Page 1 PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: Project Name PUBLIC SECTOR CAPACITY BUILDING PROJECT Region AFRICA Sector Central government administration (60%); Vocational training (30%); Information technology (10%) Project ID P066386 Borrower(s) GOVERNMENT OF RWANDA Implementing Agency MIFOTRA and MINECOFIN Ministry of Finance and Economic Planning PO Box 158 Rwanda Tel: (250) 577 494 Fax: (250) 577 581 msin@rwanda1.com Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [ ] S 2 [X] S 3 [ ] S F [ ] TBD (to be determined) Date PID Prepared February 11, 2004 Date of Appraisal Authorization February 19, 2004 Date of Board Approval May 27, 2004 1. Country and Sector Background Rwanda is one of the poorest countries, with over 60 percent of the population living below the poverty line and a per capita GNI of US$ 230. With a population of about 8.2 million people, growing at 6 percent, it is also one of the ten most densely populated countries in the world. Agriculture is the key economic activity - it employs over 90 percent of the active population and accounts for about 43 percent of GDP and 80 percent of exports. Prospects for revival of the rural economy are hampered by low productivity, already exhausted arable land and severe degradation of soil. The Government of Rwanda (GoR), as detailed in its “Vision 2020”, the country’s long-term development strategy as well as Rwanda’s Poverty Reduction Strategy Paper (PRSP) seeks to improve living conditions of the population by fostering national reconciliation, good governance, security in the region, and rapid, diversified and sustainable economic growth. It defines a medium-term strategy (2002-07) focusing on: (i) sustained macro-economic stability, (ii) rural development and agriculture transformation, (iii) good governance, (iv) human resource development, (v) economic infrastructure and (vi) institutional capacity building. Main sector issues The 1994 conflict and genocide left Rwanda with destroyed public institutions and a dearth of capacity in the public and private sectors. Even prior to the tragic events, public sector institutions were inadequate to promote equitable growth and access to services. Despite many efforts to strengthen capacities, its acute lack is particularly alarming in the public sector, where only 6.5 percent of public servants have some university education and 2.7 percent have a university degree. Refugees or decedents of refuges, who returned to Rwanda since 1994 and found employment in the public sector, have not fully compensated for lost skills. Many managerial, professional and technical positions are still vacant or filled by expatriates or unqualified staff. Furthermore, the institutional environment is not conducive to sustainable capacity development. Since 1994, the GoR has been engaged in ambitious reform programs to re-establish state institutions and re- organize the public administration for better service delivery. The GoR has initiated reforms to improve justice, governance and empower the population through decentralization and democratization. Much progress has been Page 2 made in implementing sound economic policies, initiating reforms in the civil service and public administration as well as establishing viable change institutions. However, implementation of reforms and the functioning and performance of public sector institutions are still far from satisfactory. Much of the blame has been put on the severe lack of capacity. It is evident that in order for Rwanda to achieve its stated development objectives and make progress in attaining the Millennium Development Goals, closer attention has to be paid to the effective coordination of all capacity building activities, as well as stronger links between on-going public sector reforms and capacity building activities. In particular, the following sector issues will have to be addressed: Weak links between public sector reforms and capacity building pose a serious risk to sustainability of reforms and stifle Rwanda’s development prospects. Inadequate capacities for strategic planning, policy and project design and implementation . A top-down centralized administrative culture prevails in public institutions despite attempts to change organizational structures to reflect the changing role of the public sector. Ministries, departments and agencies (MDAs) are not sufficiently responsive to needs of local communities, lack the capacity to formulate and effectively implement sector policies, prepare and implement investment projects (generally handled under donor project coordination units), execute budgets and monitor and evaluate programs. High staff turnover . Voluntary departures of qualified staff are common and sizable in the public administration. Between January and September 2002 some 700 out of 8,500 civil servants left, mainly for better paid jobs. Inadequate financial accountability. Weak capacities in financial management and procurement and inadequate enforcement of and compliance with the rules are likely to challenge prospects for attaining transparency and accountability in use of public resources. While progress has been made in improving financial accountability in government institutions through, amongst others, the introduction of a Medium-Term Expenditure Framework (MTEF) at all government levels and new institutions to