Introduction of CMP in to OWNP

Eyob DefereOWNP Consultant, August 2013

Outline

Sector Policy Rural WASH Evolution of CMP Description of CMP Introduction of CMP in to OWNP

1-The Sector Policy Understanding the sector policy the key to appreciate CMP in

Rural WASH It is also essential to assess whether CMP is supported with

the sector policy It is vital to analyze the introduction of CMP in to OWNP

within the context of the sector policy

1-Sector Policy

Promote the development of water supply and sanitation on participation-driven and responsive approaches without compromising social-equity norms

Identify and promote the development of appropriate, efficient, reliable and affordable WSS technologies, which are demand driven and have got great acceptability among the local communities.

Create and promote a sense of awareness in communities of the ownership and their responsibilities for operation and maintenance of water supply and sanitation systems and develop participatory management practices

1-Sector Policy and Strategy

Ensure self-reliance through promotion of self financing; To this end, engage the participation of banks, private operators, micro financing institutions

Ensure transparency, fairness, responsibility and accountability in the utilization and management of the Water Supply and Sanitation (WSS) funds, namely through Community Water Committees

1-Sector Policy

Provide incentives to local stakeholders such as community groups, to encourage their participation in the planning, design, implementation and management of WSS systems

2-Rural WASH

Rural WASH is providing essential social service to over 80% of the population of the Country

Providing water supply to hundreds of thousands of communities with different socio-economic and cultural identities

It requires organizing tens of thousands of communities to operate and sustain these schemes

2-Rural WASH

It requires strong government structures at woreda level that will organize and provide technical support to communities and small scale service providers

It requires small scale service providers that will construct the schemes and provide post construction services when required

Enabling environment is required to facilitate the implementation of Rural WASH

2-Rural WASH (Targets)

Water supply access in rural areas is increasing substantially from 19% in 1990 reaching 67% in 2013

The target is achieving universal access by 2015 with 98% access to water supply, and reduction of proportion of non-functioning facilities to 10%.

2-Rural WASH (Plans)

To realize universal access to water to rural communities plans have been developed based on GTP targets

A total of over 100,000 schemes of which 58,118 conventional new water points and 19,190 household dug wells and 25,038 community dug wells and rehabilitation of 20,610 existing schemes

2-Rural WASH (Challenges) Main challenges in rural WASH are

– Low implementation capacity– High level of non- functionality of schemes– Low absorption capacity– Significant human resource capacity challenges, in

particular at woreda level, despite large but limited program/project-based capacity building initiatives

3-Evolution of CMP Desire by the GOE to empower communities has led to

higher level of community involvement in rural WASH in late 1990s

Challenges of Rural WASH required a new approach with innovative financing and implementation modality

RWSEP (which was launched in 1994)recognizing policy directions and GOE’s commitment towards more community empowerment, established community development fund (CDF) in 2003 (progressively)

Since 2007, project funds have been transferred via the Bureau of Finance and Economic Development (BoFED) at regional level

Milestones of CMP

1994 2003 2005 2007 2009 2011

RWSEP started Community Development Fund piloted

CDF modality operational in 12 Woredas

CDF incorporated into WIF (CMP)

and COWASH started

CDF scaled up to BSG and UNICEF

Fund management was shifted to

BoFED

3-Evolution of CMP

Recognition of the success of RWSEP by JTR and other studies led to growing interest by GOE and donors to understand CDF more

Consequently, the World Bank, Water and Sanitation Program (WSP)-Africa has been requested by the Government of Finland , to undertake an independent study to evaluate the achievements of CDF and to recommend concrete and feasible measures to scale up the [CDF] funding mechanism.

3-Evolution of CMPEvaluation of CDF by WSP

The main findings of the study were that: The RWSEP implementation rate has increased by up to a factor

of 5 (from an average of 200 water points per year (1994-2003) from 2003, to over 1000 water points per year in 2008/9) (by then the National average was 30 water points).

