report, 2010.

13. In the medium to long term, and with the buildup of capacity at the commune level, tutelle arrangements will need to be phased out. Currently, the central government, through its tutelle, retains large ex ante controls on most decisions taken by local governments. As a result of this particular feature of the French administration inherited by Burkina Faso, local governments’ ability to make decisions is hindered. Local governments tend to be accountable towards the center rather than downward towards citizens. For local governments to be truly accountable towards citizens there is a need to shift from a centralized system with ex ante controls to a system with ex post monitoring features. In this new system, the central ministries should be expected to focus on macro policy issues—sectoral policymaking, planning, and coordination—and leave process oriented service delivery activities to local governments. 14. Although decentralization presents an opportunity to improve efficiency and effectiveness of service delivery its implementation requires careful planning. Administrative and fiscal aspects of decentralization will need a careful and well thought out implementation plan phased in over a realistic time period. Enhancing the demand for good local governance of public resources and creating a culture of social accountability will also take time. As an important matter of sequencing and implementation, during the initial phase of decentralization reform in Burkina Faso, the emphasis is on strengthening basic administrative capacities of communes and developing mechanisms for effective citizen participation and oversight, as well as lifting gender-specific barriers to participation and representation. This will be accompanied at the central level by the roll-out of de-concentrated services to support communes and a gradual loosening of ex ante controls. Once all communes have functioning robust organizational and administrative systems as well as appropriate staffing, the focus will shift to the more difficult issues of sorting out of roles and responsibilities of different levels of government in service delivery.

C. Higher Level Objectives to which the Project Contributes 15. Assisting in the acceleration of the decentralization process to facilitate improvements in social service delivery represents a cornerstone of the 2010-12 Country Assistance Strategy

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(CAS). The CAS is based on two strategic themes, namely (1) Minimizing economic vulnerability and promoting growth through economic transformation and (2) Promoting shared growth through effective social service delivery, and two cross cutting issues related to governance and demography. This operation is firmly embedded in strategic theme two which targets building demand for transparent and quality social service delivery, improving public resource management and strengthening the capacity of central and local institutions to deliver social services.

16. The CAS makes a strong commitment to support decentralization reforms in Burkina Faso, and the present project will specifically contribute to this commitment. In paragraph 25, the CAS identifies decentralization as key to improving service delivery: “[t]here is broad agreement in the country that the quality of services will not improve until accountability for service provision is shifted to the communal level where most of the actual delivery of services takes place.” The CAS commits to structuring the Poverty Reduction Support Credit/Grant (PRSC/G) series around three key objectives: growth, decentralization and public financial management. It also commits to supporting policy reforms “…needed to create environments for effective implementation of the program’s major operations which target diversification and effective decentralized social service delivery” (paragraph 62). It envisages broad operational support to decentralization both through ongoing projects and through the Local Government Support Project which is listed in the CAS Program of Assistance for FY2010-2012 and is intended to consolidate and federate ongoing support in the sectors. Through this platform of support, the CAS commits IDA support to “…both central and local levels in achieving functional and effective decentralized service delivery.” 17. The proposed project is also expected to harmonize the Bank Portfolio and improve the impact of existing and future operations related to the decentralization process at various levels. The Administrative Capacity Building Project (Projet de Renforcement des Capacités Administratifs--PRCA) focuses on improving the ability of the central government to plan for effective decentralization. As support to decentralization involves management and coordination of inter-governmental relationships, the PRCA plays an important role in magnifying the effects of capacity-building initiatives at national and local levels, respectively. As PRCA closed at the end of the FY11, this proposed project will build on the work done under that project. The Decentralized Urban Capacity Building Project (Projet Pôles Régionaux de Développement--PRD) and the Community-Based Rural Development Project (Programme National de Gestion des Terroirs--PNGT) focus on developing capacity in urban and rural municipalities respectively. The proposed project seeks to harness, build on and consolidate the support that each of these existing projects is providing by developing an approach that addresses reform and capacity at the central and local urban and rural levels. In the Bank portfolio support to decentralization was also provided through programmatic development policy lending (DPL), albeit far from being successful. Although previous attempts to advance decentralization reform through the fifth programmatic PRSC/G series proved unsuccessful, efforts are continuing to identify and define further decentralization policy reforms that are needed to achieve effective decentralization in future DPL series. In so doing, the project will support a more targeted and feasible approach to addressing decentralization reform in the future PRSC/G series. It is also expected that the extensive financial and technical support that this project will bring will catalyze decentralization processes and create an environment that is conducive to further policy reform promulgated by the next PRSC/G series.

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2. Project Development Objective (see Annex 1) 18. The proposed project is the first phase of an adaptable program loan (APL). The main aim of the programmatic approach is to undertake the project activities only in half of the 13 administrative regions of Burkina Faso during the first phase. The second phase of the APL should scale the activities up to all of the regions taking into account the lessons learned from the first phase. Therefore, the APL Project Development Objective (PDO) is the same as the APL phase 1 PDO:

A. Project Development Objective 19. The primary objective of the project is to strengthen the central government’s capacity for decentralization and the institutional capacities of municipalities (“communes”) in six regions,12

B. PDO Level Results Indicators: (see Annex 1)

and to improve accountability linkages between local policy makers and citizens in said municipalities.

• Decrease in deviation of budget implementation from approved annual commune budget. • Early disbursement of funds to communes committed by the central government. • Publication of indicative allocation transfer amount to each commune. • Increase in the number of procurement contracts awarded by communes.13

• Increase in local taxes collected by communes.

• Number of direct project beneficiaries and percentage of women (council members). • Increase in percentage of citizens rating commune’s performance satisfactory.

20. The main beneficiaries of the project are commune governments. Together with regulatory reforms and specific measures to strengthen local accountability to citizens, the project will help to improve the capacity of commune governments both in terms of administrative capacity of the executive and the oversight capacity of the commune council. The first phase of the program will cover six regions: Cascades, Sahel, Centre Nord, Centre Sud, Centre Est and Plateau Central for a period of five years. These regions were selected to strengthen synergies with other development partner programs. The first phase of the program seeks, in particular, to complement the European Union’s (EU) program which will commence at the same time. The EU program focuses support at the regional level, assisting the MATDS in establishing regional offices and regional level local governments in the six identified regions. In complement to this separate EU financed project, the first phase of the program will provide support to local municipal (commune) governments in the same regions.

21. The triggers for moving to Phase II are the following measures to be taken to the Association’s satisfaction:

1. An increase in percentage of resources transferred to local governments to achieve targets set in the 2011-2013 SCADD Table.

2. A more predictable and transparent intergovernmental transfer system, as measured through publication of indicative allocation of the transfer amounts to local governments and early disbursement of funds to region/commune accounts during the fiscal year (measured by PDO indicators 2 and 3 in Annex 1)

12 Later to be scaled up to all 13 regions under phase 2 of the APL. 13 “Communes” here and in what follows in the other indicators refers to the total number of communes in the 6 selected regions of the APL phase 1

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3. A relaxation of a priori financial controls over local governments and a simplification of procurement process at the local level.

4. A redefinition of the tutelle role of the de-concentrated office of the prefect to relax a priori administrative controls.

5. Adoption of a legal framework for the establishment of regional agencies for development (agencies regionales de development—ARD), which are going to be the technical departments of regional local governments to support communes.

6. Adoption of a legal framework to enable communes to engage in joint service provision (inter-communality arrangements).

3. Project Description 22. The rationale for the project is grounded on the evidence put forward by the 2009 Public Expenditure Review study which identifies the positive impact that an effective decentralization could have in strengthening basic service delivery in Burkina. According to the analysis, the gap between sustained growth and poor development outcomes – the ‘Burkinabe’ Paradox’ - is explained in part by the centralized management of public expenditure. Indeed, the centralization of decision-making limits the extent to which local needs and preferences are taken into account and thus has a negative impact on the quality and impact of service delivery. Moreover, the centralized management of public expenditure results in high operating costs and loss of efficiency of public expenditure. High costs in key sectors such as health and primary education in particular bear witness to the impact of this inefficiency which in turn leads to limited impact on poverty reduction. 23. Due to a highly centralized management, resources tend to remain close to the center. The regional distribution of public expenditure remains extremely uneven and favors urban regions (see Annex 8). This potentially makes public policies the source of inequalities, in particular in the health and education sectors where the concentration of infrastructures and personnel in the most favored regions constitute major obstacles for poverty reduction. For example, while the Hauts Bassins region received a per capita allocation of nearly CFAF 50,000 in 2007, the Sahel region received only CFAF 7,100. Other regions, such as Centre-Nord and Cascades, received budget allocations that are significantly larger in relative terms.

24. Adopting a decentralized program would make it possible to streamline the expenditure process, to take account of regional inequalities and to devise policies and programs that provide an improved response to the needs of the population, in particular the most vulnerable groups. There are three major areas of weakness in the existing local government system in Burkina Faso: (i) lack of basic administrative systems; (ii) nontransparent intergovernmental fiscal systems; and (iii) weak accountability systems at the local level, characterized by weak council capacity and oversight over decisions on public resource allocation and underdeveloped citizen participation mechanisms in such resource allocation. Therefore, the success of a decentralized program will depend on addressing these parallel challenges of improving financial resource flows, strengthening public administration capacity and enhancing citizens’ participation and the demand for accountability by local populations.

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25. Progress towards effective decentralization may also address underlying factors related to the recent public unrest in Burkina Faso and may provide the government with an opportunity to tangibly demonstrate its efforts in promoting good governance.14

26. Support to Burkina’s decentralization efforts will be provided in two phases. A two phase APL (see Table 3) will allow for providing continuity and long-term support for a realistic development of local as well as central government capacity for decentralization. The program will tackle key systemic weaknesses by strengthening intergovernmental administrative and fiscal systems and organizational, institutional and individual capacities of local governments.

27. Currently, the weaknesses of the local government system are at two levels: (i) central level (in terms of intergovernmental systems); and (ii) local level. The lack of rule-based, predictable and transparent intergovernmental fiscal and administrative systems is a major weakness at the central level. At the local level, the lack of capacity is a major constraint for decentralization.

28. At the central level, the lack of transparency and predictability of the intergovernmental fiscal system, particularly intergovernmental transfers and service delivery responsibilities, hinders local governments planning, budgeting, budget execution and service delivery. Central government transfers to commune governments come from multiple sources and lack predictability, simplicity and transparency. The project will support studying the adequacy and buoyancy of the transfer system and establishing policy objectives to consolidate multiple transfer arrangements. Furthermore, on the expenditure assignment, service delivery assignments in the CGCT are not always clearly delineated. The CGCT contains vague provisions requiring local governments to “participate” or “to provide their opinion” without further precision on respective responsibilities in service delivery. In the process of clarifying roles and responsibilities of different—central, regional and commune—levels of government in service delivery, the project will provide support to issuing service delivery guidelines and addressing ambiguities in sectoral decentralization issues.

29. On the administrative side, the lack of a basic regulatory framework for the administrative structures of local governments makes it difficult to assess the capacity of core administrative structures. Furthermore it makes it impossible to develop terms of references for each office within the organizational structure and judge the qualifications of civil servants working in those offices. The project will provide support to the MATDS to establish basic organizational guidelines for administrative structures of commune governments.

30. At the local level, local governments lack basic core administrative systems and capacity to function properly. A study commissioned by the EU and audit reports conducted by the World Bank-financed PRD Project in a limited number of urban communes (see Annex 9) present similar findings about commune level institutional capacities: most of the communes have very limited office space (only one room), inadequate levels of office equipment (i.e. computers, printers, photocopiers, telephones, furniture, filing cabinets), few transportation vehicles (i.e. cars, motorcycles, bicycles, minivan, trucks) and limited equipment (i.e. backhoes, cranes, tractors, welding machines, scissors, forklifts, cranes). Furthermore key posts in a large majority of communes (such as accountant, administrative officer, municipal surveyor and technician) remain vacant. The project will provide support to commune governments to strengthen these core institutional capacities and administrative systems.

14 This was highlighted by an internal political economy analysis of the crisis.

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31. In the first phase of the APL the activities will be undertaken in 6 of 13 regions of Burkina Faso. A phased approach is instrumental in avoiding overwhelming the central government’s capacity and resources. Phasing will also help applying the lessons learned in the initial phase to the activities in the next phase. The selection of the six regions for the first phase will ensure complementarity with the EU project under preparation. It will also allow the activities to be tested in different regional settings (with varying performance records, poverty levels and access to resources). The second phase of the program will extend coverage to the other seven regions taking into account the lessons learned from the first phase.

32. The program employs a systemic, dynamic and results-oriented approach to institutional development to ensure an appropriate enabling policy, regulatory and fiscal environment at the national level that supports the strengthening of physical, administrative and human capacities of local governments. It seeks to enhance the institutional capacity of local governments with respect to the functions that they actually perform (“learning by doing”) and to ensure that local governments are held to account by citizens and the national government. At the same time, it seeks to encourage a shift towards results-oriented local service delivery, by linking annual project allocations for communes to indicators and targets of commune performance in institutional development. The program will complement and harmonize existing and planned support from other development partners, including the EU, to the overall decentralization framework. Table 3: APL Phase 1 and 2 Overview Phase I

US $ 60 million total cost

Phase II US $ 90 million total cost

Implementation period: Periodic monitoring: APL trigger assessment: Appraisal of second APL phase:

January 1, 2012-December 31, 2016

Semester: March – September

June 2016

September 2016

January 1, 2017-December 31, 2021

Semester: March - September

A. Project components 33. The project design reflects the participatory nature of the preparatory stage. Three working groups were established at the behest of the Prime Minister’s office to support project preparation. The working groups were comprised of representatives from various ministries, development partners and civil society. The three working groups issued reports which identified the major obstacles to effective decentralization and proposed practical recommendations. The project components directly incorporate the recommendations that emerged from these working groups.

34. The project consists of 4 components:

35. This component will support the central government agencies to establish a transparent and rule-based intergovernmental fiscal framework and robust intergovernmental administrative systems. It will provide support to a high level policy making process (Vision Prospective de la Décentralisation--VPD) and assist the MEF and MATDS to develop their capacity (i) to clarify the roles of de-concentrated and decentralized agencies and shift tutelle responsibilities to ex post rather than ex ante controls; (ii) to improve the design of intergovernmental systems; (iii) to

Component 1 - Establishing the foundations of robust administrative and fiscal intergovernmental institutions (USD 9.8 million)

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gauge the direction, pace, and extent of decentralization; and to (iv) directly engage with local governments in the decentralization process.

36. Component 1 will support the following activities:

37. The VPD process is an iterative process which aims to support high level decision makers, including the Prime Minister and several key ministers, in advancing decentralization reform, by providing macro policy guidance on the decentralization process.

1.1 Support for high level policy making (VPD):

38. The project will provide support for the VPD process through the articulation of policy choices on intergovernmental fiscal design aspects of decentralization and provide guidance to technical experts in implementing those policy preferences. The discussions will focus on four pillars of intergovernmental fiscal design issues: expenditure assignment (service delivery responsibilities), revenue assignment, intergovernmental transfer system and local borrowing. The VPD process will also guide decision-makers on critical issues related to decentralization reforms.

39. Specifically the sub-component will comprise:

a. Consultancy studies to identify and recommend suitable fiscal decentralization policy options, including the development of a robust intergovernmental fiscal framework (IGFF) and the elaboration of sector decentralization reviews;

b. International staff training and study tours; c. Communications and awareness activities through workshops for central and local

government officials.

1.2 Support to the MEF:40. The lack of clear leadership by the MEF in strengthening the fiscal framework and lack of capacity of MATDS to regulate the local government sector have a negative impact on local government performance. The lack of incentives to collect revenues, limited access to budgetary resources (including transfer revenues), lack of critical administrative staff and capacity undermine the ability of local governments perform key functions such as budget planning and execution to respond to citizen needs.

41. This sub-component of the project will provide support to the MEF to implement recommendations suggested by the working groups. It will help improve the institutional capacities of MEF and local governments in respect of revenue collection and administration, to improve the institutional capacity of local governments in respect of expenditure planning and to rationalize fiscal transfers by MEF to local governments. Focus areas will include own source revenue collection and administration, expenditure autonomy and rationalization of the transfer system. The following specific activities will be supported: a. Comprehensive review of local government own source revenues and development of

simplified guidelines for all communes as well as design of training programs; b. Identification of issues in the flow of funds between MEF and local governments and

adoption of measures to address them through information sessions and design of training sessions for the regional staff of the General Directorate of the Budget (Direction Generale du Budget--DGB) in order to help them to perform their prior authorization function (comptabilite de l’ordonnateur) better; preparation of a procedures manual for revenue utilization by local government; the preparation of annual reports on local government finances of commune and regional governments;

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c. Review of system of resource transfers to local governments; d. Support the de-concentration policy of the MEF to assist local governments by providing

resources for the acquisition of software and hardware for regional offices of MEF and the construction of facilities.

1.3 Support to the MATDS:42. This sub-component of the project will provide support to the MATDS to: (i) rationalize and strengthen the ministry’s institutional arrangements and coordination functions; (ii) regulate, guide and monitor the application of human resource management, procurement, public financial management and information systems by local governments; and (iii) strengthen proximate ministerial support to local governments through de-concentration. Specifically the subcomponent will undertake the following activities:

a. Carrying out of an organizational, managerial and operational review of MTADS and implementation of its recommendations;

b. Development and implementation of a de-concentration action plan for the MTADS, including construction, furnishing and equipping of facilities, dissemination of informational materials concerning decentralization, and provision of software and hardware for the regional offices of MTADS, all as required under such action plan;

c. Carrying out of a study to identify issues in local government budget planning and execution, human resource management and procurement and to develop and implement recommendations to address such issues; and;

d. Development and introduction of a system for collecting, storing, archiving and dissemination of financial, economic, socio-demographic information about municipalities, as well as development of a database of such information.

.

43. Component 2 will provide resources to local authorities, through institutional development grants, to support them in developing the core administrative systems and capacities they need to attain basic levels of administration as well as effective municipal council oversight functions and functioning communication and feedback channels with the communities. The institutional development grants will be allocated to local authorities in accordance with allocation criteria established by the Project Steering Committee and reflected in the Project Implementation Manuals.

Component 2 - Strengthening capacity of municipalities to manage local development (USD 37.98 million)

44. In order to assess capacity constraints at the local authority level, the project will develop an Institutional Development Framework (IDF) during project preparation to guide communes in systematically evaluating the resources they need to establish core administrative systems and effective municipal council oversight functions. It will include templates to support communes in developing their individual Institutional Development Plans (IDPs) (see Annex 10 for a preliminary example).

45. At the outset of the project and during the first year of project implementation, the communes will develop their individual IDPs, based on the IDF. IDPs will specify the needs and prioritize the activities to be undertaken by each commune over the project period. In years two to five of project implementation, the communes will include IDP investments in their standard Annual Investment Plans (AIPs). Component 2 will provide institutional development grants to

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communes on an annual basis to finance the IDP investments included in the AIP (“sub-projects”). The award of grants will be results-oriented and will be based upon three factors: (i) the level of disbursement of the preceding grant and performance of the preceding sub-project; (ii) the performance of communes in actual implementation of their IDPs; and (iii) the performance of communes in promoting social accountability (according to set criteria such as the regular publication of budget and performance information, the organization of cadre de concertation15

47. The activities undertaken in this component comprise the following:

meetings etc.).

a. Support to the Department for Local Authorities (Direction General des Collectivités Territoriales--DGCT) of the MATDS for the elaboration of the IDF;

b. Support to the communes for the elaboration of their IDPs; c. Allocation of resources to communes through sub-grants for sub-projects based on their

IDPs, in accordance with a set of criteria (i.e. population, isolation, and poverty levels). Sub-projects can include construction of facilities, transportation vehicles, office furniture, hardware, technical support and scholarships to attend courses (offered by Ecole Nationale d’Administration et de Magistrature (ENAM) and Ecole Nationale des Regies Financieres (ENAREF) under the National Strategy for Capacity Development).

48. Subprojects would need to meet the standard eligibility criteria of the World Bank, including appraisal of the subprojects to confirm their technical, economic and financial feasibility as well as the soundness of the institutional arrangements of the IDP for implementation. The following conditions would apply to sub-grants:

• The aggregate amount of all Sub-grants to a single Beneficiary shall not exceed the equivalent of $800,000.

• Sub-projects should address physical, organizational and human development needs identified in the IDP (in accordance with the IDF and approved by the project steering committee) to enable communes to carry out their socio-economic development activities.

15 Two decrees (Decret No. 2009-837-/PRES/PM/MEF portant creation, attributions, composition et organization du Cadre national de concertation des partenaires du developpement rural decentralise (CNC-PDR) and Decret No2009_838_/PRES/PM/MEF/MATD portant creation, attributions, composition et fonctionnement de cadres de concertation pour le developpement rural decentralise) create a framework for regular national, regional, provincial and communal consultations with local populations on local and rural development. At the communal level, the cadre de concertation provides a framework for (1) exchanges between different actors on the development and implementation of community development plans; (2) information and training of different actors; (3) mobilizing human, technical, financial and material resources to implement the PCDs; (4) harmonizing interventions in the commune and the collection and dissemination of statistics; (5) capitalizing good practice in local development. It is managed by a president (the Mayor), a Vice-President (DREP representative), 2 Secretaries (the Secretary General and the President of the Council Commission on Environment and Local Development). The membership includes: heads of departmental technical services, presidents of CVDs, representatives of projects and programs involved in the commune, 2 representatives from NGOs or associations with headquarters in the commune, 3 representatives of private sector operators in the commune, one representative of union organizations present in the commune, 2 representatives of civil society 2 representatives of youth organizations, 2 representatives of women's associations, 3 representatives of professional and producer organizations, 3 representatives of religious authorities; 1 representative of customary authorities; one representative from the community radio. The mayor is required to convene 3 ordinary sessions of the cadre de concertation per year. Extraordinary sessions may also be arranged at the behest of the President or upon request from at least one third of the cadre de concertation membership.

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• Allowable expenses: goods, works and services. • Maximum size of the sub-project of the lesser of $200,000 equivalent or 100% of the

estimated cost of the subproject. • Safeguards Instruments (if required pursuant to the ESMF/RPF) prepared, disclosed and

approved by IDA prior to sub-grant award. • Prior review by IDA of the first 3 sub-projects regardless of costs, all subprojects

estimated to cost $50,000 equivalent or more and all subprojects requiring a safeguard instrument.