foster accountability and transparency in budget execution, further strengthening of institutional capacities is urgently needed. Further efforts have to go into strengthening internal control and audit functions; production of government annual financial statements; and promotion of transparency, competition and efficiency, fairness and accountability in public procurement. Weak coordination and ownership of capacity building activities. Numerous capacity building initiatives have failed to achieve a lasting impact because of insufficient coordination within MDAs, between MDAs, and between the GoR and donors. Capacity building projects have been designed and implemented in isolation and without a guiding national strategy and linkages, and complementarities between various capacity building projects have rarely been considered. Much of past capacity building activities was fragmented and donor-driven with little Rwandan ownership. There is no institutional framework for managing GoR-donors relationships in capacity building and sharing information on needs assessment, capacity gaps, ongoing activities, technical assistance and attained results. Government strategy To achieve tangible results in reducing poverty, the GoR is committed to pressing ahead with public sector reforms, underpinned with significant investments in capacity building over the medium and long-term. The GoR has defined a Multi-Sector Capacity Building Program (MSCBP) to facilitate efforts in strengthening institutional capacities, enhance a greater results-focus and greater efficiency, accountability and transparency in managing financial and human resources. The MSCBP aims at strengthening capacities at the central and local government levels, the private sector and civil society organizations. However, given the complexity of the task, the MSCBP will initially focus on the public sector while building institutional arrangements for better coordination of all capacity building efforts which the PSCBP will support. Once a strategy and framework have been established and show tangible results, the MSCBP will expand its reach to the private sector and civil society. Page 3 The Government’s programmatic approach seeks to ensure that government institutions and development partners agree on a strategic framework for the design and implementation of capacity building activities and define, monitor and evaluate results. This approach seeks to facilitate coordination and enhance synergies of currently fragmented capacity building efforts. 2. Objectives The PSCBP’s objective is to support public sector entities to: (i) attract, manage and retain qualified staff, (ii) decentralize non-core functions and (iii) use financial resources in an effective, transparent and accountable manner towards achieving the objectives of their strategic plans. This objective will be achieved through the combined impact of anticipated results of all five components, defined as follows: 1. The Human Resource and Capacity Building Agency (HRCBA) effectively coordinates, monitors and evaluates capacity-building interventions, manages MSCBP funds and educates the public on targets and achievements under the MSCBP. 2. MDAs reduce staffing gaps through training and recruitment of well-qualified personnel. 3. Improved capacity of MDAs to manage public finances and monitor outcomes. Lean, efficient and professional MDAs that successfully carry out their core mandate. 4. Participating MDAs develop and implement strategic plans and successfully manage their own capacity building to enhance agency performance 5. Public sector entities have the policies, skills, ideas, hardware and maintenance systems necessary to use ICT effectively. 3. Rationale for Bank Involvement The Bank has accumulated notable experience with capacity building, civil service reform, public finance reform, decentralization and post-conflict situations and will thus be able to bring a unique expertise to bear in helping the GoR implement its ambitious MSCBP. In addition, the Bank is already financing several projects in Rwanda which have capacity building components and will thus be able to draw from its experience with these projects. This broad experience has allowed the Bank to take the lead in helping the GoR design its strategic vision and program. Its focus has been on providing strategic leadership, focus and a framework for capacity building that will serve to coordinate both existing and planned donor support. It is anticipated that better coordination will unleash synergies and greater coherence - IDA financing will within this framework be supplemental to already ongoing donor activities. 