The technical quality of the facilities built is satisfactory and functionality rates for CDF schemes (94%) are above average for Amhara (estimated at over 75%)

Utilization of investment budgets has increased from an average of around 53% between 1998-2002 (pre-CDF) to close to 100% during the end of Phase III / start of Phase IV (compared to below 50% for other large donor programs).

CDF can and shall be mainstreamed and scaled up in the Country.

3-Evolution of CMPAssessment of CDF by GOE

In 2010 teams of government officials from MoFED and MoWR have made an assessment visit in Amhara region to look in to the potential of mainstreaming CDF and its compatibility with systems of GOE.

Findings were the following: Immediately open a serious dialogue with relevant WASH development partners

for the adoption of CDF as a funding mechanism. There is no time to waste, as the sector is falling behind schedule to reach the UAP

targets Amhara and Benishangul-Gumuz regional governments should be urged to take

immediate steps to scale up the CDF in their regions. GoE procedures are effectively used in CDF. Outsourcing fund transfer

management to a financial intermediary (ACSI) was not perceived to pose a regulatory problem for scaling up and/or replication in other regions.

Woreda and community level control mechanisms are not only sufficient but effective. With minor modifications to the existing CDF procurement and financial manuals it can be mainstreamed with the government procedures.

3-Evolution of CMPAssessment of CMP by WAE-2013

CMP approach has demonstrated benefits in terms of implementation speed and functionality from which the NGO sector could usefully learn.

It brings higher level of sustainability of services NGO funding of community-run institutions via an MFI

intermediary should not be an impediment to their adoption of the CMP model

3-Evolution of CMP Public Finance Management Assessment Amhara

Regional Government, MoFED

Findings The Public Finance Review carried out in

Amhara Region by MoFED in 2010 found that the RWSEP project financed by Government of Finland for rural water supply is channel 1 (Since 2007).

3-Evolution of CMPInitiation of COWASH

Based on recommendations of GOE and WSP assessment to scale up CDF, and the call from GoE, GoF decided to provide new support to GOE to assist the scaling up effort.

Accordingly GoE and GOF initiated the COWASH Project in 5 regions

The objective of the COWASH phase I project;– accelerated implementation of the Universal Access Plan

(UAP) through the adoption and application of community-led WASH financing mechanism”.

Based on the positive experience of the first year project and encouraging budget commitment of regions GOF has also indicated its willingness to double its support and allocate additional 11 MEUR, making the total programme cost 22MEuro.

During this period, following the sectoral developments, CoWASH was revised and designed to be a transitional programme towards the sector wide approach to OWNP.

Accordingly CMP was captured in the sector’s guiding doc. the WIF

3-Evolution of CMPIntroduction of CMP in the WIF

To consolidate the harmonization efforts and creating more effective implementation mechanism

To establish effective integration between water, sanitation and hygiene interventions

The emergence of CDF as an effective financing and implementation modality

Led to the establishment of WIF, where CMP has been recognized as one of the implementation modalities of Rural WASH

4- CMP One of the implementation and financing modalities

of Rural WASH Cost effective and sustainable solution Fully in line with Sector Policy and GOE development

agenda Enhancing implementation capacity in Rural WASH

4- CMPMAIN ELEMENTS of CMP

Community leads the development process – demand based- planning to implemetaion and beyond

Community owns the water system from the beginning – no handing over only enauguration!!

Community is responsible for the management of the fund – high absorbtion capcaity

Community is responsible for water supply operation and maintenance (O&M) – low functionality - sustainabity

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Capacity building of communities extended to contract and financial management, quick maintenance and monitoring processes

Woreda’s role: from implementer to coordinator, controller, facilitator implementation and fund management tasks, which are outsourced to the communities and financial intermediaries

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2013 2014 2015

Total number of planned water points: 93,000 WPs

71,000 WPs

Total investments 1 Billion USD

42 %

Planned number of new rural water points vs. planned investments

79 %

HDWs, SPs, SWs

Current CMP Financing arrangements

Financier

BoFED

MFI WFO

CommunityInvestments Capacity Building

Regional Governments

Services 26

Water Bureau

Goods

4- CMPWhy MFI were used

Initially tender was floated for all interested CBE was not interested DBE was too expensive with 7% commission and capacity

building requirement Woreda Finance had no capacity and raised the issue of

WASHCO legality MFI’s cost effective (3% = 1.5 % commission and 1.5 %

capacity building) and access to communities and compatibility with their core business