49. This component seeks to strengthen local government accountability for public resource utilization. It seeks to promote the development of a culture of local council oversight and citizen engagement in decision-making processes at the local level in the six selected regions. The component will support local community representatives to develop participatory monitoring practices and to use these to engage more substantively in dialogue with their local authorities. In so doing, it aims to strengthen the capacity of local councils and selected representatives of civil society and the community at the local level to voice their needs and to engage in monitoring local government performance. It will also reward local governments nationwide that adopt effective participatory local governance practices in public resource utilization. This component will be composed of the following sub-components:

Component 3 - Improving accountability linkages between local level policy makers and citizens (USD 5.94 million)

3.1 Strengthening local council and community oversight of local government performance:

50. Regional Non-Governmental Organizations (NGOs) will be recruited in each region to support local governance stakeholders, including locally elected officials (commune councilors) and representatives of local populations, in developing robust accountability and transparency practices. Representatives of local populations include civil society actors, religious and customary leaders and producer organizations represented in the village development councils—Conseils Villageois de Développement (CVD). This component will include the following specific activities: (i) regional NGOs will conduct local sensitization campaigns to strengthen local stakeholders’ understanding of decentralization and their roles and responsibilities in local governance; (ii) regional NGOs will support local communes in organizing inclusive and open council and cadre de concertation meetings to engage more effectively with local populations; (iii) regional NGOs will support municipal councilors and community representatives to strengthen their engagement in decision-making and monitoring processes; (iv) regional NGOs will prepare annual performance reports of different actors; and (v) an independent citizens perception survey will be conducted to measure improvements in citizen perception of communal performance over the course of the project. This sub-component draws upon the knowledge-sharing and capacity-building experiences of the Japanese Social Development Fund (JSDF)-supported ‘Community Monitoring for Better Health and Education Service Delivery Project’.

3.2 Recognizing and rewarding good local governance practices through competitive sub- grants:

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51. This sub-component will build upon the methodology piloted in the Competition for Excellence in Local Governance Project (COPEGOL).16

• Accountability: Transparency, Participation and Responsiveness.

The COPEGOL initiative is a nation-wide competition, open to all 351 communes, which recognizes and promotes open, transparent and participatory local governance practices by rewarding good performance in the areas of planning, financial management (budgeting and revenue collection practices), procurement, service delivery and monitoring and evaluation. The evaluation framework for good practices has 4 main assessment categories:

• Innovation: Degree of Local Initiation (whether it goes beyond requirements and whether the practice was initiated directly by local actors vs. external actors, donors etc.).

• Socio-economic Impact: Degree of social-inclusion and empowerment of vulnerable groups.

• Sustainability: Degree of Technical feasibility, financial feasibility and formalization.

52. This sub-component will finance the further development of this competitive program and sub-grants under this program to reward a selected number of urban and rural communes in all 13 regions. The number of winning communes in each region will be determined by a simple formula: 1 urban commune per region and 1 rural commune per 10 rural communes in each region. According to this formula, a maximum of 13 urban communes and 29 rural communes will be eligible for rewards financing. The selection will be completed by a national selection committee made up of government and civil society representatives based on a rigorous validation process through field visits to shortlisted communes. Sub-grants of $ 25,000 for urban communes and $ 10,000 for rural communes will be provided to finance sub-projects included in the commune’s annual development plan. The good practices of these communes will be promoted and disseminated at national and regional levels. 53. The sub-grants made under Component 3 will be aligned with the legal mandate of communes. They should meet the standard eligibility criteria of the World Bank, including appraisal of the sub-projects to confirm their technical, economic and financial feasibility as well as the soundness of the institutional arrangements for implementation. The following conditions would apply to these sub-grants:

• Subprojects should cover activities listed in the communal development plan (Plan communal de development, PCD); and will be subject to prior IDA review to ensure compliance with the project’s overall design as well as World Bank’s environmental and social safeguards.

• Allowable expenses: goods, works and services. • Maximum size of the sub-project of the lesser of $25,000 equivalent for urban

communes and $10,000 for rural communes equivalent or 100% of the estimated cost of the subproject;

• Safeguards Instruments (if required pursuant to the ESMF/RPF) prepared, disclosed and approved by IDA prior to sub-grant award.

• Prior review by IDA of all sub-projects.

16 Please visit COPEGOL website for more information: http://www.worldbank.org/copegol

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54. This component will provide project management support to the project coordination unit (PCU) in project implementation and support regular project evaluations as well as procurement and safeguards reviews and financial reporting and auditing. Currently, the capacity of the PCU is very limited. The PCU will make arrangements with the existing PNGT coordination unit to receive support from them. The cost of this support will be financed through the counterpart funds ($5 million) provided by the Government for the Project.

Component 4: Project management and evaluation (USD 10 million of which $4.65 million IDA financing)

B. Project Financing 1. Lending Instrument

55. The lending instrument chosen for Bank support is an APL. The APL is considered the most appropriate instrument when sustained effort, partnership and continuity are required to achieve long-term policy objectives. Effective decentralization in Burkina Faso will require long-term sustained support. In the initial phase, the program will support institutional development of local governments to take charge of responsibilities specified in the CGCT in the selected six regions. The second phase of the program will extend coverage to the other seven regions taking into account the lessons learned from the first phase. A phased approach will provide enough time for the central government to implement its deconcentration plans and tackle the more difficult issues of sectoral decentralization to clarify roles and responsibilities of different levels of government in service delivery.

2. Project Cost and Financing

Project Components

Project Cost

(US$m)

IDA Financing

(US$m)

Government

Financing

% IDA Financin

g

1. Support to Central Government for Strengthening Intergovernmental Fiscal and Administrative Systems

9.80 9.80

100 %

i. Support for High Level Policy Making 2.05 2.05

ii. Support to Ministry of Finance (Fiscal Decentralization)

4.25 4.25

iii. Support to the Ministry of Territorial

Administration, Decentralization and Security (Administrative Decentralization)

3.51 3.51

2. Strengthening organizational, institutional and individual capacities at the local level to manage local development

37.98 37.98

100 %

3. Improving accountability linkages between local level policy makers and citizens

5.94 5.94

100 %

i. Council and community oversight of local government performance

2.94 2.94

ii. Local government competition 3.00 3.00

4. Project Management and Evaluation

i. PNGT’s costs (Govt)

ii. All other expenditures

9.65 5.0

4.65

4.65

4.65

5.0 5.0

0 % 100 %

Total Base Cost 58.38 58.38 100 %

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Physical/Price Contingencies 1.63 1.63

Total Financing Required 65.00 60.00 5.00 100 %

C. Lessons Learned and Reflected in the Project Design 56. In Burkina Faso, the Bank has gathered substantial experience from the PNGT:

57. Harmonization of interventions around the government’s policies is a critical element of success. The sustained success of the PNGT program reflects the program’s efforts to support the government’s evolving vision on decentralization. In the first phase, the operation supported existing village development councils (CVGT) in developing and implementing their annual investment programs. With the election of local municipal councils in rural areas in 2006, the second phase of the program supports local municipalities in developing and implementing their Communal Development Plans (Plan communal de development--PCD). The proposed project continues to align closely with government policy on decentralization, supporting the implementation of the government’s organigramme on basic municipal services, functions and staffing requirements and the National Local Government Capacity Development Strategy.

58. Supporting champions of decentralization in the government and civil society is important. The Bank’s contribution to policy dialogue on decentralization is an important catalyst in putting the CGCT into the practice. Strategic support to champions of decentralization within the government and in civil society has proved essential in avoiding the blocking of reforms by entrenched bureaucratic interests. The proposed project seeks to equip high level decision makers, bureaucrats, mayors, local councilors and local civil society actors with resources, expertise and/or advice to strengthen their respective roles in championing effective decentralization in Burkina Faso.

59. Capacity building efforts need to be grounded in a ‘learning by doing’ methodology.

60. The Bank has also gathered substantial experience from the PRCA and PRD operations and from the PRSC series.

Experimental learning at the village level was one of the key success factors in the implementation of the first phase of the PNGT. The proposed project seeks to provide communes with flexible financing based on their articulated needs, to empower them to prioritize and experiment with different approaches to achieve performance results.

61. Lessons learned from the Administrative Capacity Building Project (PRCA):

62. Preparation for project implementation is critical: Detailed preparation and budgeting of major project activities during project preparation is critical to ensuring smooth and efficient implementation. A failure to provide financial or in-kind resources to facilitate communication, transport and/or other preparation activities hampers project implementation. The PRCA has recruited a procurement specialist with previous experience working on World Bank projects. In addition, the Project Preparation Facility (PPF) has enabled the project coordination unit to undertake important preliminary work to support project implementation.

63. Building the capacity of institutions yields better returns than building the capacity of individuals. While a good relationship with an individual may help move project implementation forward for a given time, PRCA’s teaching in this respect revealed that leading individuals may be called for a different assignment during project implementation, resulting in the incursion of significant delays during project implementation. Although strengthening the capacity of an

19

institution to take up the lead of a project may well cause delays at the start of project implementation, building the capacity of an institution as opposed to an individual’s will ensure that the project moves forward once ownership has been granted.

64. Lessons learned from the Decentralized Urban Capacity Building Project (PRD):

65. Government ownership of the project and its components are critical to successful implementation.

66. Lessons learned from Poverty Reduction Support Credit/Grant Series (PRSC/G):

The implication of government focal points is paramount to ensuring successful project implementation and it ultimately determines the level of ownership by the client. A close results-based monitoring of activities is required on the part of focal points to ensure that planned activities are prioritized over ad-hoc project activities.

67. Link effectively targeted development policy lending to complementary technical and financial support:

68. There are also lessons to be learned from other international experience from local government institutional strengthening programs that the Bank has supported over the past decade in a number of diverse countries including Uganda, Tanzania, Ethiopia, Cambodia, Indonesia, Bangladesh and a number of states in India. This project has design features that are very similar to those projects. Important lessons learned from other local government support projects are:

The lessons of the fifth programmatic PRSC/G series are also instructive for the project and its synergies with development policy lending. As the PRSG 11 highlights, triggers to advance decentralization were dropped from the operation on the basis that measures included in PRSC9 and PRSG10 did not produce adequate results. In part, the triggers had limited effectiveness because their design was not adequately linked with operational technical and financial support to the government to develop the architecture for fiscal transfers. The fiscal decentralization triggers were also hamstrung by central government reluctance to devolve resources to local governments with weak capacity. The lack of operational support to address the capacity issues at local levels therefore had an impact on the effectiveness of the triggers. As the PRSG11 indicates, the proposed project will support the government in (i) improving the architecture of intergovernmental fiscal architecture; (ii) strengthening the capacity of communes to manage resources effectively and; (iii) identifying further policy reforms needed to advance effective decentralization.

69. The achievements of supply-side capacity building measures aimed at local governments in the absence of demand-side incentives have been limited.17

17 World Bank (2009) Local Government Discretion and Accountability: Application of a Local Governance Framework. Report No. 49059 GLB. Washington, DC: World Bank.

Even when accountability is taken into account, the efforts tend to emphasize either the supply or the demand side of the accountability equation, but not both. There is growing evidence that building appropriate local governance structures requires bridging the supply and demand side so that local governments can be downwardly accountable to citizens. Institutional strengthening initiatives, such as systems development (in areas like financial management and planning) and training, are considerably more effective when they are designed as a part of broader systems improvements and linked with an incentive mechanisms which creates demand on the part of targeted local governments. With appropriate incentives, local governments have responded by taking advantage of these capacity building activities and have demonstrated greater commitment to inculcating them into their ongoing operations. The project adopts this approach through basing

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actual access to the institutional development funds provided under Component 2 on improvements in institutional performance which will be evaluated by clearly defined criteria, including demand-side elements.

70. Project implementation can easily become overwhelmed if the scope of the project and the number of local governments covered is too wide and if national coverage of interventions is not phased in gradually. Accordingly, the project focuses on only 6 regions where other donor activities (particularly EU) already provide significant support to the MATDS and regional governments. This will ensure that they will be sufficiently capacitated to establish support systems to municipal governments which will mitigate implementation risks in the first years of project implementation.

71. Recent implementation experiences have highlighted the importance of developing robust, clearly understood and well-supported implementation arrangements

72. Finally, the design of the social accountability initiatives in the project has drawn extensively on information gathered from ongoing pilot initiatives, namely the JSDF-supported Community Monitoring for better Health and Education Service Delivery Project and Trust Fund for Environmentally and Socially Sustainable Development (TFESSD)-supported Competition for Excellence in Local Governance Project, in addition to valuable experience and lessons learned from the PNGT. These initiatives have highlighted the importance of identifying capable individuals and institutions to implement processes. The project’s social accountability initiatives will capitalize on the existing pilots’ and the CDD program’s identification of capable actors.

that are mainstreamed into core government functions. The design and implementation readiness activities undertaken during preparation have taken specific account of these experiences.

4. Implementation A. Institutional and Implementation Arrangements

73. The Prime Minister’s Office will have overall responsibility for the project. An existing steering committee within the Prime Minister’s office18

74. The MATDS will be the entity designated by the Prime Minister’s Office to manage the project coordination unit (PCU). The Secretary General (SG) of the MATDS will be in charge of overall project management and evaluation activities.

will be charged with overseeing the overall implementation of the project.

75. This approach recognizes the need to strengthen and empower the ministries responsible for implementing the different aspects of the government’s decentralization policy. It also reflects the important convening role that the Prime Minister’s Office will play in coordinating and overseeing project implementation and the implementation of decentralization more broadly.

76. The management of components in the project will be undertaken within the current line function responsibilities of responsible government departments and agencies, under the leadership of existing senior managers in the civil service. Ministerial divisions within the MEF will manage the implementation of Component 1.2. Ministerial divisions within the MATDS will manage the remainder of the project’s components: The DGCT will have overall responsibility for Component 2, with the Department for Planning and Analysis (Direction des etudes et de la

18 The Steering Committee established for the Bank-financed PRCA which was also charged with responsibility for the preparation of the Local Government Support Project.

21

Planification – DEP), Department for Administrative and Financial Affairs (Direction des Affaires Administratives et Financieres – DAF) and Procurement Unit (Personne Responsible des Marchés – PRM) managing disbursements under Component 2; and Component 3 will be managed by the General Department for Public Liberty and Political Affairs (Directeur General Liberte Publique et des Affairs Politiques - DGLPAP). The PCU within MATDS will manage Component 4. The PCU will, no later than three months after the Effective Date, employ: (i) an environmental and social safeguards expert; (ii) a monitoring and evaluation expert; and (iii) an accountant. Currently, the capacity of the PCU is very weak. The PCU will therefore make arrangements with the existing PNGT coordination unit to receive support from them. The cost of this support from PNGT will be financed through counterpart funds.

77. In support of the institutional strengthening objective of the project, project management will be mainstreamed into regular government functions. The government has confirmed that any staff assigned to the project will have their workloads adjusted to accommodate the demands of the project and will allow sufficient time for them to devote to project implementation activities. Government staff will be supported by experts who will be appointed on contract. Key activities that require long-term consultants to support existing staff include procurement, financial management, monitoring and evaluation, communication and safeguards compliance, while other activities may require shorter-term, more intermittent support.

B. Results Monitoring and Evaluation 78. The project monitoring and evaluation (M&E) will help the PCU in tracking results and impacts of the project by establishing a functional M&E system at the local and central levels. The overall responsibility for project M&E will rest with the PCU. To carry out this responsibility, a central M&E unit will be created within the PCU that will be staffed with at least one full time staff member hired under the project preparation advance. The unit will equipped with technical resources including IT hardware and software and a management information system (MIS). The unit will generally be responsible for (i) overseeing the day-to-day M&E tasks at the central and local levels; (ii) quality control of the information received from local levels; and (iii) periodic reporting and compilation of annual progress reports on the implementation of the project. The specific reporting formats will be outlined in the M&E operational manual, which will be part of the Project Implementation Manuals. The main results and impacts to be tracked will focus on the implementation of decentralization measures by the central government, the enhancement of local institutional commune capacity and the engagement of citizens in decision-making and monitoring processes at the local level.

79. The M&E system will build on the successfully established monitoring structures of the PNGT. The project aims to complement and strengthen the existing structures in order to sustainably strengthen national and local level capacity to monitor and evaluate decentralization in Burkina. At the local level, the PNGT has already put in place M&E structures. The project will use the same structures and reinforce them by providing resources to communes to enable them to recruit a local staff member to work part-time on M&E. The commune M&E officer will be responsible for collecting commune level information (including the information required in the results framework) and for transmitting this information to the regional administration in charge of M&E. A synthesized report of commune level data will be sent to the PCU through a shared management information system (MIS). The PNGT will also share with the PCU all relevant surveys and audits carried out by the PNGT.

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80. The reporting of commune level data will be complemented by central government and regional administration information records as well as citizen perception surveys that will include a communal administrative survey module (baseline, mid-term, and project end). Separate reviews will also be commissioned to assess specific aspects of the project, such as procurement reviews, value for money audits, and other technical audits.

81. Apart from the more focused project M&E tasks, the project aims to strengthen the ability of both central and local governments, as well as citizens, to collect data and monitor results. The support should eventually build the monitoring and data collection capacity within MATDS to carry out their own, as well as the project, M&E functions. Component 1 will therefore complement ongoing and planned development partner support to reforming and strengthening data collection systems at the central level. This will include support for reviewing municipal budgets, annual work and procurement plans ensuring expenditure objectives, and procurement and safeguards adherence. Through the institutional development support under Component 2, the project will strengthen communes’ capacities to collect data. In Component 3, MATDS will receive support for consolidating and monitoring the progress of regional NGO initiatives to strengthen social accountability.

82. Component 3 will also support local community representatives to develop participatory monitoring practices and to use these to engage more substantively in dialogue with their local authorities.

C. Sustainability 83. The long term sustainability of the program hinges on two major axes:

Government’s commitment to the decentralization policy:

84. Policy sustainability prospects are strong, given government commitments to decentralization that are expressed in recent policy statements, detailed action plans, legislative commitments and recent organisational changes in national ministries. This does not mean that the project will be unaffected by political changes should they take place, but that the project is unlikely to be existentially threatened by them. The primary policy challenge is that of ensuring the sequenced, coherent implementation of the articulated decentralisation programme in a time-bound manner. The project intends to further deepen and strengthen the processes already underway and should play a significant role in securing the gains that have already been made, in particular through strengthening local level demand for decentralization by municipalities and citizens.

85. The project development objective reflects the longer-term objective of establishing strong local government institutions. Concerted efforts are required to ensure the financial and administrative viability of local governments. The project will support 40% of Burkina Faso’s 351 municipalities. The government already makes contributions to municipalities, most notably through dotation globales. Local level institutional sustainability requires, on the one hand, continued government roll-out of reforms related to the deconcentration of key ministries and the transfer of sectoral responsibilities to the control of local governments. On the other hand, it also requires an increase in the capacity of local governments to collect local revenue to sustain their administrative functions. While the government has committed itself to putting in place an administrative staff to support the functioning of local governments, the implementation is taking time and resources are limited. There is a need to accelerate these efforts to transfer human and

Sustainability of local government management capacity:

23

financial responsibilities to the local level. The project will provide support to the MEF and MATDS in the implementation of their deconcentration plans to accompany and support local authorities. There is also a need to strengthen the capacity of local governments to raise revenue to support administrative staff in the future. The project will provide resources for communes to establish basic financial management structures for revenue collection.

5. Key Risks and Mitigation Measures 86. The Risk Rating for project preparation is assessed as Moderate. The Risk Rating for project implementation is assessed as Moderate.

87. A principal risk to the implementation and sustainability of the project is the risk of weak government commitment and support for decentralization (especially in areas related to administrative and fiscal decentralization) and support for rural municipalities in particular. Despite the development of a comprehensive legal, policy and regulatory decentralization framework in Burkina Faso, the pace of reform implementation has been relatively slow. The risk of the decentralization agenda being discontinued altogether is presently considered to be low - the clearly articulated government commitments to decentralisation that are expressed in recent policy statements, detailed action plans, legislative commitments and recent organisational changes in national ministries indicate that the decentralization agenda is embedded into the political and institutional fabric of the country. And from a technical perspective, there is recent acknowledgement of the importance of decentralization as a means of improving service delivery and enhance accountability and development outcomes. From a political perspective, however, there is a risk, particularly given the recent political crisis, that the government’s commitment to effective decentralization may not represent a top priority. Recent government announcements have indicated continued government support for the decentralization, though it is too early to tell the extent to which this can be put in practice. Meanwhile, the project will tackle local level capacity deficits thereby catalysing improvements in local government, strengthening their capacity and the capacity of local populations to influence local development decision making processes. Accordingly, the project aims to facilitate implementation of decentralization reforms. The project also seeks to partner with other large donors to promote acceleration of reform implementation. Finally, the APL structure of the program allows for decentralization support to be progressively premised upon clearly defined indications of continued government commitment to decentralization, as specified in the triggers for the second phase.

88. Other risks identified include: i) coordination between national level government stakeholders for the project (for example between MATDS and MEF); ii) capacity constraints in central implementing agencies, particularly in MATDS; iii) capacity constraints at the municipal level (including procurement, financial management, reporting and safeguards compliance); and iv) institutional and financial sustainability of project interventions.

89. The project design takes into consideration the above mentioned risks through the following mitigating measures: (i) strengthening coordination of the project through mutually dependent interventions including support to the VPD process led by the Prime Minister’s Office and strengthening inter-ministerial cooperation, through the existing steering committee headed by the Secretary General of the Prime Minister’s Office; (ii) providing technical assistance support to address capacity constraints of central level agencies, including in procurement oversight and management, fiscal reforms, and financial management; (iii) providing a targeted capacity support program to participating municipalities; and (iv) addressing sustainability challenges through creating strong local governments with better management, higher revenues and

24

improved social accountability. In addition, the project approach of supporting systemic improvements rather than focusing on ring-fenced project funding will contribute to improvements in the overall intergovernmental fiscal framework (including budgeting, reporting, audits, procurement, social accountability and revenue) for all local governments in Burkina Faso, thereby directly contributing to the consolidation of a sustainable and more efficient government system.

6. Appraisal Summary A. Economic and Financial Analysis

90. The government has embarked upon decentralization reforms aimed at improving local governance and service delivery. The project will contribute to this reform process by supporting the strengthening of intergovernmental fiscal and administrative institutions and local government management capacity. It will contribute to the government’s efforts to establish sustainable local government management systems through the provision of additional funds (about $ 38 million). It is estimated that local governments in the participating six regions will receive, on average, a total amount equivalent to $ 5 per capita over the project period.

91. In terms of a cost-benefit analysis, the project seeks to strengthen local government administration, leading to better management of local governments and improved managerial efficiencies. While these benefits are expected to be significant, they are not easy to quantify. Institutional development grants will finance the implementation of institutional development plans. However, the actual composition of spending items under the second component cannot be determined a priori since the choice of investment will result from an institutional development planning process to be conducted during project implementation.