4. Description The design of the PSCBP is based on a total system’s perspective, recognizing the multi-faceted nature of capacity building as well as its linkages with the broader public sector reform agenda. Through its five components, the PSCBP targets three spheres of intervention, namely individuals (component 2), agencies (component 4) and the public sector as a whole (component 3). As capacity to manage reforms is currently low, early interventions will be simple (i.e. require minimum capacity to implement) and build the capacity needed for more complex reforms to follow. Over the five years of the project, six ministries will have priority access to the PSCBP, namely MINECOFIN (finance), MIFOTRA (public service and labor), as well as the ministries of education, health, water and energy which will also be supported under the PRSC. Page 4 Components The PSCBP will contribute to capacity building of the public sector in five important ways: 1. Foster Coordination A total systems perspective acknowledges that capacity building takes place in multiple sub-systems. The HRCBA as the coordinating agency will thus foster coordination of various – and often disparate – ongoing and planned capacity building activities so that they meld into a coherent, strategic framework. It will also, over time, rally donor support behind the government program to ensure greater coherence of donor interventions. In addition, the agency will monitor and evaluate all capacity building measures of the disparate systems and entities, thus promoting a greater results focus and effectiveness. 2. Develop Human Resources The PSCBP will fund short- and long-term measures to develop human resources: it will identify training needs, help MDAs attract and retain talent in high priority skill areas such as leadership, management, strategic planning, financial management, procurement, accounting, auditing, monitoring and evaluation etc, and support local training institutions. 3. Support Cross-Cutting Reforms This component will support the implementation of the public financial management action plan and the public sector reform strategy. To this end, the PSCBP will fund activities to enhance planning, allocation, efficient and accountable use of public financial resources, spearheaded by MINECOFIN but affecting and requiring improved skills and systems in all MDAs. Furthermore, MIFOTRA will be supported to further refine and implement its public service reform strategy in MDAs. Finally, the PSCBP will help MIFOTRA and MINECON decentralize, outsource and redefine functions and reconfigure its institutional structure accordingly, in close coordination with IDA’s Decentralization and Community Development Project. 4. Improve Agency Performance Each public sector institution has a specific mandate and responsibility to contribute to the overall government of the country. Under the PSCBP, MDAs will be supported to develop and implement strategic plans to increase the effectiveness and efficiency of each agency at fulfilling their respective roles. 5. Promote ICT If employed strategically, ICT offers various tools to increase the efficiency and transparency of public institutions. The PSCBP will thus help MDAs make better use of ICT and e-government for greater efficiency and to provide the population with easy access to government publications and information on service delivery. Support provided under the PSCBP will take the form of training, workshops, technical assistance and related equipment and improvements of working conditions and facilities as appropriate. 5. Financing Source: ($m.) BORROWER/RECIPIENT 2.00 INTERNATIONAL DEVELOPMENT ASSOCIATION 20.00 Total 22.00 6. Implementation The Human Resource and Capacity Building Agency (HRCBA) will be the coordinating agency for the MSCBP and the IDA project. The HRCBA, to be established by law, is envisaged as an autonomous agency in charge of capacity building – a “one stop shop” which carries out the day-to-day management of the MSCBP and PSCBP, coordinates capacity building initiatives by gathering information on capacity building demand from MDAs and supply from donors, prepares annual plans and budgets, provides guidance on capacity building and technical Page 5 assistance to MDAs, monitors and evaluates progress, prepares quarterly reports, mobilizes and manages funds and educates the public on the MSCBP. The HRCBA will be autonomous in its management, remuneration and activities but will rely on its parent ministry MIFOTRA to communicate with Cabinet. MDAs are primarily responsible for the implementation of the MSCBP and the PSCBP. They will implement capacity building programs in their respective fields as defined under the project components, and in line with annual programs they prepare and share with the HRCBA. 7. Sustainability Critical factors for the sustainability of the project: Strong ownership during project preparation . Participation and consultation of key stakeholders has been a key feature of the preparation process of the MSCBP. Although weak capacity and insufficient understanding of capacity issues slowed down project preparation, the project enjoys strong support by the top leadership of Rwanda, in particular that of the President and the Cabinet. Continued commitment to project implementation . The programmatic approach of the MSCBP seeks to foster greater coherence, consistency and coordination of all capacity building activities including cross-cutting public sector reforms. Although there is substantial commitment to pressing ahead with the program, its complexity requires further efforts in broadening the ownership at the level of MDAs responsible for its implementation. The project will support further understanding and consensus building of the MSCBP through an information, education and communication strategy. Strengthening government institutions. Institutional capacity building and organizational strengthening of the HRCBA is one of the key objectives. The project thus strengthens a government entity that will continue its role in coordinating