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Water Bureau WaSH Account

CMP Account

Finance Bureau WaSH Account

Financial Intermediary Account

CMP Account

Instructions to transfer to WWT CMP Account

Financial Intermediary Sub-Branch Account

WWT CMP Account

WASHCOs

Artisans, suppliers, contractors, etc…

Woreda WaSH Team

Upon Request

Accounts/Ledgers

O&M Saving accountsWithdrawal Authorizations

Payment requests

Reports and disbursement requests

CMP Investment Fund Flow

5. CMP Financing in OWNPPrinciples of OWNP

Program management based on GOE policy, systems, rules and regulations

Woredas at the center of the OWNP Woredas are responsible for deciding what kind of

modality to apply Woredas responsible for woredal level planning,

organizing, implementing, reporting and oversight (when communities implement)

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5. CMP Fund Channeling in OWNP

Under the OWNP, Once Woredas decide to use CMP then they will disburses directly to communities using either the Commercial Banks or the MFIs wherever they are applicable

5. CMP Financing in OWNPWhy using MFI introduced as an

option? Channeling through MFI has worked for the past

10 years Now being scaled up in three more regions

reaching the total regions with CMP implementations to five,

WoFED can use its capacity to effectively administer and regulate the overall WASH fund

5. CMP Financing in OWNPHow it works

If a service provider or (MFI) is used, WoFED, in agreement with the community, will enter into an agreement with the service provider, subject to the prior approval of BoFED to ensure compliance with GoE’s public financial management rules.

Disbursements to the service provider (MFI) will be subject to prior approval from the WWT and WoFED.

5. CMP Financing in OWNPHow it works

The service provider (MFI) will submit monthly disbursement and utilization reports to WoFED.

Original copies of relevant financial records will be maintained by the WoFED.

WoFED will report quarterly to BoFED on utilization of WASH funds, including funds for CMP investment funds

5. CMP Financing in OWNPPayment to WASHCOs

After signing the Funding Agreement WWT chairperson writes a letter to WoFED in order to notify the signatories of the WASHCO and to release the first installment to WASHCO.

All payments to WASHCOs will be approved by the WWT.

Second installment of payments will be paid when 80% of the first installment is expended and evidence for transaction is submitted to the CMP supervisor and WASH accountant.

5. CMP Financing in OWNPPayment to WASHCOs

The receipts and transaction evidences shall be submitted by WASHCOs to the CMP supervisor and he will work with WASHCOs to clean up all receipts and documents. Then the CMP supervisor will submit the documents to the WASH accountant in WoFED.

If the WASH accountant does not approve the documents then he will give it back to the CMP supervisor for his follow up and correction.

5. CMP Financing in OWNPControls and Safeguards

The community signs a funding agreement which specifies the obligations of the community.

For the payment to be released from the bank/MFI, two signatories from WWT shall authorize based on recommendations of the CMP supervisor on the progress of the work

Both the artisan and the WASHCO shall submit separate progress reports for payment release to be effected and their report shall be verified by woreda water office staff

The WASHCO shall submit expenditure documents for 80% of advance or previous payment for another request to be effected.

5. CMP Financing in OWNPConclusion

All efforts must be made that while working the details that GOE financial management policies are followed.

The Generic CMP Financial Management Guideline Once Finalized will be included as part of the one WASH National Programme Document

Regardless of the mode of channeling the responsibility for managing CMP investment fund shall be with WoFED

5. CMP Financing in OWNPConclusion

For phase 2 beyond July 2015, the program anticipates to channel CMP investment fund to the communities as far as possible through WoFED via the Commercial Bank or MFIs as appropriate.

During phase I using only WoFED to disburse to communities before building its capacities could hamper the effective implementation of Program

Implement the agreed Transition Plan to facilitate the smooth transition during the two years period and ensure effective implementation of CMP in Rural WASH

Thank You