92. Emerging operational evidence of similar projects suggests that there are potential efficiency gains that can be derived from implementing decentralization reforms supported by this project. Implementation of the project is likely to result in a reduction of transaction costs associated with the delivery of local services due to (a) improved predictability and reliability of transfers from the central government to local governments; (b) improved public financial management capacity at the local level resulting in better budget execution, reporting and accounting practices; (c) improved administrative capacity at the local level resulting in improved responsiveness of municipal governments to citizens’ concerns, needs and requests; and (d) improved accountability linkages between local decision makers and citizens, resulting in better living conditions and reduced social conflicts.19

93. In the absence of hard evidence on economic rates of return and economic costs and benefits of institutional strengthening, the project proposes to strengthen MATDS’s capacity to collect data and monitor the cost effectiveness of municipal institutional development plans. The MATDS will conduct a cost effectiveness review of a range of plans as part of the mid-term and end-of-project evaluations.

B. Technical 94. Municipal governments will be responsible for developing the institutional development plans that will be financed by the project. Currently, the capacity of municipal governments to develop plans and to execute them is very weak. For an initial period of project implementation,

19 About the history of social conflicts at the local see Harsch E. 2009. Urban Protest in Burkina Faso. African Affairs 108 (431): 263-288 and Hagberg S. 2007. Traditional Chieftaincy, Party Politics and Political Violence in Burkina Faso. In State Recognition and Democratization in Sub-Saharan Africa, Buur, L. Kyed, H. M. (eds). Palgrave Macmillan: Hampshire; 131-154.

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the project coordination unit will arrange with the existing PNGT coordination unit to provide support through its regional offices to local governments in developing their plans and in implementing them. The Government intends to create a legal framework for the establishment of regional development agencies (Agencies Regionales de Developpement--ARD). The ARDs will be staffed with specialists capable of supporting local municipalities in realizing local development activities. Once established, the ARDs will play an important role in providing technical support to local governments in development planning, budget execution and service delivery and will take over from the PNGT regional offices in supporting the project. The ARDs will report to regional municipal councils. The project will also strengthen processes for community participation in project planning and execution. Support from the PNGT regional teams, support for the establishment of ARDs and high levels of community involvement are expected to lead to improved technical quality of the project.

C. Financial Management 95. A financial management assessment of PCU and executing entities involved in the Project was conducted in accordance with the Financial Management Manual and AFTFM ORAF guidelines. The conclusion of the Financial Management Assessment is that, upon implementation of the mitigation measures proposed below, the overall project arrangements satisfy the Bank’s requirements under OP/BP10.02 to provide, with reasonable assurance, accurate and timely information on the status of the execution of the project. The overall FM risk at preparation is considered Moderate. 96. The assessment recommended among other measures (i) the elaboration of a project implementation manual including detailed Financial Management (FM) procedures (as a condition of effectiveness); (ii) the recruitment of one accountant (covenant: by 3 months after effectiveness), (iii) the appointment of the an external auditor (covenant: by 3 months after effectiveness), and (iv) the conclusion of arrangements with PNGT with the aim for the PCU to benefit from FM technical assistance from PNGT to oversee municipalities operations (operationalizing of suitable PCU a condition of effectiveness). Details on the Financial Management arrangements for this project are included under Annex 3. 97. The project will be implemented under the auspices of the Prime Minister’s Office. The project will be budgeted as part of the government’s budgetary processes and release of funds as well as accounting procedures will follow established government systems which are considered adequate as far as the implementing entities are concerned. FM staff (one finance manager and one accountant) of the closing Administrative Capacity Building project anchored in the Prime Minister’s Office will be transferred to the PCU. During the first year, PNGT will support the PCU in overseeing the municipalities control environment by using the fiduciary framework developed and enforced under the PNGT and by adopting a results-oriented approach to assessing local government performance. To this end PNGT is expected to hire an accountant whom could be redeployed to the PCU afterward. This framework was built on a series of controls performed by PNGT regional coordination units. Each unit is staffed with an accountant. At the commune level, FM team consists of a public accountant and a financial controller, the Mayor acts as budget holder. PNGT will train the PCU FM staff with the aim of transferring their expertise in applying controls on municipalities. A Designated Account will be opened at the Central Bank and a Transactions Account will be opened at the Public Treasury in order to replenish the municipalities’ accounts which are located in this institution. The Transactions Account will be replenished based on need. The annual financial statements prepared by the PCU as well as internal control system applied will be subject to an annual audit

26

to be performed by an external auditor. The Government will also open a separate account in the Treasury for counterpart funds required for the Project (“Counterpart Funds Account). Deposits will be made on a quarterly basis in amounts agreed with IDA under the Annual Work Program (updated by the quarterly IFRs), with the first deposit being made not later than 3 months after the Effective Date. The proceeds of the Counterpart Funds Account will be used exclusively to pay for expenditures included in the Annual Work Program described in Annex 3.

In order to further strengthen the fiduciary arrangements, ex-post audits of community subprojects will be conducted to confirm that funds transferred to the municipalities under Components 3.2 and 2 have been spent for the purposes intended and that the community has received value for money. Detailed FM and disbursement arrangements are discussed in Annex 3.

D. Procurement 98. Procurement for the proposed Project would be carried out accordance with the World Bank’s “Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011 and ``Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011, and the provisions stipulated in the Financing Agreement. For each contract to be financed by the Grant, the procurement plan will define the appropriate procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, the prior review requirements, and the time frame. The Procurement Plan will be updated at least annually, or as required, to reflect the actual project implementation needs and improvements in institutional capacity. The overall procurement risk at preparation is considered Substantial. 99. The procurement procedures, thresholds and other detailed procurement information are found in Annex 3. The procurement assessment found that the former Coordination Unit of the Administration Capacity Building Project which will have the overall responsibility of procurement activities is well staffed by a confirmed procurement specialist who has strong experience in the Bank procurement procedures. The PNGT Coordination Unit which will give technical assistance for the implementation of Component 2 also has a procurement specialist with strong procurement experience. The mains risks identified during the assessment are the following: (i) the limited experience of the PRM of the MATDS and the MEF in the Bank procurement procedures, (ii) the weak capacity of the local communities and the mobility of their representatives, (iii) the lack of CDD procedures in the national procurement law yields a high risk that communes will experience procurement difficulties thereby leading to low disbursements in Component 2; (iv) the prior review of the DGMP of all the contracts estimated to cost $2,000 could delay some processes. Adequate Mitigation Measures to address the abovementioned risks are outlined in Annex 3.

E. Social (including safeguards) 100. The social impacts of the proposed project activities are expected to be positive. The activities to be undertaken by the municipalities will improve their capacity to deliver better services, be transparent and use resources effectively, thereby improving the living conditions of their respective communities. The concept of social accountability is strongly embedded in project activities. Together with other interventions, it is expected that the project will enhance development and ensure greater engagement of project beneficiaries in local decision-making processes. Specific attention will also be paid to gender inequalities. The project will promote

27

participation and representation of marginalized groups, particularly women, in decision-making and monitoring of commune performance.

101. From a social safeguards perspective, the activities that are likely to be undertaken by the municipalities under Sub-projects (under Components 2 and 3) are unlikely to have an impact on livelihoods, restrict access or involve land acquisition, though this cannot be ruled out a priori since the subprojects have not yet been developed. The activities that are going to be undertaken by MEF (under component 1) will involve construction and minor works. The exact location of the sites is not known and will only be identified on an annual basis. In view of the above, the World Bank policy on involuntary resettlement, OP 4.12 is triggered, for which the government has prepared a Resettlement Policy Framework (RPF) to guide the response to any potential involuntary resettlement. The RPF has been prepared through a consultative process. The RFP was disclosed in the country on September 20, 2011 as well as at the World Bank’s Infoshop on September 14, 2011. Any resettlement that may be required under a Sub-project will be identified during the appraisal of the Sub-project, and a RAP will be prepared, disclosed and subject to IDA approval prior to the award of the Sub-grant. Similarly, activities under Component 1 will be identified annually and detailed in the Annual Work Program which the Recipient will be required to prepare and furnish (by November 30 of the preceding year) to IDA for approval. If any resettlement would be required in connection with these activities, a RAP for these activities will be included in the Annual Work Program furnished to IDA for approval. Proposed Sub-projects for the following year, together with any RAPs required for them will also be included in the Annual Work Program. During the selection of construction sites and the sitting alignment of construction activities all alternative options will be considered to avoid involuntary resettlement. A resettlement action plan will be prepared for any activities involving resettlement. The project coordination unit will be responsible for implementing and monitoring of the RPF.

F. Environment (including safeguards) 102. The project is category B. The environmental safeguard issues of the proposed project are associated with the first, second and third component activities. The Recipient will provide sub-grants to municipalities for Sub-projects that may involve small scale civil works such building rehabilitation, building an extension to existing buildings, etc. In addition, Component 1 will involve some construction, though the sites are not currently known and will be identified each year during implementation as part of the Annual Work Program.

103. The overall environmental impact of the project is expected to be positive. Significant positive impact on the natural and socioeconomic environments is likely to result from the implementation of activities on the part of participating municipalities. By developing institutional capacity, the capacity of the municipalities to deliver quality services will be improved. However, some negative impacts may arise during project implementation. Such negative but limited impacts on soil, air, water, noise environments and surrounding communities, could occur essentially during construction. These impacts will be temporal, localized, and with proper mitigation measures during the implementation of the project, they be could minimized or even eliminated.

104. At the time of project appraisal, the exact location, nature and number of investments and/or services are not known under any of the components. Thus, the appropriate environmental safeguards instrument, an Environmental and Social Management Framework (ESMF), has been prepared to ensure that all investments are adequately screened for their potential environmental

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and social impacts, and that correct procedures are followed to mitigate and minimize any potential negative impacts arising from these investments. The ESMF has been prepared through a consultative process. It was disclosed at the World Bank’s Infoshop on May 9, 2011 as well as in the country on September 8, 2011. Any EA or EMP that may be required under a Sub-project will be identified during the appraisal of the Sub-project, and the EA and any needed EMP will be prepared, disclosed and subject to IDA approval prior to the award of the Sub-grant. Similarly, activities under Component 1 will be identified annually and detailed in the Annual Work Program which the Recipient will be required to prepare and furnish (by November 30 of the preceding year) to IDA for approval. If these activities would require an EA or EMP, the EA/EMP for these activities will be included in the Annual Work Program furnished to IDA for approval. Proposed Sub-projects for the following year, together with any EA/EMP required for them will also be included in the Annual Work Program. Environmental screening of each sub-project will be part of the annual work program preparations. During the design of sub-projects and other Project activities, all alternative options will be considered to minimize environmental impact. An environmental impact assessment will be prepared for activities with potential adverse environmental impact. The project coordination unit will be responsible for implementing and monitoring of the ESMF.

G. Governance 105. A critical factor in the ongoing public unrest in Burkina Faso relates to the perceived lack of accountability and responsiveness on the part of the central government. The decentralization process is intended to facilitate better accountability and allocative efficiency in resource allocation and social service delivery by creating closer proximity between local populations and local governments / service delivery agents. In practice however, accountability in Burkina Faso is oriented upward, rather than downward. Central government retains large ex-ante controls on most municipal decisions, through the exercise of tutelle powers. Although public accountability structures in the form of local municipal councils exist, their authority is limited and they have minimal incentives or capacity to fulfill their oversight and representation functions. Downwards accountability towards citizens remains particularly weak, in part due to the limited capacity of local populations and civil society to actively engage and in part due to the poor organization of formal consultation/participation mechanisms. The recent events in Burkina Faso have, however, shown that local populations are gradually breaking away from their cultural and historical reticence to hold Government accountable. Annex 7 provides a detailed analysis of the accountability failures that exist at the local level in Burkina Faso.

106. The proposed project seeks to target critical accountability failures related to the process of decentralization in order to achieve improved service delivery outcomes and enhance accountability and good governance in public resource allocation. A key aspect of the project is its central focus on empowering citizens, with a particular focus on women, to hold local government accountable – harnessing the momentum that has been generated through the recent displays of public unrest. It targets institutional reform to enhance the capacity of municipal councils and local communities to oversee municipal performance by regularizing their engagement with local authorities, enhancing the accessibility of the information that they receive and by deepening their understanding of roles and responsibilities and tools for participatory monitoring. It capitalizes upon formal consultative fora at the local level (public municipal council sessions, cadre de concertation meetings), by anchoring municipal council and community interactions with the commune in these fora and by ensuring that the organization of consultative sessions is adequately resourced. With respect to access to

29

information, the proposed project will provide resources to communes to facilitate the dissemination of accessible information to local populations.

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Annex 1: Results Framework and Monitoring

BURKINA FASO: LOCAL GOVERNMENT SUPPORT PROJECT Project Development Objective (PDO)

PDO Level Results Indicators*

: To strengthen the central government’s capacity for and institutional capacities of municipalities (“communes”) in six regions, and to improve accountability linkages between local policy makers and citizens in said municipalities.

Cor

e Unit of Measure

Base-line

Cumulative Target Values** Freque

ncy

Data Source/

Methodology

Respon-sibility for

Data Collection

Description (indicator definition etc.)

Dec.’12 Dec.’13 Dec.’14 Dec.’15 Dec.’16

Indicator One: Institutional/local: Deviation of commune level budget implementation from initially approved annual communal budget

% 40% - 16%* 12%* 8%* 4%* Annual from

second year

onward

Communal budgets in municipal

records and central

administrative records

PACT PCU Measures local government’s institutional capacity. Based on the difference between the ‘budget primitif’and the ‘compte administratif’ records. Level of data availability: (local commune)

Indicator Two: Fiscal, admin./central: Actual availability of funds to communes committed by the central government earlier in the budget cycle

Date/month

30 April 2011

No later than 30 April 2012

No later than 31 March 2012



No later than 28

February 2016

Annual Central Administrative records

PACT PCU through MEF & MATDS

Measures the actual availability of all funds by the central government to local governments. Level of data availability: central (MEF)

Indicator Three: Fiscal, admin./central: Notification of indicative allocation of transfer amounts by central government to each commune government by November of preceding fiscal year

y/n No No Yes Yes Yes Yes Annual Central Budget Records


Information will be taken from the “projet arretés”. Notification to include indicative allocations for all general dotations and sectoral transfers (according to the sectoral competencies actually delegated to each commune). Level of data availability: central (MEF)

Indicator Four: Administrative/local: Increase in the execution rate of annual commune procurement plan**

% 0 - 10%* 10%* 5%* 5%* Annual from

second year

onward

Communal records kept by M&E officer

MEF & MATDS

Execution rate will be measured in terms of monetary value: the share of monetary value of executed procurement plan in total monetary value of the procurement plan. Measures administrative capacity

Indicator Five: Institutional/local: Increase in local taxes collected for the commune governments

% 0 - 7%* 10%* 12%* 15%* Annual from

second year

onward

Budgets in communal

records

PACT PCU Local taxes include mortmain, residency, firearms, land and license tax as well as informal sector contribution Level of data availability: local

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(commune)

Indicator Six: Institutional/local: Direct project beneficiaries (number), of which female (percentage)

Yes

% 0 - 1000 (of which 15%

female)

2000 (of which 25 % female)

3000 (of which 40%

female)

4000 (of which 50%

female)

Annual from

second year

onwards

Communal records kept by M&E officer


Direct project beneficiaries are commune council members. The indicators measures commune council members trained– cumulative figures

Indicator Seven: Accountability/local: Increase in percentage of citizens rating commune government’s performance satisfactory

% 0 - - 40% - 70% Mid-term and final year

Citizen Satisfaction

Survey

MATDS This will be conducted by an independent agency recruited by the project coordination unit as an independent check on the work done by the commune government

*The percentage targets are indicative at this stage and will depend on the acquired baseline ** “communes” here and in what follows in the other indicators refers to the total number of 143 communes located in the 6 selected regions of the APL phase 1

INTERMEDIATE RESULTS Intermediate Results (Component One): Establishing the foundations of robust administrative and fiscal intergovernmental institutions Indicator One: Intergovernmental fiscal framework policy statement issued by the government

yes/no 0 - - - - yes Once Signed policy statement

PACT PCU through MATDS

Measures outcome of support of the policy dialogue process Level of data availability: central (MATDS)

Indicator Two: Sectoral decentralization reviews/service delivery guidelines completed

Number (cumul-ative)

0 1 3 5 7 8 Annual Central published

reports

PACT PCU through MATDS

Measures outcome of support of the policy dialogue process Level of data availability: central (MATDS)

Indicator Three: Number of government officials who participated in decentralization training courses and study tours

Number of persons (cumul-ative)

0 15 30 45 60 70 Annual Central records at MATDS

MATDS List of participants of training courses and study tours

Indicator Four: Communes that established local budget committees

% of total 0 - 65% 75% 85% 100% Annual from

second year

Communal records kept

by M&E officer

Regional MATDS

administrative records

Level of data availability: regional PNGT

Indicator Five: Commune officials find MEF ordinateur function for revenue collection carried out effectively at a regional level

% of total 0 - - 30% - 70% Mid-term and

final year

Communal administration survey as part

of citizen perception

survey

PACT PCU The survey will be run as a separate module in the citizen satisfaction survey.

Indicator Six: Communes that comply to 70 percent with organigramme

% of total 0 - 10% 15% 20% 30% Annual from

second year

Communal records kept

by M&E officer

PACT PCU What defines 70 percent compliance will be stipulated in the M&E manual once the decree on the organigramme is used by MATDS

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for territorial collectivities in terms of responsibilities and functions implemented on regional and commune level Intermediate Results (Component Two): Strengthening capacity of municipalities to manage local development Indicator One: Number of communes with council-validated Institutional Development Plans (IDP)

% 0 - 65% 75% 85% 100% Annual from

second year

Reports submitted to regional authority

MATDS The IDP needs to be validated in an open municipal council meeting.

Indicator Two: Communes that were awarded the consecutive budget allocations

% 0 - 50% 60% 70% - Annual from

second year

Assessment report from steering committee

MATDS This indicator will measure how successful communes are in implementing the IDP – it’s an indicator based on the whole range of evaluation criteria detailed in component 2

Indicator Three: Investments made for institutional capacity building: - people hired -people trained -construction and rehabilitation projects - office equipment items acquired - vehicles acquired

Number of -people; -construct-ions; - items purchased for office equip.; - vehicles

0 TBD TBD TBD TBD TBD Annual Communal records kept by M&E officer

MATDS The target values can only be determined with the development of IDP’s to have an estimate

Intermediate Results (Component Three): Improving accountability linkages between local level policy makers and citizens Indicator One: Increase in the number of people attending periodic/bi-annual public - “cadre de concertation” and - local council meetings

% 0

20%* 20%*

45%* 45%*

65%* 65%*

80%* 80%*

Annual Municipal Surveys/adm

inistrative records

PACT PCU

through MATDS

This should be an outcome of increased efforts by local administration to communicate about the local meetings and to invite participation. Level of data availability: Records held at commune by M&E responsible

Indicator Two: Increase in the number of people who state that they have received announcements of the “cadre de concertation” meetings and who can recall through which channel

% 0 - - 40% - 80% Mid-term and final year

Citizen Satisfaction

Survey

MATDS This will give an indication of what drives indicator one in the component three indicators.

Indicator Three: Communes submitting their candidacy documents to the annual regional competition

% of communes per region

0 - 30% 40% 50% 60% Annual from

second year

Regional Competition Records

MATDS This gives an indication of communication and hence awareness of communes of the competition.

**Target values should be entered for the years data will be available, not necessarily annually.

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Annex 2: Detailed Project Description The high level objective to which this project contributes is to strengthen the central government’s capacity for decentralization and the institutional capacities of communes in six regions, and to improve accountability linkages between local policy makers and citizens through:

(i) More robust intergovernmental administrative and fiscal institutions; (ii) Improved local government capacities in key areas in six regions; (iii) Increased local council oversight and citizen participation in local governance processes.

The project will provide an integrated package of support to build the capacity of municipalities in six regions. At the core of the intervention is an institutional development grant (Component 2) that provides a predictable flow of resources to municipalities, alongside their existing entitlement from the State e.g. DGE/DGF, TUPP and FPDCT. Together with regulatory reforms (Component 1) and specific measures to strengthen local accountability to citizens (Component 3), institutional development support will improve the capacity of local governments both in terms of administrative capacity and municipal council oversight capacity. This proposed systematic, dynamic and results-oriented approach to capacity building aims to provide an appropriate enabling policy, regulatory and fiscal environment at the national level to support efforts to strengthen local government capabilities. This ensures that the capacity of municipalities is built in relation to functions that they actually perform (“learning by doing”), and that they are held to account (by citizens and national government). At the same time, it encourages a shift towards results-oriented, gender-responsive local service delivery, by linking program resources to commune performance. The project will also assist the government to further develop its overall decentralization framework.

This first phase of the program focuses specifically on the 143 municipalities in the six selected regions. This phasing approach will give the government time to strengthen deconcentrated administrations in the regions (13), provinces (45) and departments (350) to accompany municipal government operations proximately. It will allow government to build capacity to manage the project and will enable a harnessing of lessons learned for the next batch of communes.

The project will complement and harmonize existing and planned support from other development partners to the overall decentralization framework of the government. At the community level, specific support to community investment needs is already being provided by several development partners, including the World Bank. The proposed project will harness existing support for local development investments by providing complementary administrative and institutional support to local governments to assist them in managing their local development mandates. At the regional and national level, the project also will also strengthen synergies with an EU program that is currently under preparation. The EU program will provide support (i) to strengthen the MATDS and its de-concentrated offices; (ii) to strengthen the MATDS M&E capacity and (iii) to create regional developments agencies (ARD). The proposed project will complement these initiatives by supporting the deconcentration of procurement and revenue collection functions, by enhancing intergovernmental administrative and fiscal arrangements at the central level and by targeting the capacity development of local municipal governments in the six regions covered by the EU program. Finally, the project will harness and complement a range of activities that are being supported by other development partners, including supporting

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local municipal staff to access training provided through the National Strategy on Capacity Development of Local Governments (which is supported by the German Development Cooperation) and strengthening the effectiveness of cadre de concertation meetings at the local levels based upon the experiences of the Swiss Development Cooperation and the EU.

Component 1 - Establishing the foundations of robust administrative and fiscal intergovernmental institutions The objective of this component is to support the establishment of a predictable and transparent administrative and fiscal framework for local governance within the framework of the national decentralization policy. An effective administrative and fiscal framework will complement the provision of capacity support and financing to local governments by creating appropriate incentives for effective and efficient local government operations and accountable decision-making.