capacity building efforts beyond the project. It further builds the capacity of MDAs to identify, plan and manage their own capacity building activities in line with strategic plans. Once systems and procedures are in place and capacities created, further consolidation of reforms and related costs for training and equipment should be reflected in program budgets of MDAs, the MTEF and annual budgets. Future financing will be ensured through the national budget which will increasingly be financed by through budget support rather than project aid. A lasting approach . The PSCBP will support development of a policy, operational guidelines and a coordinating mechanism for capacity building, all of which lay solid knowledge and institutional foundations for coherent capacity building beyond the life of the project. Most likely, the MSCBP will thrive on other donor support even beyond the PSCBP. Link with implementation of the PRSP . Capacity building for strategic planning, human resource management, public financial management and procurement, institutional restructuring and M&E will facilitate implementation of the PRSP. The PRSC currently under preparation will build upon these achievements and further solidify them, until they are fully institutionalized. 8. Lessons Learned from Past Operations in the Country/Sector Past capacity building interventions often failed to make a lasting impact . Assessments of past capacity building interventions in Rwanda have shown that success was often hampered by the following factors: initiatives were scattered and ad hoc with little to no coordination with other capacity building activities; they lacked a strategic and comprehensive vision; they were not integrated in the broader context of needs for development; they were treated in isolation from public sector, notably pay reform: as a consequence, people were trained but then left the public sector or returned to institutions that did not provide the environment they needed to apply Page 6 their acquired skills; technical assistance failed to build local capacity as it was used as substitution; etc… Also, initiatives failed to produce results where beneficiaries lacked ownership. The PSCBP – in support of the government’s MSCBP – is designed to overcome these pitfalls. First, it emphasizes coordination and coherence. The MSCBP was conceived to provide the strategic vision, foster greater coherence, consistency and coordination in formulating and implementing capacity building interventions as well as facilitate GoR’s ownership. The PSCBP will help prioritize and sequence interventions to ensure feasibility and a gradual approach to capacity strengthening. A priority intervention will be to set up the HRCBA to become the information and coordination center for capacity building interventions and to monitor and evaluate the impact. Second, it follows a comprehensive approach. Unlike previous interventions, the PSCBP intervenes at the individual, agency and public sector level to ensure sustainable and mutually reinforcing capacity gains. It aims to build a public sector capable of building, attracting, managing and retaining capacity. Third, ownership has been a key feature in the development of the government program as well as IDA support. The GoR, supported by the World Bank, has gone to great length to ensure participation of stakeholders throughout program preparation and has acquired an impressive amount of ownership. Stakeholders contributed to program design through workshops in May and June 2002, and September 2003 and were consulted throughout. A Government Task Force comprising various ministries and key donors has been leading the preparation process. 9. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment ( OP / BP / GP 4.01) [ ] [x ] Natural Habitats ( OP / BP 4.04) [ ] [x ] Pest Management ( OP 4.09 ) [ ] [x ] Cultural Property ( OPN 11.03 , being revised as OP 4.11) [ ] [x ] Involuntary Resettlement ( OP / BP 4.12) [ ] [x ] Indigenous Peoples ( OD 4.20 , being revised as OP 4.10) [ ] [x ] Forests ( OP / BP 4.36) [ ] [x ] Safety of Dams ( OP / BP 4.37) [ ] [x ] Projects in Disputed Areas ( OP / BP / GP 7.60) * [ ] [x ] Projects on International Waterways ( OP / BP / GP 7.50) [ ] [x ] 10. List of Factual Technical Documents \01\02 The Vision and Strategic Framework for the Multi-Sector Capacity Building Programme in Rwanda, May 2003 \01\02 Medium Term Strategy, Action Plan and Budget for Multi-Sector Capacity Building Programme, Draft Report, June 2003 \01\02 Operational Manual for the Multi-Sector Capacity Building Programme, Draft, PriceWaterhouseCoopers, June 2003 \01\02 Multi-Sector Capacity Building Programme: Retreat held in Gisenyi, Final Report, June 2002 \01\02 Inception Report – Multisectorial Capacity Building Program, January 2002 \01\02 Summary of the Main Report - Multisector Capacity Building Programme: Assessment of Capacity Building Activities, May 2002 * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas Page 7 \01\02 Multi-Sector Capacity Building Program: Workshop to define the way forward, Final Report, May 2002 \01\02 Appraisal of the Decentralisation in Rwanda, September 2003 11. Contact point Contact: Gradimir Radisic Title: Sr Economist Tel: (202) 458-5249 Fax: (202) 473-8368 Email: Gradisic@worldbank.org 12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project.