This component will support the central government agencies in establishing a transparent and rule-based intergovernmental fiscal framework and robust intergovernmental administrative systems. It will provide support to a high level policy making process (vision prospective de la decentralisation--VPD) and assist the MEF and MATDS to develop their capacity: (i) to clarify the roles of de-concentrated and decentralized agencies and shift the emphasis of tutelle responsibilities to ex post monitoring rather than ex ante controls; (ii) to improve the design of intergovernmental systems; (iii) to gauge the direction, pace, and extent of decentralization; and (iv) to directly engage with local governments in the decentralization process. Component 1 will support the following activities:

Sub-component 1.1: Support for high level policy making (VDP).

This sub-component will support the VDP process through the following specific activities:

The VDP is intended to provide macro policy guidance to decentralization process. The participants of this roadmap process are high level decision makers, including the Prime Minister and several key ministers. The discussions will focus on intergovernmental fiscal and administrative design issues, including expenditure assignment (service delivery responsibilities), revenue assignment, intergovernmental transfer system, local borrowing and council oversight. This high-level process will articulate policy choices on administrative design and intergovernmental fiscal design aspects of decentralization and provide guidance to technical experts in implementing those policy preferences.

a. Consultancy studies to identify and recommend suitable fiscal decentralization policy options, specific regulatory changes and implementation guidelines. These studies will all be undertaken as part of consultative processes that will lead to recommendations to the Prime Minister. The studies will include the following:

(i) A review of the Intergovernmental Fiscal Framework (IGFF): This initial consultancy will support the MATDS to develop an IGFF Policy Statement. It will also suggest regulatory instruments to implement IGFF. This forms an integral part of the overall national decentralization policy and action plan. The revision will clarify the guiding principles of the framework with respect to fiscal decentralization and local government financing, establish fiscal policy objectives for different categories of local governments, establish the categories and roles of various resource flows to local governments and address issues of unfunded mandates and

35

reporting and accountability arrangements between tiers of government, among other matters. A subsequent review is programmed for the final year of project implementation to allow lessons of the intervening years to be incorporated into the policy statement.

(ii) Sector fiscal decentralization reviews: This activity will build on the principles and strategies of the IGFF Policy Statement through supporting sectoral and specific studies on fiscal issues in decentralization; including decentralized education financing, decentralized health financing, decentralized water and sanitation financing and issues associated with personnel transfers. These reviews will be conducted in a consultative manner with relevant sector departments and will lead to specific recommendations on policy and regulatory changes to strengthen accountable and effective systems of decentralized service delivery. These reviews will present options to high-level decision-makers. The implementation of some of these decisions will be supported in the second phase of the program.

b. International staff training and study tours: The project will support government officials, male and female, to attend internationally recognized courses on fiscal decentralization or related issues. In addition, the project will support one study tour to two countries to look at models and practices of local government sector.

c. Communications and awareness: This activity will support a regular, semi-annual program of liaison workshops with both central and local government officials. MATDS intends to conduct at least semi-annual discussions with both these groups to enable regular dialogue and information-sharing with the Ministry on decentralization issues.

Sub-component 1.2: Support to the Ministry of Finance (MEF).

a. Improving collection of local government revenues: This activity will support a comprehensive review of local government own source revenues. It will take stock of existing rules and regulations with the aim of updating them to get rid of contradictions and simplify objectives. It will also support the dissemination of these reviewed simplified guidelines to all communes and the design of training programs for MEF revenue collectors to improve local government revenue collection.

The lack of clear leadership by the MEF in strengthening the fiscal framework and lack of capacity of MATDS to regulate the local government sector have a negative impact on local government performance. The lack of incentives to collect revenues, limited access to budgetary resources (including transfer revenues), lack of critical administrative staff and capacity undermine the ability of local governments to perform key functions such as budget planning and execution to respond to citizen needs. This sub-component of the project will provide support to the MEF to implement recommendations suggested by the working groups. It will support improving the institutional capacities of MEF and local governments in respect of revenue collection and administration, to improve the institutional capacity of local governments in respect of expenditure planning and to rationalize fiscal transfers by MEF to local governments. Focus areas will include own source revenue collection and administration, expenditure autonomy and rationalization of the transfer system. The following specific activities will be supported:

b. Improving flow of funds to local governments: This activity will support the identification of issues in the flow of funds from MEF to local governments through the holding of information

36

sessions in regions. It will also support adoption of measures to address them. There will be training sessions for the regional staff of the General Directorate of the Budget (Direction Generale du Budget--DGB) in order to help them to perform their prior authorization function (comptabilite de l’ordonnateur) better. It will facilitate the preparation of a manual of procedures for the MEF for revenue utilization for the benefit of local governments. This activity will also support the preparation of annual reports on local government finances of commune and regional governments.

c. Review of intergovernmental fiscal transfers: This activity will support a comprehensive review of the system of resource transfers to local governments in order to improve their transparency, predictability and adequacy. The current system is opaque, unpredictable, fragmented and seldom timely, which disrupts municipal planning, budgeting, execution and accountability for service delivery. Consultants will support the MEF to identify and review all resource transfers to municipalities, develop common principles, rules, reporting practices and design and establish effective monitoring systems within the MEF. The efficient estimation and management of cash flows and grant allocation systems will ensure the timely communication of indicative budget allocations from the central level in advance of the financial year, as well as the actual transfer of grant allocations in accordance with a predictable transfer schedule.

d. Strengthening proximate ministerial support to local governments through de-concentration: This activity will support the de-concentration policy of the MEF by providing resources for the development of an action plan for the mobilization of regional revenue collection services, the construction of facilities and the acquisition of software and hardware for the regional offices of the ministry, notably with respect to procurement and revenue collection functions. Sub-component 1.3: Support to the Ministry of Territorial Administration, Decentralization and Security (MATDS).

a. Rationalization and strengthening of the MATDS’s institutional arrangements and coordination functions: This activity will support an organizational, managerial and operational review of the ministry. This review will identify an optimal organizational structure, including human resource needs for the ministry. This activity will finance the implementation of the recommendations of the report. It will also provide support to the MATDS in upgrading the skills of its staff on intergovernmental relations, administrative and fiscal decentralization, decentralized human resource and public financial management issues.

This sub-component of the project will provide support to the MATDS to implement recommendations suggested by the working groups. Focus areas will include the regulation of human resource management, procurement, public financial management and information systems. The following specific activities will be supported:

b. Strengthening proximate ministerial support to local governments through de-concentration: This activity will also support the development of a de-concentration action plan for the MTADS, including construction, furnishing and equipping of facilities, dissemination of informational materials concerning decentralization, and provision of software and hardware for the regional offices of MTADS, all as required under such action plan.

c. Regulating, guiding and monitoring the application of human resource management and public financial management functions of local governments: This activity will support the identification of issues in budget planning and execution, human resource management and procurement at the local level. MATDS will prepare annual reports on the progress in these areas. It will facilitate the translation of relevant laws, regulations and guidelines in local

37

languages and their dissemination to communes. It will also provide support to the implementation of the 2006 Law on Local Government Civil Servants (La loi no 027-2006/AN du 05 decembre 2006 portant regime juridique applicable aux emplois et aux agents des collectivites territoriales), while encouraging an increase in the representation of women.

d. Development of information systems: This activity will provide complementary support to the MATDS for the development and introduction of a system for collecting, storing, archiving and dissemination of financial, economic, socio-demographic information about municipalities, as well as development of a database of such information.

Component 2 - Strengthening capacity of municipalities to manage local development Component 2 will provide resources to local governments to support their core institutional development needs through institutional development grants. It will support the development of core administrative systems and capacities necessary for local authorities to attain basic levels of administration as well as an effective municipal council oversight function and functioning communication and feedback channels with the communities. It will also provide support to strengthen the capacity of communes to manage their sectoral service delivery responsibilities in health, education and water and sanitation. Items such as construction of facilities, transportation vehicles, office furniture, hardware, technical support and scholarships to attend courses (offered by Ecole Nationale d’Administration et de Magistrature (ENAM) and Ecole Nationale des Regies Financieres (ENAREF) under the National Strategy for Capacity Development) will be financed under this component. The MATDS is working on new guidelines for the organizational structure of communes (organigramme-type). These new guidelines will establish the minimum level of functional structures and staff in different types of communes, urban and rural. The aim is to organize commune administrations in a manner that would enable them to carry out the responsibilities assigned to them by the CGCT. Component 2 will help communes to develop institutional development plans (IDP) to build these core functional structures (see example in Annex 10). The expenditure items in IDP should enable communes to carry out their socio-economic development activities. The plan will identify the specific needs of each commune with respect to:

i. Physical development: physical space and hardware needs of both the administration and municipal council; including office space, office supplies (computers, printers, photocopiers, telephones, furniture, filing cabinets), transportation vehicles (cars, motorcycles, bicycles, minivan, trucks), equipment (backhoes, cranes, tractors, welding machines, scissors, forklifts, cranes) and communication systems (community notice boards, community radio).

ii. Organizational development: software and technical assistance required to support functioning organizational systems, particularly with respect to archiving, communications, public financial, procurement, human resource and inventory management. It will also include needs in organizing council meetings (providing transportation and accommodation to council members).

iii. Human development: gender-sensitive staffing and capacity development needs aligned with the MATDS’s human resources organigramme-type and training modules offered under the National Strategy for Capacity Development of Local Governments. Capacity development of sectoral management committee members – including education and health local management committees (COGES) and water user associations.

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Prior to the development of IDPs, the component will support the elaboration of an Institutional Development Framework (IDF) to ensure harmonization and consistency across communal institutional development plans. The framework will guide communes in identifying their resource needs to establish core administrative systems. The IDF will be comprehensive in coverage, capturing the needs of both the executive (the mayor’s office) and legislative (the municipal council) branches of commune governments.

Process:

In the first year of project implementation, the communes will develop their individual IDPs, based on the IDF. IDPs will specify the needs and prioritize the activities to be undertaken by each commune over the project period. In developing their IDPs, commune governments will receive support from the PCU. Taking the capacity constraints at the local authority level into consideration, the PCU will initially make arrangements with the PNGT for the PNGT regional offices to support communes in applying the IDF to identify their institutional needs and develop their IDPs.

In years two to five of project implementation, the communes will include IDP investments in their standard Annual Investment Plans (AIPs). Component 2 will provide annual Sub-grants financed out of the IDA Grant to communes to finance subprojects consisting of IDP investments included in the AIP. The communes will receive support from PNGT regional teams in incorporating IDP activities into their regular AIPs against their allocated resource envelope. Once the ARDs are functional, this regional support function will be transferred to the relevant ARDs.

The component will allocate resources to each commune based on clearly defined criteria (such as population, isolation, and poverty levels) identified by the steering committee. Communes will be advised of their overall indicative allocation envelope prior to preparing their IDPs. At mid-term, the steering committee will review implementation progress and may revise the allocation criteria if necessary, subject to the Bank’s approval.

Allocation of resources:

The Sub-grants to each commune will be results-oriented and will be based upon three factors:

(i) The level of disbursement by the commune in the preceding year; (ii) The performance of the commune in implementing the IDP activities identified in the

AIP. This will be assessed by the regional offices of the PNGT; (iii) The level of performance of the communes in promoting social accountability. This will

be assessed by the regional offices of the PNGT according to clearly defined criteria such as (i) holding at least one cadre de concertation or community meeting (for urban communes) with a minimum quorum of participants and documented minutes of proceedings; (ii) publication of the local budget or budget execution report in at least 3 public places; (iii) existence of a local government communications strategy; and (iv) a summary report of community complaints received and treated by the commune in the preceding year.

In Burkina Faso, communes have already developed their PCDs with the support of the PNGT. A PCD provides a detailed description of the community and identifies local development projects that have been prioritized by the local populations. Through the institutional development plans, component 2 will provide resources to communes to develop effective,

Connection to existing communal development plans:

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efficient and accountable administrations which are equipped to carry out the task of implementing PCDs. Accordingly, both the PCD, and the IDP will help communes to achieve their local economic development goals.

Component 3 - Improving accountability linkages between local level policy makers and citizens This component seeks to strengthen local government accountability. It seeks to promote the development of a culture of local council oversight and citizen engagement in decision-making processes at the local level in the six selected regions. In so doing, it aims to strengthen the capacity of local councils and selected representatives of civil society and the community at the local level to voice their needs and to engage in monitoring local government performance. It will also support local governments that adopt effective participatory local governance practices, nationwide. This component will be composed of the following sub-components:

The sub-component activities will be managed by DGLPAP under MATDS, with support from the PNGT. Regional NGOs will be recruited through a competitive selection method in the six regions covered. The regional NGOs will support communes, locally elected officials and representatives of local populations (including civil society actors, religious and customary leaders and producer organizations represented in the CVDs) in developing robust accountability and transparency practices at the local level. PNGT will support and guide regional NGOs, using the experiences gained from the PNGT project. This sub-component also draws upon the experience of the knowledge-sharing and local-level capacity building activities put in place by the JSDF-supported ‘Community Monitoring for Better Health and Education Service Delivery Project’.

Sub-component 3.1: Strengthening community oversight of local government performance

The sub-component will include the following specific activities:

a. Information and Sensitization: This sub-component will be officially launched through national and regional workshops. The objectives of the workshops are to inform and raise awareness of local actors on: (a) the process of decentralization, including the rights and responsibilities of the different actors; and (b) the objectives of this sub-component. These preparatory workshops will target regional, commune, village and community level actors such as, DRED, DREBA, DRS, local councilors, CVD members, APE, AME, COGES health and COGES education; village and commune based NGOs. During these workshops, the regional NGOs, with feedback from these actors, will also lay out the procedures by which communes (both executive and legislative branches) engage and consult communities (such as cadre de concertation, quarterly local council meetings etc). Sensitization campaigns will also be conducted by the regional NGO’s using local radio.

b. Communication and community engagement support to communes: The regional NGOs will support the mayor in coordinating and organizing accessible and open cadre de concertation (or other public consultation fora for urban communes) and municipal council meetings. The regional NGOs will also support the commune in preparing accessible communications (e.g. on municipal performance, budget execution) and in responding to citizen grievances (e.g. complaints handling mechanisms).

c. Capacity development support to municipal councilors and community representatives to strengthen their engagement in decision-making and monitoring

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processes: The regional NGO’s will support municipal councilors and community representatives (members of the CVDs) in understanding, preparing for and participating in council and cadre de concertation meetings. This will involve training on budget literacy, local administrative processes and participatory monitoring tools.

d. Annual performance reports: The regional NGO’s will prepare annual reports, assessing the performance of the different actors.

e. Independent citizen perception survey: A base-line survey of citizen perceptions of commune performance will be conducted in the first year of project implementation and followed by mid-term and end of project surveys to assess changes in citizen levels of satisfaction with communes over the course of the project.

This activity will build upon the methodology piloted in the Competition for Excellence in Local Governance (COPEGOL). The COPEGOL initiative is a nation-wide competition, open to all 351 communes which recognizes and promotes open, transparent and participatory local governance practices, by rewarding good performance. The competition seeks to motivate those behind the development of good practice and increase the incentives of local governments to develop and sustain transparent and open processes and systematic engagement with communities in making local-level decisions. The focus of the competition will be to particularly bring out good governance practices in the areas of planning, budgeting, procurement, service delivery and monitoring and evaluation, initiated by local governments’ themselves. Based on the lessons learned from the pilot round of COPEGOL, the nation-wide competition will take on a regional dimension: Whereas the pilot round identified 6 winners (2 urban and 4 rural communes) in total nation-wide, this sub-component will reward a selected number of communes in each of the 13 regions. This sub-component comprises the following activities:

Sub-component 3.2: Recognizing and rewarding good local governance practices

a. Establishing the administrative structure of the competition: In order to promote ownership, this sub-component will be administered by DGLPAP under MATDS. The DGLPAP will be supported in the first year of implementation by a technical advisor. The DGLPAP will prepare communication materials, proposal formats etc. DGLPAP may build on the evaluation framework that was already developed as part of COPEGOL pilot program. The evaluation framework for good practices has 4 main assessment categories, designed to reward good performance in the areas of planning, financial management (budgeting and revenue collection practices), procurement, service delivery and monitoring and evaluation:

• Accountability: Transparency, Participation and Responsiveness • Innovation: Degree of local initiation (whether it goes beyond requirements and

whether the practice was initiated directly by local actors vs. external actors, donors etc.)

• Socio-economic Impact: Degree of social-inclusion and empowerment of vulnerable groups

• Sustainability: Degree of technical feasibility, financial feasibility and formalization

The regional offices of Mayoral Association of Burkina Faso (Association des Maires du Burkina Faso (AMBF), will be responsible for announcing the competition to urban communes, provide coordination and technical support such as distributing submission

41

guides and support urban communes in filling their applications. DGLPAP will obtain the support of PNGT to disseminate all related information to the rural communes and help them with the submission process. Under this sub-component, a 10-member national selection committee will be established, made up of central government representatives (other than MATDS to avoid conflict of interest), civil society representatives and academic experts. The Committee members will be chosen based on their knowledge of the decentralization process, prior experience with similar evaluative exercises, and most importantly based on their renowned integrity, independence and their commitment to stay with the committee throughout the process.

b. Application and Selection process: All interested communes will be asked to fill out standard application forms and send them to DGLPAP either electronically or by mail (PNGT and AMBF will also be available to collect the applications and send them altogether if needed). The national selection committee will rank the submissions based on a standard evaluation framework and identify shortlisted communes. The committee will then organize direct visits to the shortlisted communes in order to validate the accuracy of the submitted practices and to interview a broader set of actors to assess the impact of the practice on the communities. The number of winning communes in each region will be determined by a simple formula: 1 urban commune per region and 1 rural commune per 10 rural communes in each region. According to this formula, a maximum of 13 urban communes and 29 rural communes will be eligible for rewards (see table below).

c. Reward process: In addition to public recognition through media coverage, certification etc, the winning communes in each region will be eligible for sub-grants to support innovative and context-specific proposals for improving their performance. The sub-grant will not exceed $ 25,000 equivalent for urban communes and $ 10,000 equivalent for rural communes. The winning communes will be asked to submit a sub-project proposal with a budget sheet, disclosing how they intend to allocate their respective sub-grant amounts. The use of sub-grants will be limited to micro-projects that the local government has already agreed to in their local development plans in a manner that is in line with the project’s safeguards arrangements. They will be expected to discuss this micro-project with the communities during municipal council meetings. The utilization of the sub-grants will be monitored in accordance with the project operational manual. To promote the winning good practices, DGLPAP within the MATDS will conduct a national dissemination campaign. The AMBF and PNGT regional offices will support the regional councils in organizing a local governance innovation and reward day each year to allow the winning communes to share their good practices with other communes in the region.

N° REGIONS Urban communes Rural communes TOTAL Urban rewards Rural rewards

1 Boucle du Mouhoun 6 41 47 1 4

2 Cascades 3 14 17 1 1

3 Centre 1 6 7 1 1

4 Centre Est 6 24 30 1 2

5 Centre Nord 3 25 28 1 3

6 Centre Ouest 4 34 38 1 3

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7 Centre Sud 3 16 19 1 2

8 Est 5 22 27 1 2

9 Hauts Bassins 3 30 33 1 3

10 Nord 4 27 31 1 2

11 Plateau Central 3 17 20 1 2

12 Sahel 4 22 26 1 2

13 Sud Ouest 4 24 28 1 2

TOTAL 49 302 351 13 29 Component 4: Project management and evaluation This component will provide project management support to the Project Coordination Unit in project implementation and support regular project evaluations as well as procurement and safeguards reviews and financial reporting and auditing. Currently, the capacity of the PCU is very weak. The PCU will therefore make arrangements with the existing PNGT coordination unit to receive support from them. The cost of this support from PNGT will be financed through counterpart funds.

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Annex 3: Implementation Arrangements 1. Project Institutional and Implementation Arrangements

i. Project administration mechanisms The Prime Minister’s Office will have overall responsibility for the project. An existing steering committee within the Prime Minister’s office20 will be charged with overseeing the overall implementation of the program. The MATDS will be the entity designated by the Prime Minister’s Office to manage the PCU. The management of individual components in the project will be undertaken within the current line function responsibilities of relevant government departments and agencies. A graphical illustration of the overall project institutional arrangements is provided in the diagram below.

The steering committee will be the highest authority of the project, making final decisions on all aspects of the project, subject to Bank approval. The steering committee established under the PRCA project which was charged with responsibility for preparing the Local Government Support project will continue to function as the steering committee for implementation of this project. The composition of this steering committee includes representatives from the relevant ministries (e.g. MEF, MATDS, and social service ministries), civil society and donors. The head of the steering committee is the Secretary General of the Prime Minister’s Office.

Program Steering Committee:

The PCU will operate under the guidance of the steering committee and will be responsible for the day-to-day management of the project. It will implement decisions taken by the steering committee. The PCU will be led by the Secretary General of the MATDS as National Coordinator and by the existing PRCA associate coordinator, who will assume the role of project Associate Coordinator within MATDS. The PCU will be supported by experts who will be appointed to serve in the PCU. Key activities that require long-term consultants to support existing staff include procurement, financial management, safeguards compliance, communications and monitoring and evaluation.

Project Coordination Unit:

Ministerial divisions of the MATDS and MEF will be responsible for the execution of individual sub-components of the projects. For Component 1, subcomponents 1 and 3 will be managed by MATDS and subcomponent 2 will be managed by MEF. An assessment of support requirements for the responsible departments of MEF and MATDS have been made and resources will be provided for both establishment costs and the initiation of core functionalities of these departments. DGCT within MATDS will manage the disbursement of Component 2 under the guidance of the Steering Committee using established budgetary mechanisms. MATDS will make arrangements with the PNGT coordination unit to receive technical assistance for FM and procurement systems and for use the regional offices of PNGT to provide technical assistance to communes in the development and implementation of their IDPs. Both sub-components under Component 3 will be managed by DGLPAP in the MATDS. DGLPAP will manage sub-component 3.2 with the assistance of regional offices of AMBF and PNGT. The activities under Subcomponent 3.1 will be contracted out to 6 national or regional NGOs (one per region). Component 4 activities will be managed by the PCU in MATDS.

Management of Components and Sub-components of the Project

20 The Steering Committee established for the Bank-financed Administrative Capacity Building Project (ACBP) was also charged with responsibility for the preparation of the program.

44

PCU will prepare an annual work program for the following year and submit it to the IDA not later than November 30 in each calendar year. The annual work program will include: (a) a detailed timetable for the sequencing and implementation of project activities; (b) the types of expenditures required for such activities and a proposed financing plan (including counterpart funds to be provided by the Recipient) for such expenditures; and (c) each Safeguard Instrument required for such activities.

Annual Work Program

45

Sub-component 1: VPD (MATDS)

Team within PCU and DGCT, DAF, DEP,

PRM

MEF Treasury Account

Project Coordination Unit (MATDS) National Coordinator (SG of MATDS), Associate National Coordinator (Administrator), other members of the PCU will include a financial management specialist, a procurement

specialist, an accountant, a communications specialist, an IT support staff, a safeguards specialist and an M&E specialist.

BURKINA FASO

Component 1 Component 2 Component 3 Component 4

Sub-component 2: Fiscal decentralization (MEF)

Sub-component 3: Administrative decentralization (MATDS)

- Studies - Manuals - Training - Deconcentration

Regions • Les Cascades • Le Sahel • Le Centre Nord • Le Centre Sud • Le Centre Est • Le Plateau Central

Institutional Development Plan

- Project Manuals - Technical Assistance - Training - Project Management

Local Communities

Citizens

Steering Committee (Prime Minister’s Office) (President: Secretary General PM)

PNGT Coordination Unit

Flow of resources

Output

Indirect impact

Link

Protocole

Civil Society

Contract

PCU Unit

Local Communes

Village Development Committees

Training and sensitization

National / Regional

CSOs

DGLPAP

COPEGOL Sub-grants selected

PNGT ARMBF

Institutional Development

Funds

46

ii. Financial Management, Disbursements and Procurement

a. Financial Management and Disbursement Arrangements

The Prime Minister’s Office will have overall responsibility for the project. An existing steering committee within the Prime Minister’s office will be charged with overseeing the overall implementation of the Project. The MATDS will be the entity designated by the Prime Minister’s Office to manage the PCU. Implementation of activities under Component 2 will require technical assistance from the PNGT. PNGT has developed an adequate fiduciary framework with the 302 rural municipalities.

Overview of project and implementing entity

Overall, the Bank has judged implementation performance of the PFM reform program (Stratégie de Renforcement des Finances Publiques--SRFP) to date and the government’s commitment to PFM improvements as exemplary. As a result, the Bank has made an 11th PRSG to Burkina Faso. The SRFP is supported by most donors that provide budgetary support, and is a core element of budget support. To assess progress made so far after 4 years of SRFP implementation, the government has performed a repeated PEFA analysis. Outcomes from this PEFA exercise, completed in June 2010, have confirmed progress made so far by Burkina Faso in the PFM area. Improvements are noted on budget credibility (indicators 1-4). Confirmation of adequate arrangements has been highlighted for the remaining indicators (comprehensiveness and transparency, policy-based budgeting and predictability and control in budget execution). Improvements remain to be made in the areas of mobilization of fiscal revenues, control over payroll, and scope of internal and external controls. To complement the national PEFA, a sub national PEFA for the Ouagadougou municipality was also completed in June 2010 with major outcomes fairly similar to the national PEFA. Meanwhile, the MEF is working on several PFM initiatives on PFM. Among them (i) a new sectoral strategy (Stratégie Sectorielle du Ministère de l'Economie et des Finance) aimed at merging both the SRFP and PRGED (Programme de Renforcement de la Gestion de l'Economie et du Développement) and ensuring a smooth transition towards the implementation of the WAEMU PFM Directives recently issued and (ii) the new Integrated Circuit for Donors-financed Projects (Circuit Intégré des Financements Extérieurs (CIFE).

Country Public Financial Management Situation and Use of Country Systems

CIFE, which went live on live April 1st, 2011 following the final approval by the Council of Ministers held on March 2nd, 2011, is built on a computerized system and seeks to apply the country PFM system at the projects level by involving key country system players in project monitoring (Directorate of Budget, Directorate of Finance Control, and Directorate of Public Treasury). CIFE has six modules; two have already been used since 2010. They relate to project identification and financing agreement monitoring. The four remaining modules cover budget monitoring as well as internal controls and accounting arrangements in line with the national PFM system. All modules are interfaced with the country Integrated Financial Management Information Systems (IFMISs). After a review of the key actors outlined above, CIFE allows donor funds to be fully integrated into the budget, accounting, reporting and treasury systems, yet remain earmarked for a specific use. It includes flexibility for the use of standalone project implementing units or integrated units within a Ministry. As it is currently, CIFE is only opened at central level not yet decentralized at projects level. The proposed project will be channeled

47

through CIFE as per the recommendation of the ESW on Burkina PFM systems since all of the requirements identified in ESW have been met. Upon satisfactory reconciliation of the financial data and decentralization of CIFE at projects level, decision will be made to fully rely on CIFE. To this end, policy dialogue will be pursued with the aim to render CIFE fully operational at projects level.

The following are the financial management arrangements for the project:

Staffing and Training: FM staff (one finance manager and one accountant) of the closed Administrative Capacity Building project anchored at the Prime Minister is transferred to the PCU. Through an internal protocol, PNGT will provide FM technical assistance to oversee the municipalities control environment by using the fiduciary framework developed and enforced by the PNGT and by moving towards a results-oriented approach. To this end, PNGT will hire an accountant who could be redeployed at the PCU afterward. This framework is built on a series of controls performed by PNGT regional coordination units. Each unit is staffed with an accountant. Municipality FM staff consists of a public accountant and a financial controller, the Mayor acts as budget holder. PNGT will train the PCU FM staff with the aim to transfer the expertise in the control over the municipalities.

Budgeting: Budgeting arrangements will be developed in the manual of procedures which will be elaborated by using among other documents, the PNGT budgeting arrangements, with specifics related to the second component and CIFE budgeting requirements. With CIFE implementation, donors-financed projects’ budget allocation and execution will be aligned with the national budget process.

Accounting Policies and Procedures: The PCU will (i) develop an accounting manual of procedures and (ii) procure an accounting software (multi project and multi site) to maintain the books and accounts of the project activities and ensure that the annual financial statements are produced in a timely manner in accordance with OHADA (Organisation pour l’Harmonisation en Afrique du Droit des Affaires) accounting principles – SYSCOHADA which calls for double entries system. As per CIFE procedures and by using an interface, the project’s accounting transactions will be reflected in the national financial statements. This will improve reliability of the national financial statements. The accounting section of the manual of procedures will be based on simplified accounting procedures developed by PNGT for the municipalities.

Internal Control and Internal Auditing: The PCU will develop a manual of procedures dealing with delegation of authorities, fixed assets, accounts reconciliation, segregation of duties, and the control over the municipalities (performed by PNGT regional coordination units). Ex ante control and control over delivery (contrôle du service fait) of procurement contracts above the national thresholds will be performed by the Directorate of Financial Control and its representative at municipal level. Reliance will be placed on the national internal audit arrangements managed by Public Control Institutions (Autorité Supérieur de Contrôle d’Etat - ASCE, Inspection Générale des Finances – IGF and Inspection Technique du Ministère). The Bank has provided technical assistance to develop a risk map and implement risk based audit for Public Control Institutions in three pilot ministries. It is expected the MATDS will be included in the list of next pilot ministries.

Funds Flow and Disbursement Arrangements: A segregated Designated Account (DA) will be opened at the Central Bank in Ouagadougou. A Transactions Account will be opened at the Public Treasury with the aim to replenish the municipalities accounts located in this Institution and for the other project components (including sub grants that will be managed by the public

48

management financial staff located at the municipalities’ level). Replenishment of the Transactions Accounts will be made monthly based on need. Direct payments, will be made to service providers if needed. The Government will also open a separate account in the Treasury for counterpart funds required for the Project (“Counterpart Funds Account). Deposits will be made on a quarterly basis in amounts agreed with IDA under the Annual Work Plan (updated based on the quarterly IFRs), with the initial deposit being made no later than 3 months following the Effective Date. The proceeds of the Counterpart Funds Account will be used exclusively to pay for expenditures included in the Annual Work Program.

49

LegendTransfers of funds

:

Flow of documents (invoices, good receipt notes, purchase order, contract) Payment to suppliers Method of Disbursement: The report–based disbursement procedures will be applied upon effectiveness. The quarterly Interim Financial Report (use of funds and use of funds per category) will be supplemented by (i) bank reconciliation statements of the designated and the operational accounts; (ii) cash flow forecast for the following semester; and (iii) the list of payments against contracts that are subject to Bank prior review. The Designated Account (DA) will be used for all payments inferior to 20 % of the authorized allocation and replenishment applications will be submitted as often as possible. At effectiveness, the initial advance equivalent to the cash forecast for two quarters will be deposited to the DA. Further deposits by the Bank into the DA will be made against withdrawal applications supported by the quarterly Interim Financial Report prepared by the Project. The reconciliation of the DA included in the withdrawal applications will include the Transactions Accounts. Disbursements to municipalities under Subprojects (Components 2 and 3) will be made in tranches; the initial tranche will be disbursed against submission of signed sub-grant agreement and subsequent tranches will be disbursed upon submission of a report showing utilization of initial tranche and a progress report.

IDA

PCU Designated Account in BCEAO

PCU Transaction Account in Public Treasury

Municipalities bank accounts (for

sub grants)

IFR based

Order of transfer

Simplified reporting tools

Services providers

Services Providers

50

Disbursements by category: The table below sets out the expenditure categories to be financed out of the Grant proceeds. This table takes into account the prevailing Country Financing Parameters for Burkina Faso in setting out the financing levels.

Category

Amount of the Financing Allocated (expressed in SDR)

Percentage of Expenditures to be

Financed

1. Goods, works, non-consulting services, consultants’ services and Training and Operating Costs for all Parts of the Project (excluding expenditures financed under Sub-grants under Component 2 and 3.2)

8,300,000 100%

2. Goods, works, non-consulting services, consulting

services and Training required for Sub-projects under Component 2 and 3.2

27,300,000 100%

3. Refund of Preparation Advance 1,100,000 Amount payable pursuant to Section 2.07 of the General

Conditions 4. Unallocated

600,000

TOTAL AMOUNT 37,300,000

Financial Reporting and Monitoring: The financial reporting arrangements will be developed using the closed PRCA project’s reporting arrangements. The specifics of the second component will need to be adapted to the simplified reporting system applied in the context of the PNGT fiduciary framework. IFR will be submitted by the PCU to IDA within 45 days after the end of each calendar quarter. The content and format of the IFR are agreed during negotiations. PNGT regional coordination units will review the simplified financial reporting documents submitted by the municipalities before submission for consolidation purposes at the central level. At the end of each fiscal year, the project will prepare an annual financial statement which will be reconciled with financial statements generated from CIFE. The decision to fully rely on CIFE for the financial reporting will be made upon satisfactory completion of the reconciliation of the accounts at the end of the first year. The financial management indicators for the project are the following: (i) part of the budget disbursed every year at the level of each component of the project; (ii) nature of the opinion from the external auditor on the annual financial statements; (iii) number of internal control major weaknesses identified by the internal and the external auditors; and (iv) rating of FM overall control risk. Simplified reporting tools have already been developed and enforced.

Auditing: The annual financial statements prepared by the PCU as well as the internal controllers will be subject to an annual audit to be performed by an external auditor. The recruitment process for the auditor will be led by the Supreme Audit Institution in line with the Use of Country System initiative. The auditor will provide one single opinion on the annual financial statements in compliance with IFAC Standards on Auditing. In addition to the audit reports, the external auditors will be expected to prepare a Management Letter giving observations, comments, and providing recommendations for improvements in accounting

51

records, systems, controls and compliance with financial covenants in the Financing agreement. The project through the Supreme Audit Institution will be required to produce, no later than June 30 of the following fiscal year, audited annual financial statements. In line with the new access to information policy, the project will comply with the Bank disclosure policy of audit reports (e.g. make publicly available, promptly after receipt of all final financial audit reports (including qualified audit reports) and place the information provided on its the official website within one month of the report being accepted as final by the team. In order to further strengthen the fiduciary arrangements, ex-post audits of community subprojects will be conducted to confirm that funds transferred to the municipalities under Components 2 and 3 have been spent for the purposes intended and that the community has received value for money.

Implementation Support Plan: FM implementation support missions will be consistent with a risk-based approach, and will involve a collaborative approach with the entire Bank Task Team (including procurement). A first implementation support mission will be performed within six months after the project effectiveness. Afterwards, the missions will be scheduled by using the AFTFM risk based approach model and will include the following diligences: (i) monitoring of the financial management arrangements during the supervision process at intervals determined by the risk rating assigned to the overall FM Assessment at entry and subsequently during Implementation (ISR); (ii) review the IFRs; (iii) review the audit reports and management letters from the external auditors and follow-up on material accountability issues by engaging with the task team leader, Client, and/or Auditors; the quality of the audit (internal and external) also is to be monitored closely to ensure that it covers all relevant aspects and provide enough confidence on the appropriate use of funds by recipients; and, (iv) physical supervision on the ground; and (v) assistance to build or maintain appropriate financial management capacity.

Weaknesses and Action Plan to reinforce the control environment Significant Weaknesses or risks

Action Responsible body

Completion

Lack of FM manual of procedures in line with the project implementation arrangements

FM staff of the closing project will not suffice to handle the project transaction

Develop a PIM including a comprehensive FM manual of procedures. For the second component, the manual will be built based on PNGT manual which includes simplified and appropriate budget arrangements with regard to the municipalities Sign a protocol with PNGT to benefit from FM technical assistance in order to oversee municipalities transactions. Agree on consolidated format of IFR and procure accounting software.

PCU

Effectiveness

Effectiveness

Software: expected 3 months after effectiveness (not a condition)

Supreme Audit Institution might not be in a position to produce an annual audit report in a timely manner and in line with the International

Supreme Audit Institution to outsource the external audit with a private audit firm based on ToR acceptable to the Bank covering fraud and corruption.

PCU

3 months after effectiveness for the recruitment

52

standards.

b. Procurement Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011; and “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011, and the provisions stipulated in the Financing Agreement. For each contract to be financed by the Grant, the procurement plan will define the appropriate procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, the prior review requirements, and the time frame. The procurement plan will be updated at least annually, or as required, to reflect the actual project implementation needs and improvements in institutional capacity. The procurement procedures and other detailed procurement information are found below. Procurement of Works and Goods:

a. Except as otherwise provided in sub-paragraph (b) below, Works and Goods shall be procured under contracts awarded on the basis of International Competitive Bidding.

b. The following methods, other than International Competitive Bidding, may be used for procurement of works and goods for those contracts which are specified in the Procurement Plan: (A) National Competitive Bidding subject to the additional provision that the Recipient shall use Standard Bidding Documents acceptable to the World Bank; (B) Shopping; (C) Direct Contracting and (D) Framework Agreements.

Procurement of Consultants’ Services a. Except as otherwise provided in sub-paragraph (b) below, consultants’ services shall be

procured under contracts awarded on the basis of Quality- and Cost-based Selection (QCBS).

b. The following methods, other than Quality- and Cost-based Selection (QCBS), may be used for the procurement of consultants’ services for those assignments which are specified in the Procurement Plan: (A) Selection based on Consultants’ Qualifications (CQ); (B) Quality Based Selection (QBS); (C) Fixed Budget (FBS); (D) Least Cost Selection (LCS); (E) Single Source Selection (SSS); and (F) Selection of Individual Consultants.

Procurement of the items included in the component 2 and 3: Component 2 and 3 will include investment activities prepared on a participatory basis at the commune level and implemented by the local government. The contracts for these activities would be procured following Community Participation procedures which have been found acceptable to the Association and are described in the Project Implementation Manuals, as permitted under the paragraph 3.19 of the Guidelines. Workshops, Seminars and Conference: Training activities will comprise workshops and training in the region and abroad, based on individual needs as well as group requirements, on-the-job training, and hiring consultants for developing training materials and conducting training.

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All training and workshop activities will be carried out on the basis of approved annual programs that will identify the general framework of training activities for the year, including: (i) the type of training or workshop; (ii) the personnel to be trained; (iii) the selection methods of institutions or individuals conducting such training; (iv) the institutions which will conduct the training; (v) the justification for the training, how it will lead to effective performance and implementation of the project and or sector; and (vi) the duration of the proposed training; (vii) the cost estimate of the training. Reporting by the trainees upon completion of training would be mandatory. Operating costs: “Operating Costs” means the incremental expenses incurred on account of project implementation, consisting of reasonable expenditures for vehicle operation and maintenance, communication and insurance costs, banking charges, rental expenses, office maintenance and office equipment maintenance, utilities, document duplication/printing, consumables, travel cost and per diem for project staff for travel linked to the implementation of the project, and salaries of contractual staff for the project (but excluding salaries of officials of the Recipient’s civil service). Operating costs financed by the project will be procured as follows: for goods and services, they will be procured in accordance with the above procedures; for non-procurable items, they will be procured in accordance with the implementing agency’s administrative procedures, which will be described in the Project Implementation Manual (PIM). Assessment of the Agencies’ Capacities to Implement Procurement: The MATDS will have the overall responsibility of the Local Government Support Project. However, the project is composed of four components which will be implemented as follows: (i) the MATDS and the MEF will be responsible for component 1, (ii) component 2 will be implemented by the local communities and managed by the MATDS (DGCT); (iii) the MATDS (DGLPAP) will manage component 3 by contracting with local NGOs; (iv) and component 4 will be implemented by the PCU.

The former PCU of the PRCA will be restructured and transferred to the MATDS to implement the project. The PCU will have overall responsibility for procurement activities. The PCU will be directly in charge of component 4 activities and procurement of large, complex and/or pooled procurement across two ministries. The MATDS and MEF will be in charge of all TORs and technical specifications elaboration, and with the support of the PCU procurement specialist they will carry out procurement processes for simple items and studies.

Activities financed under component 2 will be carried out by the local governments. For that, the MATDS will make arrangements with the PNGT PCU to receive technical assistance and the use of the regional offices of PNGT to assist local communities with procurement activities.

The former PRCA PCU is staffed with a procurement specialist who has a master’s degree in finance and has been working in the PCU for more than 5 years. He has a strong knowledge of the Bank procurement procedures and has demonstrated that he is able to successfully work in this kind of arrangement.

A procurement capacity assessment of the MATDS and the MEF has found that these two ministries implemented the new procurement law adopted in 2008 successfully. Both ministries were strengthened by the creation of a procurement department (Personne Responsable des Marchés--PRM) who is in charge of the procurement activities of the ministries. The PRM is responsible for: (i) finalizing procurement documents prepared by the Financial Department or the technical structures, (ii) preparing the advertisement notices; and (iii) presiding over tender committees and drafting contracts for approval. However, the procurement department in both

54

MATDS and MEF is not well staffed. In both cases, the PRM is a civil servant with master’s degree in law or finance, but they both have limited experience in the Bank procurement procedures.

The PNGT PCU has been in place since the first phase of PNGT. It is well staffed by a confirmed procurement specialist who has a long experience in the Bank procurement rules and is fully aware of procurement inherent to CDD projects. The PNGT prepared simple procurement documents to be used by local communes, the PNGT with the support of the procurement directorate (Direction générale des Marchés Publics--DGMP) provided trainings to the local representatives in procurement. However, because of the mobility of people, the capacities at the local level remain very weak and still need to be strengthened. The other problem identified is that, according the national procurement system, the local communes are subject to the same control and procurement rules as the central government. This requirement could be a source of delays in implementation of component 2. Risk assessment and mitigations measures: Procurement risk at country level: The public procurement system in Burkina Faso is currently under reform. The 2005 Country Procurement Assessment Report (CPAR) was carried out in order to: (i) measure progress made in the past five years, (ii) analyze the current procurement environment, (iii) assess the 2003 national procurement law in view of: (a) transparency, efficiency and competition principles required for International Standards, and (b) the harmonization process (among sub-regions countries) initiated by the West African Economic and Monetary Union (WAEMU). The 2005 CPAR Action Plan was adopted by the Council of Ministers in March 2006. The 2003 National Procurement Act, evaluated in light of the OECD Benchmark Indicators system, has been found unsatisfactory. Even though there has been major progress in improving the institutional framework of procurement, there is still room to improve it. Based on the progress made since 2000 (between 31 percent to 55 percent of requirements for International Standard are met), the system has been found acceptable for National Competitive Bidding process. It has been agreed that the implementation of the action plan included in CPAR 2005 would help to achieve 76 percent of the requirements by 2010. One of the major actions currently under implementation is the updating of a 2003 version of the National Procurement Act in light of a WAEMU Regional Guidelines agreed by the World Bank and included in the CPAR recommendations. The Procurement System has been strengthened in 2008 by (i) the adoption of new procurement procedures, (ii) the creation of Autorité de Régulation des Marchés Publics including the Commission de Règlement Amiable des Litiges (CRAL) which was transformed in 2010 to the Commission de Règlement des Différends (CDR) who is in charge of the compliance process, and (iii) the deployment of procurement specialists in key ministries. The national bidding documents were finalized and published in July 2009. The Bank is working with the government to identify the inconsistencies with its documents in order to recommend some exceptions to include in these documents. Until the NCB documents are finalized and acceptable to the Bank, the Bank ICB documents should be adapted for all NCBs, and the adapted version should be cleared by the Bank. Procurement risk at the Project level:

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The main risks identified during the assessment are the following: (i) the limited experience of the PRM of the MATDS and the MEF in the Bank procurement procedures, (ii) the weak capacity of the local government and the mobility of their representatives, (iii) the lack of CDD procedures in the national procurement law which could result in low disbursement rates for component 2; (iv) the prior review of the DGMP of all the contracts estimated to cost USD 2,000 could delay some processes.

Mitigation Measures: The Mitigation Measures proposed are presented in the table below. The annual procurement audits will be financed by the Recipient and will be carried out by an independent consultant specialized in procurement. The scope of the work would include: (a) verification that the procurement and contracting procedures and processes followed for the local communes were in accordance with the PIM; (b) verification of technical compliance, physical completion and price competitiveness of each contract in the selected representative sample; (c) review and comment on contract administration and management issues as dealt by the Communities in handling procurement efficiently; and (d) identification of improvements in the procurement process in the light of any identified deficiencies.

Action Plan for Strengthening Procurement Capacity

Ref. Tasks Responsibility Comments / Due date

1 The PRMs of the MATDS and MEF will work closely with the project PCU procurement specialist to prepare the first procurement documents for activities they are charged with. A training will be organized by the PCU procurement specialist with the support of the Bank team

PCU and The Bank Expected three months after effectiveness (not a covenant)

2 The PNGT procurement team will continue local capacity building and assist communes to carry out their first contracts procurement procedures.

PNGT and PCU Annually (not a covenant)

3 The Project Implementation Manuel (PIM) must describe in detail the procurement procedures for component 2 and 3, acceptable to IDA

PCU Adoption of the PIM acceptable to IDA is a condition of effectiveness

4 The DGMP must accept the use of the CDD procurement procedures for component 2 and 3 described in the approved PIM

PCU and DGMP Adoption by the Recipient of the PIM acceptable to IDA is a condition of effectiveness

5 The DGMP must designate a focal point for the prior review of procurement documents

PCU / DGMP Expected three months after effectiveness (not a covenant)

5 Annual procurement audits of component 2 to be carried out by an independent consultant specialized in procurement

MOB and MEBF Annually

Overall Procurement Risk Assessment: Low Moderate Substantial X High

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Procurement plan: The Recipient developed a draft procurement plan for Components 1, 3 and 4 for the first 18 months of the project implementation with the basis for the procurement methods for each component. Immediately upon approval of the Grant, with the Recipient’s agreement, the plan will be published on the Bank’s public website and the Recipient’s intranet website. Once approved, the procurement plan shall be updated in agreement with the Project Team on an annual basis or as required, to reflect the actual project implementation needs and improvements in institutional capacity. Individual contracts under Component 2 are not known yet and will be identified at the end of the first year by each commune after knowing their institutional development grant allocation. Communes will prepare their procurement plans and submit them to the PCU to be reviewed to ensure that they meet the minimum requirements of the Bank and seek the approval of their PRM. It is only after the PCU is satisfied with the quality of the procurement plans the allocated funds shall be transferred to commune budget accounts to implement procurement plans.

Fraud, Coercion, and Corruption: All procuring entities, as well as bidders, suppliers, and contractors shall observe the highest standard of ethics during the procurement and execution of contracts financed under the project in accordance with paragraphs 1.15 & 1.16 of the Procurement Guidelines and paragraphs 1.23 & 1.24 of the Consultants Guidelines. The project will be carried out in accordance with the provisions of the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011. Frequency of Procurement Implementation Support : In addition to the prior review supervision as indicated in the procurement plan, the preliminary capacity assessment of the implementing agency recommended supervision missions to visit the field twice a year and to carry out post review of procurement actions once annually.

Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contract Subject to

Category (Threshold) Method Prior Review US$ US$ 1. Works ≥ 3,000,000 ICB All

< 3,000,000 NCB The first contact

< 50,000 Shopping

No threshold Direct contracting All

2. Goods ≥ 500,000 ICB All

< 500,000 NCB The first contract

< 50,000 Shopping

No threshold Direct contracting All

3. Consultants

Firms No threshold QCBS; LCS; FBS All contracts of US$200,000 and more

< 100,000 CQ

Individuals No threshold IC (at least 3 CVs) All contract of US$50,000

and more

No threshold Single Source All

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(Selection Firms &

Individuals)

All TORs regardless of the value of the contract are subject to prior review

For the details of the Procurement Arrangements for the first 18 months, please see Annex 11.

i. Environmental and Social (including safeguards)

The project is categorized as B implying that the potential environmental and social impacts will be minor, site-specific and manageable to a reasonable level. The Bank safeguards policies apply to the first, second and third component activities. The project triggers two Bank safeguards policies: Environmental Assessment (OP 4.01) and Involuntary Resettlement (OP 4.12).

The project will involve minor civil works which might lead to expected minor environmental impacts, site-specific and manageable to an acceptable level. The nature of the impacts can be direct, indirect, secondary, cumulative, short-term, medium-term and long-term, negative and positive. The negative impacts might come from activities such as potential construction/rehabilitation or extension of facilities. Since the location and nature of these activities are not known, an Environmental and Social Management Framework (ESMF), including an Environmental Management Checklist (EMC), has been prepared. This document has been the subject of consultation and it has been reviewed, approved and disclosed in-country and in the Bank’s Infoshop prior to appraisal.

ESMF will be used by trained personnel in the project coordination unit to provide the project with guidance related to: (i) systematically screening the annual works programs (including subprojects) in terms of risks and environmental sustainability; (ii) identification of potential impacts and appropriate mitigation measures to be implemented for the identified risks; and (iii) developing detailed institutional and operative mechanisms to ensure that the activities under the annual works programs (including sub-projects) remain sustainable and equitable, from both environmental and social viewpoints throughout project implementation. The EMC checklist will review and specify appropriate roles and responsibilities and outline the necessary reporting procedures, for managing and monitoring environmental and social concerns related to the activities undertaken.

The undertaking of activities (including sub-projects) will be agreed during the annual work program discussions. Environmental screening of each activity will be part of the annual work program preparations. During the selection of activities all alternative options will be considered to minimize environmental impact. An environmental impact assessment will be prepared for activities with potential adverse environmental impact. The project coordination unit will be responsible in implementing and monitoring of the ESMF.

From a social safeguards perspective, the activities that are likely to be undertaken by the municipalities (under Component 2 and 3) may, and the activities that are going to be undertaken by MEF (under component 1) will, include construction and minor works, therefore the project triggered the World Bank policy on involuntary resettlement, OP 4.12 for which the Government has prepared a Resettlement Policy Framework (RPF) to guide the response to any potential social impacts. The RPF has been prepared through a consultative process and disclosed in the country as well as at the World Bank’s Infoshop. The undertaking of activities (including sub-

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projects) will be agreed during the annual work program discussions. Social screening of each activity will be part of the annual work program preparations. During the selection of construction sites and the sitting alignment of construction activities all alternative options will be considered to avoid potential involuntary resettlement. A resettlement action plan will be prepared for activities which will involve resettlement. The project coordination unit will be responsible for implementing and monitoring of the RPF.

The PCU will recruit a safeguards officer that will be responsible for following up safeguards issues during project implementation. The safeguards officer will work closely with the Ministry of Environment and Livelihood of Burkina Faso and other ministries. The PCU will be responsible for preparing TORs for any Environmental Assessments/Environmental Management Plans (EAs/EMPs) and Resettlement Action Plans (RAPs); and monitoring whether implementing agencies (ministries and communes), in conjunction with the Ministry of Environment, are ensuring that contractors comply with the recommendations of these studies and environmental and social clauses inserted into their contract. The Bank will provide guidance on the elaboration of the TORS and the Ministry of Environment and Livelihood will be responsible for providing overall quality through the review and clearance of the EAs/EMPs and validating the environmental audit reports to be prepared at the completion of works by the contractors. The Ministry of Environment will also assist in enforcing compliance with Bank safeguards policies and monitoring the implementation of the ESMF. Specific capacity building support on environmental management and environmental assessment will be provided to the communes, the key staff of the PCU and other implementing focal points.

ii. Monitoring & Evaluation The monitoring and evaluation of the project will be under the overall responsibility of the PCU with strong support from the MATDS and MEF with regard to indicators related to the functionality of the intergovernmental fiscal framework.

The project will provide support to both the PCU and indirectly to the Monitoring Department of MATDS to strengthen their monitoring functions to better track progress of local municipalities. Responsibilities for M&E will be shared between actors at the national and communal levels. At the national level, the PCU includes an M&E team responsible for setting up the system, analyzing the data and disseminating information. To monitor progress and impact indicators, the project will establish baseline data at its start-up and hire a specialized institution, which will do an impact analysis at midterm and at the end of the project. The project will build upon the PNGT M&E experience known as a best practice. Details of methods and procedures for monitoring and evaluating progress and impact indicators will be included in the M&E manuals.

In terms of responsibility, the PCU set up within the MATDS will coordinate data collection and consolidation. A mechanism to involve implementing agencies (e.g., Municipalities, DGLPAP) in the system will be established to elicit ownership and promote the use of M&E outputs. In this regard, implementing agencies (as identified) will be strengthened to monitor and evaluate their activities. Data collected and processed by implementing agencies will be transmitted to the PCU, which will consolidate them and produce M&E progress reports and dashboards to monitor project performances.

The M&E section of the Project Implementation Manuals will identify data sources and detail data collection methods, both as regards primary and secondary data, and quantitative versus qualitative data (through Third Party involvement). The PCU will prepare a bi-annual and an annual report that will make an in-depth assessment of progress achieved during the year.

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The PCU will recruit an M&E specialist not later than 3 months after effectiveness. The M&E specialist will be responsible for following up data collection and analysis. The project will finance the design and implementation of a participatory monitoring and evaluation system to:

• Foster accountability and transparency in the management process; • Set mutually agreed, realistic and clear results for this operation; • Engage stakeholders by sharing information on progress made, lessons learned and

improvements; • Measure the gaps between actual and targeted indicator values, thereby identifying

problems; and • Propose corrective measures and alternative solutions, including rectifying measures for

registered gender imbalances.

iii. Role of Partners The activities of development partners in supporting decentralization in Burkina Faso respond to the key policy objectives and implementation programs of the government. A Development Partner Decentralization Consultation Committee meets regularly and provides a forum for the discussion of cross cutting issues related to decentralization reforms, including political economy issues affecting the reforms as well as the coordination of donor support for reforms in administrative and fiscal decentralization. The World Bank is a member of the Development Partner Decentralization Consultation Committee Secretariat. Despite the prominent role that partners play in supporting the implementation of decentralization reform in Burkina Faso, development partner coordination around decentralization has been marred to a certain extent by inter-agency rivalries and a divergence of approaches and interventions.

At the outset of project preparation, the Prime Minister called upon the World Bank to assume a leadership role in promoting enhanced coordination amongst development partners and harmonization of donor programs. Accordingly, the World Bank initiated an innovative approach to project preparation by encouraging the government to include other development partners, including civil society and donors in the actual design of the project. Three working groups comprised of government, development partner and civil society representatives produced a report identifying critical bottlenecks to effective decentralization and outlining recommendations for the project. The project design incorporates the vast majority of recommendations provided.

The design of the project also took into account the existing and proposed projects of other development partners. To strengthen coordination and enhance synergies, the World Bank and the EU have worked closely in defining their respective programs which are due to commence at the same time. The EU’s program, which seeks to support regional decentralization and the de-concentration of specific MATDS functions (related to the FPDCT) in 6 regions, will be complemented by the proposed program which targets support to local levels and supports central ministries in de-concentrating revenue collection, control and procurement functions. Both programs will be managed by the MATDS and a single steering committee chaired by the Prime Minister’s office will provide overall coordination and oversight of both programs. The proposed project also seeks to harness and support ongoing German development cooperation support for the National Local Development Capacity Development Strategy. It will provide financing to local communes to enable municipal staff to access ENAM and ENAREF training supported by German aid. Component 3 participatory monitoring activities will also draw upon

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the Swiss and EU (PROS) experiences in promoting community engagement in local cadre de concertation meetings.

Given the synergies between the proposed project and other development partner projects in decentralization, continued collaboration and information-sharing will be necessary throughout the implementation of the project. To this end, joint supervision missions can be conducted where possible and the World Bank will continue to play an active role in the Secretariat. Through the project’s support for institutional reform and restructuring within the MATDS, the World Bank will promote the consolidation of project implementation units under the auspices of one agency within the MATDS.

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Annex 4 Operational Risk Assessment Framework (ORAF)

Project Development Objective(s)

The objectives of the project are to strengthen the central government’s capacity for decentralization and institutional capacities of municipalities (“communes”) in six regions, and to improve accountability linkages between local policy makers and citizens in said municipalities.

PDO Level Results Indicators:

Deviation of commune level budget implementation from initially approved annual communal budget Actual availability of funds to communes committed by the central government earlier in the budget cycle Notification of indicative allocation of transfer amounts by central government to each commune government by November of preceding fiscal year Increase in the execution rate of annual commune procurement plan Increase in local taxes collected for the commune governments Direct project beneficiaries (number), of which female (percentage) Increase in percentage of citizens rating commune government’s performance satisfactory

Risk Category Risk Rating Risk Description

Proposed Mitigation Measure 1. Project Stakeholder Risks

1.1 Stakeholder

Moderate The Prime Minister’s Office and the MATDS have demonstrated strong ownership for the project and a broad spectrum of stakeholders has been engaged in project preparation. If the political unrest increases, stakeholder positions may change.

Project preparation involved an extensively collaborative process through which stakeholders were directly engaged in supporting project design.

2. Implementing Agency Risks (including FM & PR Risks)

2.1 Capacity

Moderate The PCU core functions will be carried out by staff who have familiarity with Bank

The government has confirmed that any staff assigned to the project will have their

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procedures and with capacity to manage the project full time. However, ministerial staff assigned to execute specific components of the project will need capacity development and incentives to manage project responsibilities. Capacity constraints at the municipal level (including procurement, financial management, reporting and safeguards compliance) also pose a risk to project implementation.

workloads adjusted to accommodate the demands of the project and allow sufficient time for them to devote to project implementation activities. Government staff will be supported by experts who will be appointed on contract or by PNGT staff. A manual of procedures will be developed. Municipalities will receive support from the PCU and the regional offices of the PNGT to strengthen their capacity in managing procurement, financial management, reporting and safeguard compliance.

2.2 Governance

Moderate The MATDS’s weak coordination capacity could jeopardize the complex institutional arrangements for execution.

The Prime Minister’s office will assume overall coordination and oversight functions for the project as chair of the project’s steering committee.

2.3 Fraud & Corruption

Moderate Though the overall perception of corruption in Burkina is relatively modest compared to other WAEMU countries, accountability failures in local government could result in elite capture of project resources.

The PCU will receive technical assistance from the PNGT regional offices to closely monitor local government performance through a results-based approach. The project will also strengthen accountability relationships by enhancing the oversight and monitoring functions of municipal councils and local civil society. The project will also support the effective complaints handling mechanisms at the local level. An external auditor will be recruited with acceptable ToR covering fraud and corruption.

3. Project Risks

3.1 Design

Moderate The design of the project is fairly complex. There is a risk that the multiplicity of ministries, sectors, stakeholders involved could also complicate implementation.

The Prime Minister’s Office effectively led the preparation phase of the project. The convening power of the Prime Minister’s Office will also be harnessed during project

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implementation. The multi-stakeholder steering committee which includes all ministries and sectors involved in project implementation will be chaired by the Prime Minister’s Office and will support the coordination of the overall project.

3.2 Social & Environmental

Low The project’s impact on environmental and social safeguards is expected to be low.

An ESMF and RPF have been prepared to guide the preparation of safeguards instruments (e.g. Environmental Assessments, Environmental Management Plans, Resettlement Action Plans, etc.) once works have been identified during project implementation. The project will strengthen the capacity of the PCU to monitor and apply appropriate safeguards, using the best practices developed under PNGT and through the recruitment of a safeguards specialist. It will also seek to provide an enabling environment to rectify gender imbalances and promote the participation and representation of marginalized groups in monitoring commune performance.

3.3 Program & Donor

Moderate The large number of donors engaged in local development and decentralization makes coordination challenging.

The inclusion of donors in the project preparation working groups helped to strengthen coordination and move towards a harmonization of the multiplicity of donor activities in the sector. Ongoing collaboration during implementation is planned through the use of joint supervision missions, a shared steering committee for the EU project and regular information-sharing through the development partner consultation framework.

3.4 Delivery Quality

Moderate Local governments may not have the resources to maintain the employment of personnel that are trained and recruited through the project. The continued financing of ongoing institutional development needs may be jeopardized by the inability of local

Through their Institutional Development Plans, municipalities will receive resources to develop their administrative capacity to collect revenue. The Institutional Development Framework will identify the development of collection revenue capacity as a priority support category. At the central level, the project will also support the MEF to

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governments to generate resources or the insufficiency of intergovernmental transfers to finance the needs.

better accompany municipalities in the collection of revenue. Increased own source revenue will enable municipalities to retain personnel engaged during the implementation of the project and to finance ongoing institutional development needs.

Overall Risk Rating at Preparation

Overall Risk Rating During Implementation

Comments

Moderate Moderate

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Annex 5: Implementation Support Plan This project marks the beginning of a new programmatic engagement in Burkina Faso on decentralization for the World Bank. At the same time, the project begins at the time of new, sweeping and ambitious reforms proposed in the wake of recent events. The project aims to support policy priorities identified in the CSMOD. The implementation support plan for this project is designed to ensure that the initial setup and take off of the project is assured, both to address technical challenges related to the project itself, as well as to allow the Bank to maintain a close dialogue with Government on decentralization reforms more broadly and to allow continuous engagement with other development partners on the reforms. Initial post-effectiveness support and implementation support The project will require extensive support in the start up and early phases of the project. This is expected to diminish during project implementation as Government implementation capacity strengthens. At mid-term, implementation support will be reviewed and necessary adjustments will be made.

Time Focus Skills Needed Projected

Missions Resource Estimate

Partner Role

First twelve months

Start up phase, Support for the development and implementation of IDPs

Organizational, leadership, safeguards, procurement, communications

4 $300,000 Coordination with EU, UNDP and Donor Coordination Group

12-60 months

PCU Monitoring and Evaluation, Steering Committee evaluation of commune performance Mid-term independent audits and citizen perception surveys

Organizational, monitoring and evaluation


APL1 Review

Review to assess triggers

Intergovernmental fiscal and administrative reforms


Supervision Arrangements It is projected that a total of 17 supervision missions will be required over the project period. Support will be provided in Component 4 to PCU to undertake a semi-annual field survey in advance of each of supervision missions. The PCU will undertake mid-term independent audits and perception survey, which will be undertaken in a random sample of communes. These activities will be the basis of progress review in the implementation of the commune IDPs.

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Skills transfers The government has indicated a strong preference for project management support provided at the national level to ensure an effective and sustainable transfer of skills to the MATDS. This will be achieved by giving careful attention to the scope of work envisaged in the terms of reference of specialists financed in the project, complemented by management oversight and adjustments to the job requirements of government staff. Supervision missions will review progress made with respect to skills transfer. II. Skills Mix Required

Skills Needed Number of Staff Weeks Number of Trips Comments Financial Management 15 6 FM implementation

support mission will be consistent with a risk-based approach, and will involve a collaborative approach with the entire Task Team (including procurement).

Procurement 15 6 Procurement implementation support mission will be consistent with a risk-based approach, and will involve a collaborative approach with the entire Task Team (including procurement).

Project Management 40 6 Project implementation support mission will be consistent with a risk-based approach, and will involve a collaborative approach with the entire Task Team (including procurement).

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Annex 6: Team Composition

World Bank staff and consultants who worked on the project:

Name Title Unit

Serdar Yilmaz Senior Social Development Economist AFTPR Bronwyn Grieve Governance Specialist AFTPR Celestin Bado Senior Operations Officer AFTPR Abdoulaye Kane Urban Specialist AFMBF Mamata Tiendrebeogo Procurement Specialist AFTPC Asli Gurkan Governance Specialist SDV Ousman Kollie Financial Management Specialist AFTFM Amadou Konare Senior Environmental Specialist AFTEN Abdoul-Wahab Seyni Senior Social Development Specialist AFTCS Begnadehi Claude Bationo Operations Officer AFMBF Maman-Sani Issa Senior Environmental Specialist AFTEN Catherine Desiree Gamper M&E Specialist SASDO Catherine Compaore Team Assistant AFMBF Emmanuel Dina Ngollo Environment Specialist, Consultant Ousmane Haidara Health Specialist AFTHE Adama Ouedraogo Senior Education Specialist AFTED Corinne Ilke Ilgun Social Development Specialist and Gender

Focal Point, Consultant AFMBF

Emmanuel Nikiema Senior Natural Resource Management Specialist

AFTEN

Nicolette K. DeWitt Lead Counsel LEGAF Seydou Traore Water and Sanitation Specialist TWIAF Alexandra Sperling Paralegal LEGAF Boubacar Diallo Procurement Specialist AFTPC Aissatou Diallo Senior Finance Officer CTRFC

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Annex 7: Governance and Accountability in Burkina Faso

The recent political and public unrest in Burkina Faso has brought to the fore issues of governance and accountability. The program provides a timely opportunity to address critical issues of local governance and accountability.

The decentralization process is intended to facilitate better accountability and allocative efficiency in social service delivery by creating closer proximity between local populations and local governments / service delivery agents. In practice however, the decentralization process is hampered by a series of accountability failures. This annex uses the World Bank’s World Development Report 2004 - Making Services Work accountability framework to identify accountability failures in Burkina Faso.

Burkina Faso’s 1991 Constitution guarantees its people the right to elect their government freely through periodic multiparty elections. Regular elections since 1991 have ostensibly been ruled as free but not entirely fair, due to the ruling CDP’s access to state resources and media. The lack of effective opposition and electoral law restrictions on independent candidates tend to limit the choice of candidates at election time.

Accountability relationship between local governments and citizens

While the implementation of political decentralization in Burkina has facilitated the direct election of local municipal councilors and the creation of local municipal councils in all 352 communes, the effectiveness of the local council’s oversight function is limited by the lack of separation of powers at the local level. At the commune level, although institutional arrangements conform to a parliamentary model, with the mayor chosen amongst councilors and council having oversight responsibility over the executive branch, the executive remains strong. The mayor is supposed to implement council’s decisions under the latter’s control, without having a veto power. Therefore, de jure the mayor reports to and is accountable to the council. However, de facto there is no separation of powers and the mayor has total control over the council. There are several reasons for the lack of separation of powers. First, the mayor is also the president of the commune council. The mayor/president convokes and presides council sessions. Second, the mayor can make policy decisions without consulting the council. The mayor has regulatory powers (pouvoir reglementaire) and can enact decrees according to the articles 212 and 299 of the CGCT. Third, the lack of capacity of councilors hinders their ability to overview mayoral decisions, as does the unmanageable size of the councils. Fourth, the lack of remuneration for councilors and lack of resources for council meetings (for transportation and accommodation expenditures) are major disincentives for councilors to take their oversight responsibility seriously.

In addition, the CGCT gives broad powers to the central authorities that undermine local accountability. According to the CGCT, central authorities (tutelle) can suspend or revoke local government executives and deputies for gross negligence (faute lourde) linked to mismanagement or corruption. Councils may also be dissolved if they become dysfunctional. Such measures however require a Council of Ministers’ decree upon reporting by the Minister of MATDS. When this occurs, tutelle authorities take over until the election of a new council within 60 days. The vagueness of this provision allows councilors to force a new election by boycotting sessions, thus triggering the dissolution procedures (World Bank, 2007).

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In principle, citizens can also interact directly with their elected representatives and the executive to demand accountability and to monitor local government performance. In Burkina Faso, citizen voice is particularly weak at local levels. The legacy of the dominant Mossi society21

Beyond municipal elections, the legislative framework provides citizens and local civil society with formal avenues for participation, including through the elaboration of annual communal development plans and through access to municipal council sessions and cadre de concertation meetings. Yet these processes of inclusion and institutionalized fora for participation tend to be superficial or one-sided. They focus on engaging actors in consultation but not necessarily being responsive to their demands. This has particular repercussions at the local level. While citizens are formally consulted in the elaboration of the communal development plans, they are rarely engaged in the monitoring of the implementation of these plans. Local civil society actors tend not to participate actively or substantively in the formal avenues for consultation. In part this is due to the lack of resources they have at their disposal to participate (transportation etc.). It is also due to the limited capacity of civil society at the local level to substantively monitor commune performance: civil society and local authorities’ roles are not always separated at the local level, civil society actions tend to be poorly coordinated and civil society actors do not make use of investigative participatory tools (score-cards, audits), limiting the extent to which they can substantively engage in the independent analysis of programs.

and colonial rule has entrenched hierarchical political and administrative structures and ordinary citizens are reticent to challenge elites and less implicated in politics, which is seen as an elite affair. Recent events have, however, demonstrated the emergence of an increasingly active and engaged citizenry at local levels. Nationwide and locally specific public protests often directed at local governments or de-concentrated agencies are increasingly becoming a vehicle for voice. The country’s dependence on official development assistance (ODA) has also shifted the lines of accountability away from citizens and towards donors.

There is no formal Access to Information legislative or regulatory framework in Burkina Faso. Accordingly there are no redress mechanisms for citizens to whom access to information is denied. The bureaucracy has neither the systems in place, nor the resources to facilitate information disclosure on demand. At the local level, a culture of secrecy prevails and citizens’ access to information is hindered by the reluctance of municipalities to share information and by limited administrative capacity / resources to make information readily available in an accessible and regularly up-dated manner (illiteracy affects approximately 70% of the Burkinabe population).

The accountability relationship between locally elected representatives and service delivery providers is particularly weak. There are limited incentives for service providers to respond to levels of user satisfaction which are not factored in to the measurement of outcomes in the social service sectors. While local governments have been vested with authority to manage many social services, they lack control over human resources, have limited financial resources and are constrained by extensive a priori central state controls. There is a resultant confusion as to which level of government service providers must account, with many providers continuing to account to central or de-concentrated authority to the exclusion of local authorities. At the front-line

Accountability relationship between local governments and service providers

21 The Mossi are unique in Western Africa for their centralized and hierarchical life style. The Mossi people have organized their society in an original hierarchic process in which family and state are the key elements.

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provider level, the lack of resources and poor information collection and reporting systems further weaken the compact between local governments and service providers.

Unconstrained by its compact with policy-makers, service providers tend to operate in monopolistic fashion with little regard for citizen feedback or engagement. Citizens have little or no information on performance or targets at the service provision level. While Burkina has formalized the use of community-based management committees (COGES) in health and education and water user associations, this has resulted in a blurring of responsibilities – with community ‘representatives’ assuming the dual role of manager and supervisor. Local community associations that have developed around the sectors, such as parent teacher associations (APE), often step into the place of service delivery providers (by, for example, collecting funds from parents to purchase text books when state funding is not made available in time for the school year), rather than directly demanding performance from providers. As noted earlier, few civil society organizations make use of tools to systematically and accurately monitor service delivery performance on behalf of citizens.

Accountability relationship between citizens and service providers

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Annex 8: Decentralization in Burkina Faso: Issues and Challenges

Background The 1991 Constitution articulates a vision for local governance and citizens’ participation.22 In 1993, the government enacted five local government laws to establish territorial administrations, to define the administrative structure of municipalities, and to set the electoral rules for local government authorities.23 The same year, an independent commission (Commission Nationale de la Décentralisation--CND) linked to the Prime Minister’s office was established to advise the government on its decentralization strategy.24 Its work laid the ground for the first local elections, which were held in 1995 in 33 urban municipalities (then known as “communes de plein exercice”). The CND’s recommendations also informed another wave of legislation to advance decentralization reforms in 1998.25

In 2001, a new unit of administration was introduced: the region. With the creation of regions, the number of territorial collectivities was increased from two (municipality and province) to three.

The main objective of the new set of legislation was to give a more coherent orientation to decentralization and to design a strategic implementation program. In September 2000, a second round of municipal elections, this time for all urban municipalities, was held under the new legal and institutional framework.

26 However, in 2003, provinces were abolished as decentralized entities and stayed as deconcentrated units.27

In 2004, The General Code for Territorial Collectivités (Code Général des Collectivités Territoriales--CGCT) was adopted. The CGCT confirmed the two levels of decentralized local government structures, region and municipality (distinguishing between urban and rural municipalities), and communalized the whole country (communalisation integrale). Today, Burkina Faso has 13 regions, 49 urban municipalities – two of which (Ouagadougou and Bobo-Dioulasso) have a specific status – and 302 rural municipalities. At the deconcentrated

22 Articles 144 and 145 of the 1991 Constitution stipulate that “The creation, suppression and division of territorial collectivities shall be defined by law” and “Democratic participation of populations to the administration of territorial collectivities shall be organized by law.” 23 These five laws are: (i) Loi n°003/93/ADP du 7 mai 1993 portant organisation de l’administration du territoire au Burkina Faso; (ii) Loi n°004/93/ADP du 12 mai 1993 portant organisation municipale; (iii) Loi n°005/93/ADP du 12 mai 1993 portant statut particulier de la province du Kadiogo et de la Commune de Ouagadougou; (iv) Loi n°006/93/ADP du 12 mai 1993 portant statut particulier de la Commune de Bobo-Dioulasso; (v) Loi n°007/93/ADP du 12 mai 1993 portant régime électoral des conseillers de village, de secteur communal, de département et de province. 24 The CND was created as an independent commission by the décret N°93-350/PRES/PM du 16 novembre 1993. The Commission conducted numerous research projects, studies and communication campaigns, to raise awareness about and inform the decentralization process. Today, it is attached to the Ministry of Territorial Administration and Decentralization (MATD). 25 The legislation enacted in this period included: (i) Loi N° 040/98/AN du 3 août 1998 (JO 1998 N°38) portant orientation de la décentralisation au Burkina Faso which defines basic principles for decentralization in Burkina Faso; (ii) Loi N°041/98/an du 06 août 1998 (JO N°38 1998) portant organisation de l'administration du territoire au Burkina Faso which establishes the distinction between administrative circumscriptions (village- department- province) and the decentralized entities (municipality and province); (iii) Loi n°042/98/AN du 06 août 1998, portant organisation et fonctionnement des collectivités locales which describes governance structures (executive and legislative branches) of decentralized entities, local administrations, state agents in decentralized entities, consultative bodies at the local level; and (iv) Loi N° 43/98/AN du 6 août 1998 (JO 1998 N°38) portant programmation de la mise en œuvre de la décentralisation which lays out the timetable for implementation of decentralization reform. 26 Loi 13-2001du 2 juillet 2001 relative a la création des régions. 27 Loi n° 049-2003/AN du 6 août 2003 portant modification de la loi n° 041/98/AN du 6 août 1998, portant organisation de l’administration du territoire au Burkina Faso.

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level, a 2005 decree maintains the three tiers of territorial administration with 13 regions, 45 provinces, and 350 departments. 28

The local government elections in 2006 were a landmark event in the history of local governance in Burkina Faso. It allowed for the election of the first regional and rural municipal councilors, and the second generation of councilors in urban municipalities, except in the 33 initial “pilot” urban municipalities where representative were elected for the third time.

Local government structures in Burkina Faso

There are two types of local government structures: decentralized and deconcentrated (see Figure 1). Deconcentrated units are the representatives of the central government and have supervision (tutelage) responsibility over decentralized units.

Figure 1: Decentralized and deconcentrated local governments in Burkina Faso

A regional council is in charge of regional administration, which is indirectly elected and composed of two representatives per municipal council. The three standing committees of the regional council are: social and cultural affairs, economic and financial affairs and environment and local development. The regional council may also create ad hoc committees for specific matters. Regional government is headed by a president and two vice-presidents, selected by the councilors from amongst themselves. A secretary general, who is an employee of the MATDS, assists the regional president.

Decentralized units

Municipal council members are directly elected by popular vote. The municipal mayor and its two adjuncts are elected by and within the municipal council. A secretary general, appointed by the MATDS assists the mayor. Similar to the arrangements prevailing at the regional level, there are three permanent commissions of a municipal council. Ad hoc commissions may also be established for specific issues. There are two types of municipalities: urban and rural.

28 Décret n° 2005-045/PRES/PM/MATD du 03 février 2005 portant attributions du Gouverneur de région, du Haut-commissaire de province, et du Préfet de département.

Central Government

Territorial Collectivities (Decentralized Local Governments)

Administrative Circumscriptions (Deconcentrated Local Governments)

Tutelage

Regions (13) Regions (13)

Municipalities (351) Provinces (45)

• Urban Municipalities with Special Status (2) • Urban Municipalities with Ordinary Status (47) • Rural Municipalities (302)

Departments (350)

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Urban municipalities have either ordinary or particular status. Urban municipalities with ordinary status have at least 25,000 inhabitants and their economic activities allow generating yearly budget resources exceeding 25,000,000 CFA (about 50,000 USD). Their territory is organized in sectors or villages. Urban municipalities with particular status have at least 200,000 inhabitants and their economic activities allow generating yearly budget resources exceeding 500,000,000 CFA (about 1,000,000 USD). Their territory is organized in agglomerations covering sectors and/or villages. Two urban municipalities, Ouagadougou (administrative capital) and Bobo-Dioulasso (economic capital) have special status.

Rural municipalities are a grouping of villages with a population of above 5,000 inhabitants whose economic activities allow generating yearly budget resources exceeding 5,000,000 CFA (about 10,000 USD). Villages are endowed with development councils (Conseil Villageois de Développement - CVD), set up by municipal legislatures. They are in charge of promoting local economic development in the village.

According to the 2006 census more than 62 % of the population lives in rural commune jurisdictions (see Table 1).

Table 1: Distribution of population across different types of local governments

2006 Population Number Share

Rural communes 8,806,000 62.82%

47 Urban communes 3,182,000 22.70%

Ouagadougou 1,475,000 10.52%

Bobo-Dioulasso 554,000 3.95%

Total 14,017,000 100%

There are 13 (deconcentrated) regions whose territory coincides with the 13 decentralized regions. The head of a regional deconcentrated administration is a governor, who is the representative of the central government. The governor’s main responsibility is to ensure compliance with laws, regulations, and decisions. The governor is responsible for overseeing decentralized regional administration (collectivite territoriale) and approving decisions made by the decentralized regional administration president and council.

De-concentrated units

29

The province is the intermediary level of deconcentrated administration. There are 45 provinces whose territory covers several municipalities and departments. A high commissary, appointed by the central government, is the head of the province. Like the governor, the high commissary’s main responsibility is to ensure compliance with laws, regulations and central government decisions. The high commissary is responsible for overseeing urban and rural municipalities, providing prior approval for their budgets and decisions (tutelle).

The department is the lowest level of deconcentrated administration. It is headed by a prefect, appointed by the central government. The prefect’s responsibility is to verify the compliance of decentralized units with laws and regulations.

Administrative Decentralization Issues

29 This top-down supervision model by central state vis-à-vis local governments is called tutelle. It is a typical feature of the colonial system inherited by Burkina Faso.

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In Burkina Faso, central government retains large ex-ante controls on most sub-national governments’ decisions, through the exercise of tutelle powers. As a result of this arrangement, local governments’ ability to make decisions is starkly hindered by central government involvement in local government affairs. The tutelle implies a top-down supervisory model entailing an oversight role of the central state vis-à-vis local governments. The tutelle of the MATDS is carried out by the central government representatives at the deconcentrated level; by the Governor of regions for (decentralized) regions and the High-commissary of provinces for rural and urban municipalities. The central government, through its tutelle, retains large ex ante controls on most decisions taken by decentralized local governments (see Table 1). Approval or prior authorization is required for all decisions with financial impact. Other decisions are only considered in force once they have been transmitted to the tutelle.

In Burkina Faso, more than 56 % of the civil servants reside in the Centre region where the capital city Ouagadougu is located (see Table 2). To attract and retain staff at the local level, a 2006 law created the equivalent of a local civil service statute.

Civil service management

30

However, despite the adoption of the law, human resources management functions continue to be performed by the central government. Due to the resistance from civil servants to join local governments, the central government has decided to keep the local government staff under the central authority, until they retire. Even when the “local civil service statute” law is fully implemented, it will only provide limited power to local governments. They will control recruitment and will be able to offer incentives for attracting qualified staff in poor and/or remote areas,

This local administration would include the key posts of general secretary, financial controller, and accountant. A local administration is envisioned to manage day-to-day activities of a commune government, under the elected councils’ supervision. The new local civil servants would be subject to hiring, promotion and firing by decentralized local governments instead of being managed by the central government.

31

The central government seconds one top civil servant in all municipalities for the key position of secretary general. Paid by the MATDS, the secretary general is a valuable asset for the local government given his/her knowledge of administrative processes and experience in management.

but they will have no flexibility over salaries, limited ability to fire, and a narrow leeway over promotion which is based on seniority. These issues will be regulated by ministerial decrees.

Table 2: Distribution of Civil Servant across regions Region Number of Civil Servants Share Boucle du Mouhoun 4,588 4.91% Cascades 1,834 1.96% Centre 52,594 56.33% Centre-Est 3,720 3.98% Centre-Nord 4,823 5.17% Centre-Ouest 4,437 4.75% Centre-Sud 2,103 2.25%

30 Décret No 2007 - 006 /PRES - promulguant la loi no 027-2006/AN du 05 décembre 2006 portant régime juridique applicable aux emplois et aux agents des collectivités territoriales. 31 Article 76 of the Decree No 2007 - 006 /PRES authorizes local governments to offer “indemnities justified by hardships or risks of the employment,” as well as “in-kind benefits.”

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Est 3,337 3.57% Hauts-bassins 5,106 5.47% Nord 4,088 4.38% Plateau Central 1,716 1.84% Sahel 2,346 2.51% Sud-Ouest 2,668 2.86% Total 93,360 100.00%


Subnational governments’ discretion over procurement process is very low as it requires prior authorization and close monitoring by the central government.

Procurement

32

Both nationally and locally, bodies intervening in the procurement process include:

Since local governments are usually not aware of formal procedures, tenders are conducted by deconcentrated authorities according to national regulations and guidelines, with limited involvement from local governments.

• The Person Responsible for Procurement (PRM); • The Tender Commission (Commission d'attribution des marchés--CAM); • The Acceptance Commission (Commission de réception--CR) ; • The Public Procurement General Directorate (Direction générale des marchés publics--

DGMP); and • Public Procurement Regulatory Authority (Autorité de régulation des marchés publics--

ARMP).

At the regional and municipal levels, the president of a region and the mayor of a commune designate the Person Responsible for Procurement. The CAM is headed by the secretary general and includes representatives of deconcentrated units as members. Observers may be invited to CAM meetings. At the regional level, representatives of donor agencies, a competent financial controller, and a representative of the DGMP are invited as observers.

All tenders above 1,000,000 FCFA (about 2000 USD) must be accepted by a special Commission composed of the local government’s representative in charge of finances, the PRM, and representatives of deconcentrated units. Observers may include the internal controller and representatives of the contracting local authority, a donor agency, local business associations and the DGMP. Tender proceedings are monitored by the DGMP. The Directorate exerts a priori control over procurements, through its special agents posted to regional administrations. In particular, it is in charge of ensuring that tenders are conducted in compliance with national regulations. Established in July 2008, the ARMP issues procurement regulations and ensures implementation of these regulations. In addition, it is responsible for carrying out a posteriori controls, instigating external audits and settling tender disputes.

Fiscal Decentralization Issues The CGCT foresees that all responsibilities of local governments should be matched by appropriate transfer of resources through a mix of fiscal sources, financial transfers and borrowing powers. In practice, however, local governments have very limited discretion over their fiscal policy and transfers from the central government are insufficient and unpredictable.

32 See Décret N° 2008 -173/PRES/PM/MEF 16 avril 2008 portant règlementation générale des marchés publics et des délégations de service public, JO, N°18, 1 May 2008 (see in particular articles 166-170).

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Expenditure decentralization is very low. In 2005, expenditures of urban municipalities represented only 1.9 % of government expenditures despite several years of decentralization reforms in urban areas (World Bank 2007). The CGCT assigns expenditures according to two principles: subsidiarity and progressiveness. The subsidiarity principle implies that activities are assigned to the level that can best carry them out. The code specifies the distribution of competences between the two levels of sub-national government. Regions are responsible for development coordination and planning. They are responsible for delivering specific services, including secondary schools and second-level health centers. Municipalities are responsible for building and managing most basic socioeconomic infrastructures, such as kindergartens, primary schools and clinics.

Expenditure Assignment

However, the assignment of service delivery responsibilities between central and municipal governments is not always clear. While some competences are exclusive (such as preschools), some others are shared (secondary education). The Code contains vague provisions requiring local governments to “participate” or “provide their opinion” without further precision on respective responsibilities for decision making. Some of the ambiguity is also related to the fact that the CGCT articles need to be enforced through decrees and service delivery guidelines, which have not yet been issued yet.

The progressiveness principle means that responsibilities are transferred gradually to local governments as their capacity increases. Among the 11 functions stated for devolution to local governments,33 only four were initially transferred to the urban municipalities.34

In 2006, more than half of the total municipal expenditures were on recurrent expenses (53.4%): personnel (29.2 %), transportation (14.9%), office supplies (16.9%), utility bills (23.8%), interest payment (0.00%), subsidies (0.00%), and other expenses (0.00%).

In rural municipalities and regions, the transfer of responsibilities was supposed to take place within three years after the 2006 local elections

35

Table 3: Municipal Expenditures in 2006

Table 3 presents an urban/rural breakdown of the total municipal expenditure in 2006. Nearly 95 % of total municipal expenditures were in the urban areas where only 37 % of the total population lives. More than half of the total municipal expenditures were in the capital city, Ouagadougu, and its vicinity.

2006 Expenditure (in billion CFA) All Communes Ouaga Bobo 47 Urban

Communes 47 Urban

Communes+Ouaga+Bobo

Recurrent expenditures 10.784 5.273 1.963 2.852 10.089

Capital expenditures 9.419 5.843 1.018 2.231 9.091

Total 20.203 11.116 2.981 5.083 19.18

Share of recurrent in total 53.4% 47.4% 65.9% 56.1% 52.6%

Share of capital in total 46.6% 52.6% 34.1% 43.9% 47.4%

33 These eleven functions are defined in Articles 80 through 105 of the CGCT as (i) land, (ii) communal development and physical planning; (iii) environment and natural resources management; (iv) planning and economic development; (v) health and hygiene; (vi) education, literacy, and vocational training; (vii) culture, sports, and leisure; (viii) civil defense, assistance, and social protection; (ix) funeral services and cemeteries; (x) water and electricity; and (xi) marketplaces, slaughterhouses, and fairs. 34 They are (i) culture, youth, sports, and leisure; (ii) pre-schooling, primary education and literacy; (iii) drinking water distribution and sanitation; (iv) health. 35 In 2006, rural communes were not established as decentralized local governments yet. 302 rural communes with elected leadership were established in 2007.

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Share of Urban in total expenditures 94.9% Share of Urban in total recurrent 93.6% Share of Urban in total capital 96.5%

Share of Ouaga in total expenditure 55.0% Share of Ouaga in total recurrent 48.9% Share of Ouaga in total capital 62.0%

Share of Ouaga&Bobo in total expenditure 69.8% Share of Ouaga&Bobo in total recurrent 67.1% Share of Ouaga&Bobo in total capital 72.8% Source: Dafflon and Madies, 2010.

More importantly, spending at the local level does not correspond to the prioritization of needs at the local level. Table 4 provides sectoral spending levels and levels of poverty at the regional level. Per capita spending is highest in the Sahel and Centre-nord regions where poverty levels are relatively low. The information in the table is consistent with the visual presentation in figures 2 & 3 below.

Table 4: Government spending per region, 2010 (Millions de CFA)


In Burkina Faso, there are four different types of municipal revenues:

Revenue Assignment

(1) National taxes: For this group of revenues, taxing authority remains largely with the central government. Central government retains control over the determination of base and rates on the six main taxes: 1) mortmain tax (taxe des biens de mainmorte), 2) residency taxes, 3) license tax (patente), 4) informal sector contribution (contribution du secteur informel), 5) taxes on firearms, and 6) land tax (taxe de jouissance).

REGIONS Agr

ic E

lev

Pêc

he E

nv

Indu

str A

rtisa

nat

Eau

& a

mén

Hyd

ro-a

gric

Ene

rgie

Tran

spor

t

Educ

atio

n et

form

atio

n

Sant

é &

VIH

/SID

A

Aut

res

Tota

ux (M

io C

FA)

Pop

ulat

ion

2006

('00

0)

Tota

ux 2

010/

pop

2006

(CFA

)

Indi

ce d

e pa

uvre

té

Sahel 228 0 66 114 110 64 121 702 621 1 131 37Centre-nord 131 0 245 8 75 89 48 109 706 641 1 101 34Plateau central 105 0 346 64 110 9 36 669 696 961 59Boucle du mouhoun 250 57 300 16 232 107 96 46 1 104 1 443 765 59Centre-sud 134 0 22 78 63 48 33 379 532 713 66Est 176 47 139 13 8 132 80 65 660 1 212 544 41Hauts-Bassins 145 28 197 266 43 48 38 766 1 470 521 35Sud-Ouest 71 0 46 140 42 127 30 457 968 472 57Centre-ouest 139 0 234 114 125 21 63 697 1 727 403 41Centre 26 40 206 126 60 3 20 480 1 202 399 22Nord 164 0 116 11 104 64 14 473 1 186 399 69Centre-Est 77 28 198 8 48 42 51 3 454 1 187 383 55Cascades 92 19 29 53 62 0 31 286 1 132 253 39National 111 0 11 92 73 100 212 599 14 017 43 46Total 1 848 219 2 155 56 1 410 1 162 759 823 8 431 14 017 601

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(2) Local taxes: For this group of taxes (i.e. entertainment tax, gambling tax, advertisement tax, refuse collection and disposal tax), local governments have the autonomy to revise base and rates.

(3) Revenue for communal service provision: For this group of fees (i.e. slaughterhouse fee, service delivery charge, health service charge, charges on State services, funeral tax), municipalities collect a set fee.

(4) Revenues in communal domain: For this group of revenue items (i.e. fee for commercial activity, cemetery concessions, beautification fee), local governments have the autonomy to revise base and rates.

For municipal governments the buoyant sources of revenue are the first group of items (on average the first group is one fourth of total municipal revenues, including transfers). However, these revenues are collected by a deconcentrated agent (public accountant), an employee of the Treasury Department or the Tax Department of the MEF. Although, the total municipal revenues, including transfer revenues, of municipal governments in Burkina Faso has been increasing since 2007, the gap between urban and rural local governments’ revenue raising capacity remains the same (see Table 5). In 2007, urban commune governments’ per capita revenue raising capacity of CFA 2,806 (around USD 6) was 4.3 times higher than rural communes’ capacity of CFA 660 (around USD 1.3). In 2008, it was 5.8 times higher (Urban CFA 4,587 (around USD 9.8) vs. Rural CFA 788 (around USD1.6)). In 2009, the ratio came down to 4.1 (Urban CFA 4,527 (around USD 9.9) vs. Rural CFA 1106 (around USD 2.4)). Table 5: Total revenues of municipalities, 2007-2009

Revenues 2007

(in million CFA) Per

capita* 2008


capita* 2009


capita*

49 Urban Communes 14,625,630 2,806 23,905,939 4,587 23,592,596 4,527

302 Rural Communes 5,810,389 660 6,943,050 788 9,742,582 1,106

Total 20,436,019 1,457 30,848,989 2,200 33,335,178 2,378 Source: Vaillancourt, 2010. * 2006 census figures are used.

Revenue raising capacity also has a regional dimension. Both rural and urban communes in the Centre and Cascades regions have the highest capacity (see Tables 6&7). The regions with the highest revenue raising capacity of urban governments are Centre, Cascades, Centre Sud, Hauts Bassins, Plateau Central and Sud Ouest (see Table 6). The regions with the highest revenue raising capacity of rural governments are Centre and Cascades (see Table 7).

Revenue collection

The responsibility for collecting the revenues of the local governments is with the deconcentrated departments of the MEF. Revenues are collected by MEF staff but they might be assisted by temporary personnel recruited and paid for by local governments for the collection of some local taxes which are generally user fees. For the collection of the revenue of the local governments, the staff of the MEF are not assigned target values, as is the case for the collection of central government revenues. Consequently, the collection of these taxes does not receive a high level of priority and the level of collection is generally lower than it should be.

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Table 6: Per capita revenues of urban communes across regions (2007)


COMMUNES BO

UC

LE D

U M

OU

HO

UN

CA

SC

AD

ES

CE

NTR

E

CE

NTR

E E

ST

CE

NTR

E N

OR

D

CE

NTR

E O

UE

ST

CE

NTR

E S

UD

ES

T

HA

UTS

BA

SS

INS

NO

RD

PLA

TEA

U C

EN

TRA

L

SA

HE

L

SU

D O

UE

ST

Total% CU avec R1>1000cfa 33% 100% 100% 83% 0% 75% 100% 40% 100% 75% 100% 50% 100% 69%# de CU 6 3 1 6 3 4 3 5 3 4 3 4 4 49# de CU avec R1>1000cfa 2 3 1 5 0 3 3 2 3 3 3 2 4 34OUAGADOUGOU 9 617 9617POUYTENGA 4 237 4237BOBO-DIOULASSO 3 976 3976BANFORA 3 082 3082KOUDOUGOU 2 954 2954OUAHIGOUYA 2 853 2853GAOUA 2 796 2796ZINIARE 2 610 2610MANGA 2 456 2456DIEBOUGOU 2 366 2366KOUPELA 2 007 2007BOROMO 1 783 1783NIANGOLOKO 1 747 1747ORODORA 1 733 1733HOUNDE 1 717 1717DEDOUGOU 1 710 1710BITTOU 1 688 1688GOURCY 1 586 1586TENKODOGO 1 532 1532DJIBO 1 527 1527FADA N’GOURMA 1 476 1476KOMBISSIRI 1 476 1476LEO 1 401 1401ZORGHO 1 352 1352PO 1 324 1324YAKO 1 246 1246REO 1 240 1240BOUSSE 1 156 1156DANO 1 155 1155PAMA 1 144 1144DORI 1 126 1126OUARGAYE 1 060 1060SINDOU 1 051 1051BATIE 1 050 1050

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Table 7: Per capita revenues of rural communes across regions (2006)


In Burkina Faso, the intergovernmental transfers system is fragmented across 6 different transfer schemes (see Table 8):

Financing the Fiscal Gap: Intergovernmental Transfer System Design

(1) Dotation Globales: In order to enable local governments to finance the extra expenditures related to the devolved competencies, two new types of grants were established in 2007: one for operation (Dotation générale de fonctionnement - DGF) and another for investments (Dotation générale d 'équipement - DGE). The grant allocation is determined each year by a joint decree of the MATDS and the MEF. Then, regions receive 10% of DGF and 20% of DGE, while municipalities receive respectively 90% and 80%. In 2007, intergovernmental transfers represented about 29 % of the total amount of the municipal budgets (World Bank, 2007). In 2009 and 2010, per capita total DGF and DGE transfer amounts were less than one US dollar, the total amount transferred to communes in each year was a little over USD 11 million (see Table 7).

(2) Permanent Development Fund for Local Governments (FPDCT): FPDCT was created in 2007 under the leadership of the MATDS and the MEF. The Fund is meant to provide

COMMUNES BO

UC

LE D

U M

OU

HO

UN

CA

SC

AD

ES

CE

NTR

E

CE

NTR

E E

ST

CE

NTR

E N

OR

D

CE

NTR

E O

UE

ST

CE

NTR

E S

UD

ES

T

HA

UTS

BA

SS

INS

NO

RD

PLA

TEA

U C

EN

TRA

L

SA

HE

L

SU

D O

UE

ST

R1

> 10

00

% de CR avec R1>1000cfa 7% 29% 83% 8% 4% 3% 6% 9% 13% 0% 6% 0% 8% 9%# de CR 41 14 6 24 25 34 16 22 30 27 17 22 24 302# de CR avec R1>1000cfa 3 4 5 2 1 1 1 2 4 0 1 0 2 26ZEGUEDEGUIN 5 134 5 134KOMPIENGA 3 222 3 222SAABA 3 108 3 108SIBY 2 485 2 485SAMOGOHIRI 2 427 2 427BAGRE 2 013 2 013BEREGADOUGOU 1 850 1 850KYON 1 848 1 848DOUNA 1 792 1 792OUESSA 1 718 1 718KOUBRI 1 666 1 666WOLONKOTO 1 598 1 598BEGUEDO 1 587 1 587TANGHIN-DASSOURI 1 529 1 529N’DOROLA 1 499 1 499MOUSSODOUGOU 1 421 1 421POURA 1 402 1 402KOUROUMA 1 374 1 374PABRE 1 364 1 364KOMSILGA 1 286 1 286BINDE 1 284 1 284LOUMBILA 1 270 1 270BOMBOROKUY 1 228 1 228KOPER 1 213 1 213TOUSSIANA 1 205 1 205NAMOUNOU 1 106 1 106

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financing for the infrastructure investment needs of communes. The government has committed to put CFA 5 billion (around USD 10 million) each year.

(3) Petroleum Tax: The CGCT prescribes that ten percent of the taxes levied on petroleum products (Taxe unique sur les produits pétroliers – TUPP) be transferred to local governments. Currently, these resources are used to finance construction of regions and municipalities’ headquarters. The distribution formula has however not been clearly defined.

(4) Financing for the construction local government facilities: In addition to TUPP resources, the government provides resources for the construction of local government facilities at the regional and commune level. The distribution of these resources is not formula based.

(5) Salaries of previous provincial agents working at the local level. (6) Transfer of resources from line ministries for the functions devolved to the communes.

Table 8: Transfer Amounts in 2009 and 2010

2009 2010

CFA USD CFA USD

Dotations globales 6,650,000,000 14,148,936 6,819,991,000 14,061,837

Dotation aux régions 1,177,000,000 2,477,897 1,227,591,000 2,531,115

Dotation aux communes 5,473,000,000 11,522,105 5,592,400,000 11,530,722

Renumération ex-agents provinciaux 310,000,000 652,631 305,219,000 629,318

Taxe sur les produits pétroliers (TUPP) 2,597,000,000 5,467,368 2,826,817,940 5,828,491

FPDCT/tranche subvention Etat investissement 5,000,000,000 10,526,315 5,000,000,000 10,309,278

Construction sièges des collectivités territoriales 1,000,000,000 2,105,263 790,460,000 1,629,814

Transfert de ressources financières 2,014,000,000 4,240,000 10,775,895,360 22,218,341

When the transfer system was established in 2007 for the first year of operation of the rural communes, the resources were received by the communes during the second half of the fiscal year and it was almost impossible to use them in a timely manner. Recently, there have been some improvements in the flow of resources to local governments; however, the issue that remains is the lack of clarity on how the amount of the transfer is determined and how it is distributed among the local governments.

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Figure 2: Poverty Incidence, 2006

Figure 3: Per Capita Expenditure (PCE), data by Region, 2006

Source: PER (2009: 38).

PI>60%

40%<PI<60%

PI<25%

25%<PI<40%

PCE>50

30<PCE<50 8<PCE<10

10<PCE<13

PCE<8 13<PCE<15

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Annex 9: Muncipal Audits to Identify Local Government Needs

As part of Decentralized Urban Capacity Building Project (PRD) activities, municipal audits were conducted in five urban communes: Koudougou, Fada N‘Gourma, Manga, Ouahigouya and Tenkodogo. The organizational audits identify significant weaknesses in the operational capacity of these communes and make recommendations with respect to the functional needs of each local government. Despite variations in the size of the communes audited, the audits demonstrate a degree of uniformity across urban communes in terms of the extent and nature of weaknesses in local government functionality. The Local Government Support project will extend the audit exercise to all urban and rural communes covered by the project to enable a comprehensive and detailed analysis of local government needs. It is expected that the audits of rural communes will identify greater challenges, given that rural communes have been operating for a shorter period of time and have access to significantly fewer resources. This annex provides a summary of the audits conducted under the PRD. The audits were conducted by a series of trained consultants who applied a uniform methodology to collect information from local governments, to conduct inventories and to carry out a needs assessment for each commune. The audit reports identify (i) the formal structures and functions of each commune; and (ii) an inventory of material, financial and human resources available. The reports than analyze the functioning of the communes in practice, identifying weaknesses in operational capacity and organization and providing recommendations. Formal structures and functions of the commune: The legal and policy framework of the urban communes is centered on the CGCT, a local public servants law and several decrees regulating council functions and transferred competencies, as well as the Communal Development Plan. The urban communes audited have relatively sophisticated formal structures. The deliberative organ of the commune, the council, is formally organized into three commissions: the Commission on General, Social and Cultural Affairs, the Commission on Economic and Financial Affairs; the Commission on the Environment and Local Development. The executive organ of the commune is comprised of a council member-elected mayor assisted by two deputies. The mayor is also the head of the commune administration and is responsible for (i) the administrative and technical services offered by the mayoral office; (ii) the management of personnel and material; and (iii) technical relations between the commune and state services. Each commune possesses a fairly elaborate administrative organizational chart which varies from one commune to the next:

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Organizational structure of Fada N’Gourma

Organizational structure of Ouahigouya

Conseil municipal

Maire

Sécretariat Général

Service de l'Etat civil Service domanial

Service de la Police Municipale

Service Administratif et financier

Bureau des finances et Régie de recettes

Bureau chargé des affaires administratives

Secretariat Pool dactylographes

Accueil information

Cabinet

EPCD

Maire

Secrétariat particulier Secretariat Général

Direction de l’Administration et

des Finances

Service de l'Etat civil

Service des la Comptabilité Régie des Recettes

Services des Ressources

humaines et du matériel

Direction des Affaires Sociales,

Culturelles, Sportives et de la

Jeunesse

Secrétariat du SG Service Informatique

Direction des Services

techniques Municipaux

Service de la VoirieServices des

Domaines et de l' Habitat

Service de l'Hygiène et de

l'Assainissement

Direction de la Police municpale

Cabinet

85

Resources: As the table below indicates, the financial resources available to the urban communes are relatively important in comparison with rural communes: Financial resources of five urban communes over five year period (2004 – 2008):

Revenue anticipated Revenue collected

Operational Investments Total Rate Total Rate

Koudougou

Total 3 693 893 361 2 543 628 314 1 972 572 642 77,55 571 055 672 22,45

Average 615 648 894 423 938 052 328 762 107 77,55 95 175 945 22,45 Fada N’Gourma

Total 1 240 242 145 997 595 558 847 043 140 84,91 150 552 418

15,09

Average 206 707 024 166 265 926 141 173 857 84,91 25 092 070

15,09

Manga

Total 601 383 087 463 213 670 406 650 240 87,79 56 563 430

12,21

Average 100 230 515 77 202 278 67 775 040 87,79 9 427 238

12,21

Ouahigouya

Total 3 960 712 912 1 997 824 808 1 486 968 347

74,43 510 856 461

25,57

Tenkodogo

Total 1 186 277 911 933 941 229 701 416 884 75,10 232 524 345

24,90

Moyenne 237 255 582 186 788 246 140 283 377 75,10 46 504 869

24,90

Despite the resources available, human resource levels are low and insufficient to sustain the formal organizational structure of the communes: Summary of staffing levels in 5 urban communes (2010): State employees Permanent

commune employees

Commune contractors Total

Fada N’Gourma

6 48 3 57

Koudougou 12 101 34 148 Manga 1 14 0 15 Ouahigouya 8 53 37 98 Tenkodogo 3 36 13 52 The inventories of stock reveal that while these urban communes have adequate office buildings, the buildings tend to be poorly furnished, lacking intercom telephones, storage facilities and

86

lighting. Importantly, all five communes have electricity and wi-fi connections, with three of the five maintaining web-sites or possessing multi-media library facilities for the public. Electrical equipment tends to be in a poor state of repair and the communes posses few vehicles for carrying out their functions. I. Audit Findings:

The audits produced very similar findings with respect to the weaknesses urban communes face in carrying out their administrative, deliberative and executive functions. The main findings are as follows: Dysfunctional Municipal Councils and Permanent Commissions:

The audits reveal that the majority of council members do not have formal education and are illiterate. Although the quorum may be reached in council meetings, the councils do not perform their oversight function effectively; a majority of council members have very limited capacity and do not usually participate in discussions. In addition, although the CGCT requires the municipal councils to create permanent commissions (Commission on General Affairs; Commission on Environment and Local Development; Commission on Finances, and Commission on Territorial Administration and Land Management), these commissions are either not functioning or have not been yet established. Those that do function, function poorly due to their unmanageable size (over 40 members per commission).

Inadequate staffing levels are compounded by poor human resource management:

The audits systematically highlight the lack of qualified and senior staff to fulfill critical posts in the formal structure of the communal administration. Existing staff are required to perform multiple tasks and services and few have more than five to ten years of experience. The lack of opportunities for professional growth and promotion have also negatively impacted upon the performance of staff and resulted in high turn-over rates. Staff are not provided with start-up or continuous training support and have limited access to officially recognized national administrative management training courses (operated by ENAM, ENAREF etc). The communes have also failed to institute formal performance management systems. The absence of precise Terms of Reference and detailed assignment descriptions make employee performance evaluation all the more difficult. The audits recommend the appointment of additional staff to key posts in each commune, including office secretaries, Registry data entry staff, planning economists, lawyers, public officials with CEPE level of experience and training and accountancy aides. The audits also recommend enhancing access of staff to recognized training courses, including training on procurement and document processing.

Absence of Effective Systems and Lack of Computerization of Registry and Other Functions:

The lack of computerized systems, particularly for the Births, Deaths and Marriages registry, renders the processing and management of files inefficient and insecure. Despite access to the internet, the communes were found to have outdated and dysfunctional electronic equipment.

Inadequate information and communication systems: The audits highlighted the lack of or inadequacy of structured communication strategies amongst urban communes. Whilst most urban communes disseminated information through radio and physical postings, the information

87

was disseminated in an ad hoc and often inaccessible manner (e.g. postings in commune buildings only). More significantly, the communes did not have systems in place to receive feedback and input from citizens. There were no complaints handling mechanisms and this made it difficult for citizens to register concerns over, for example, excessive fines levied against businesses. Failure to comply with procurement regulations:

As for procurement procedures to acquire goods and services for the benefit of the commune, the audit reports reveal that the town hall does not follow the required format even if the commune complies with the obligation to publish calls for tenders. The audits recommend that the lack of compliance with the required format for issuing mandates could be resolved by supporting the Controller’s Office with additional staff.

Poor physical condition of commune assets:

The audits highlight in particular the poor state of existing office furniture (desks, chairs, filing cabinets, and tables), equipment (computer, printer, fax machine, camera, copy machine, calculator, air conditioner, radio, television, and megaphone) and transportation (truck, car, motorcycle) and the lack of facilities for effective archiving and storage.

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Annex 10: Institutional Development Framework Template (sample) Institutional Development Category Institutional development needs36 2013

(Annual Investment Plan)

(for 4 years) 2014 (Annual Investment Plan)

2015 (Annual Investment Plan)

2016 (Annual Investment Plan)

Outcome 1: Better management and organization in the commune Functional Capacity of Financial Management and Budget Execution

1. Physical development needs 2. Organizational development needs 3. Human Development Needs

Functional Capacity for Revenue Collection 1. Physical development needs 2. Organizational development needs 3. Human Development Needs

Better Functional Capacity of Local Councils 1. Physical development needs 2. Organizational development needs 3. Human Development Needs

Functional Capacity in Procurement 1. Physical development needs 2. Organizational development needs 3. Human Development Needs

Functional capacity in human resource management


Outcome II: Better transparency, community participation and government openness

Information disclosure and dissemination 1. Physical development needs

2. Organizational development needs 3. Human Development Needs

Community consultation and participation 1. Physical development needs 2. Organizational development needs 3. Human Development Needs

Grievance Redress Mechanisms 1. Physical development needs 2. Organizational development needs 3. Human Development Needs

Community Monitoring of Local Government Performance


36 Physical development: infrastructure and hardware needs of both the administration and municipal council, including office space, office supplies (computers, internet, and furniture), transportation and communication requirements (vehicles, motorbikes, bicycles, community notice boards). Organizational development: software and technical assistance required to support functioning organizational systems, particularly with respect to archiving, communications, public financial management, procurement and human resource management. It will also include needs in organizing council meetings (providing transportation and accommodation to council members). Human development: staffing and capacity development needs aligned with the MATDS’s human resources organigramme-type and training modules offered under the National Strategy for Capacity Development of Local Governments.

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Annex 11: Procurement Plan I.

General

Project information: Country: BURKINA FASO; Borrower: BURKINA FASO; Project Name: Local Government Support Project - Programme d’Appui aux Collectivités Territoriales (PACT); Project ID: P120517 1. Bank’s approval Date of the procurement Plan Original: August 1, 2011; Revision : September 27, 2011 2. Date of General Procurement Notice: May 20, 2011 3. Period covered by this procurement plan: The first 18 months of the project II.

Goods and Works and non-consulting services.

1. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement: Procurement Method Prior Review Threshold Comments 1. ICB and LIB (Goods) > 500, 000 $ 2. NCB (Goods) No Prior Review The first contract 3. ICB (Works) > 3,000,000 $ 4. NCB (Works) No Prior review The first contract 5. ICB (Non-Consultant Services) > 150,000,00 $ Add other methods if necessary

2. Prequalification. Non applicable 3. Proposed Procedures for CDD Components (as per paragraph. 3.17 of the Guidelines: To be described in the Project Implementation Manuals

4. Reference to (if any) Project Operational/Procurement Manual: Not available for the

moment

5. Any Other Special Procurement Arrangements: Not applicable 6. Procurement Packages with Methods and Time Schedule [List the Packages which require Bank’s prior review first and then the other packages]

1 2 3 4 5 6 7 8 9 Ref. No.

Contract (Description)

Estimated Cost $ US

Procurement Method

Prequalification (yes/no)

Domestic Preference (yes/no)

Review by Bank (Prior / Post)

Expected Bid-Opening Date

Comments

1 Purchase of computer equipment for: (i) central and de-concentrated services of the MATDS ; (ii) central and deconcentrated services of the MEF; (iii) PCU; (iv) PNGT regional offices

1,310,000 ICB No No Prior 02/02/2012

2 Purchase of office furniture and supplies for (i) central and de-concentrated services

180,000 NCB No No Prior 10/01/2012

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of the MATDS ; (ii) central and deconcentrated services of the MEF; (iii) PCU; (iv) PNGT regional offices

3 Purchase of vehicles and motorcycles for (i) central and de-concentrated services of the MATDS ; (ii) central and deconcentrated services of the MEF; (iii) PCU; (iv) PNGT regional offices

645,000 ICB No No Prior 10/01/2012

4 Production and distribution of guidelines

175,000 NCB No No Post 20/03/2012

5 Purchase of fuel for vehicles

200,000 NCB No No Post 20/01/2012

6 Equipment, internet connection and cabling for information stations of the MEF (for procurement processes) in 6 regions

428,000 NCB No No Prior 05/03/2012

III.

Selection of Consultants

1. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants:

Selection Method Prior Review Threshold Comments 1. Competitive Methods (Firms) > 200, 000 $ 2. Single Source (Firms) All contracts 3. Individual Consultants > 50, 000$

2. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than $ 200,000 equivalent per contract, may be comprised entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 3. Any Other Special Selection Arrangements: Not applicable 4. Consultancy Assignments with Selection Methods and Time Schedule:

1 2 3 4 5 6 7 Ref. No.

Description of Assignment

Estimated Cost $ US

Selection Method

Review by Bank (Prior / Post)

Expected Proposals Submission Date

Comments

1 Financial audit for the first three years

90,000 LCS Prior 25/03/2012

2 Continued support for the Intergovernmental Fiscal Framework exercise by two international consultant

37,500x2=75,000

CI Post 15/01/2012

3 Continued support for the Intergovernmental

15,000 CI Post 15/01/2012

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Fiscal Framework exercise by a local consultant

4 Continued support for the sectoral decentralization in 8 sectors

37,500 CI Post 15/01/2012

5 Elaboration of regulations for law n°027-2006

100,000 QCBS Post 15/01/2012

6 Elaboration of a sectoral deconcentration plan for MATDS

36,700 CQ Post 20/01/2012

7 Elaboration of a matrix and organigramme for MATDS

36,150 QC Post 05/02/2012

8 Elaboration of a procedures manual for MATDS

36,150 QC Post 15/02/2012

9 Elaboration, updating and dissemination of the texts on the application of the CGCT

111,000 QCBS Post 28/02/2012

10 Study to up-date and adjust legal texts dealing with tutelle arrangements

215,000 QCBS Prior 15/03/2012

11 Elaboration and dissemination to communes of operational tools to assist in planning

146,000 QCBS Post 30/03/2012

12 Evaluation of commune development plans

209,000 QCBS Prior 15/04/2012

13 Translation of documents on decentralization to local languages

25,000x3=75,000

CI Post 30/04/2012

14 Recruitment of a firm to study fiscal potentials in 6 regions

200,000 QCBS Prior 15/01/2012

15 Recruitment of a firm to implement the findings of the fiscal potentials study in 6 regions

120,000 QCBS Post 15/02/2012

16 Production of a report on the identification of obstacles for budget execution of communes

120,000 QCBS Post 25/02/2012

17 Recruitment of 6 NGOs (one per region)

1,800,000 CQ Prior 01/04/2012

18 Recruitment of a technical adviser for the DGLPAP

13,000 CI Post 20/01/2012