Document of The World Bank Report No:ICR2350 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-48410 and IDA-42390) ON A LOAN IN THE AMOUNT OF EURO 4.4 MILLION (US 5.6 MILLION EQUIVALENT) AND ON A CREDIT IN THE AMOUNT OF SDR 2.5 MILLION (US$ 3.7 MILLION EQUIVALENT) TO ALBANIA FOR BUSINESS ENVIRONMENT REFORM & INSTITUTIONAL STRENGTHENING PROJECT [April 23, 2014] Financial and Private Sector Department South East Europe Country Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective 12/7/2012) Currency Unit = Euro 1 Euro = US$ 1.29 US$ 1.00 = Euro 0.77 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ARCS Administrative and Regulatory Cost Survey BERIS Business Environment Reform and Institutional Strengthening CARDS Community Assistance for Reconstruction and Development Support CA Competition Authority CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CPAR Country Procurement Assessment Report CPU Competition Policy Unit DA Directorate of Accreditation DPL Development Policy Loan DMP Department of Market Policies of the Ministry of Economy, Trade and Energy DPS General Directorate of Standardization EC European Commission EMP Environmental Management Plan EP European Partnership EU European Union FIAS Foreign Investor Advisory Service FDI Foreign Direct Investment FY Fiscal year GMC General Directorate of Metrology and Calibration GDP Gross Domestic Product GTZ Gesellschaft fur Technische Zusammenarbeit IBRD International Bank for Reconstruction and Development IDA International Development Agency IFR Interim un-audited Financial Report IMF International Monetary Fund IS0 International Organization for Standardization M&E Monitoring and Evaluation METE Ministry of Economy, Trade and Energy MSTQ Metrology, Standards, Testing and Quality IEG Internal Evaluation Group PM Prime Minister PPPS Public-Private Partnerships RIA Regulatory Impact Assessment SaU State-aid Unit TF Task Force USAID United States Agency for International Development WEF World Economic Forum WTO World Trade Organization Vice President: Philippe H. Le Houerou Country Director: Ellen A. Goldstein Sector Manager: Lalit Raina Project Team Leader: Evis Sulko ICR Team Leader: Evis Sulko ALBANIA BUSINESS ENVIRONMENT REFORM & INSTITUTIONAL STRENGTHENING PROJECT TABLE OF CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ................................................... 1 1.1 Context at Appraisal ............................................................................................. 1 1.2 Original Project Development Objectives (PDO) and Key Indicators ................. 3 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification.............................................................................................. 4 1.4 Main Beneficiaries ................................................................................................ 4 1.5 Original Components ............................................................................................ 4 1.6 Revised Components ............................................................................................ 6 1.7 Other significant changes ...................................................................................... 6 2. Key Factors Affecting Implementation and Outcomes .................................................. 7 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization ...... 9 2.4 Safeguard and Fiduciary Compliance ................................................................. 11 2.5 Post-completion Operation/Next Phase .............................................................. 12 3. Assessment of Outcomes .............................................................................................. 12 3.1 Relevance of Objectives, Design and Implementation ....................................... 12 3.2 Achievement of Project Development Objectives .............................................. 13 3.4 Justification of Overall Outcome Rating ............................................................ 19 3.5 Overarching Themes, Other Outcomes and Impacts .......................................... 19 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ... 20 4. Assessment of Risk to Development Outcome ............................................................. 21 5. Assessment of Bank and Borrower Performance ......................................................... 21 5.1 Bank Performance ............................................................................................... 21 5.2 Borrower Performance ........................................................................................ 22 6. Lessons Learned............................................................................................................ 23 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 24 Annex 1. Project Costs and Financing .............................................................................. 25 Annex 2. Outputs by Component...................................................................................... 26 Annex 3. Economic and Financial Analysis ..................................................................... 32 Annex 4. Bank Lending and Implementation Support/Supervision Processes................. 33 Annex 5. Beneficiary Survey Results ............................................................................... 35 Annex 6. Stakeholder Workshop Report and Results....................................................... 36 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 37 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ........................... 38 Annex 9. List of Supporting Documents .......................................................................... 39 MAP A. Basic Information Business Environment Reform and Country: Albania Project Name: Institutional Strengthening IBRD-48410,IDA- Project ID: P096643 L/C/TF Number(s): 42390 ICR Date: 03/11/2013 ICR Type: Core ICR REPUBLIC OF Lending Instrument: TAL Borrower: ALBANIA Original Total USD 9.30M Disbursed Amount: USD 9.16M Commitment: Revised Amount: USD 8.82M Environmental Category: B Implementing Agencies: Ministry of Economy, Trade and Energy Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/10/2005 Effectiveness: 03/01/2007 03/01/2007 04/10/2007 01/30/2008 Appraisal: 03/31/2006 Restructuring(s): 01/28/2010 08/31/2010 01/11/2012 Approval: 10/26/2006 Mid-term Review: 04/30/2009 03/23/2009 Closing: 01/15/2011 06/30/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory i Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 100 100 Theme Code (as % of total Bank financing) Legal institutions for a market economy 20 20 Other accountability/anti-corruption 20 20 Regulation and competition policy 20 20 Trade facilitation and market access 40 40 E. Bank Staff Positions At ICR At Approval Vice President: Philippe H. Le Houerou Shigeo Katsu Country Director: Ellen A. Goldstein Orsalia Kalantzopoulos Sector Manager: Lalit Raina Fernando Montes-Negret Project Team Leader: Evis Sulko Silvia Minotti ICR Team Leader: Evis Sulko ICR Primary Author: Hiran Herat ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The overall objective of the BERIS is to assist the Government to: (i) facilitate business entry and operations in the formal economy; and (ii) strengthen the enterprise sector's capability to increase exports towards the region and EU markets. Revised Project Development Objectives (as approved by original approving authority) The PDO was not revised. As agreed with the Government, key results (PDO) indicators were replaced by the following indicators that reflected the project outputs and activities better and more comprehensively: business satisfaction with quality of regulation, % of senior manager time dealing with state administration, use of MSTQ services, measured as number of calibration services provided and number of inspection agencies. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Business satisfaction with quality of regulation (1 = very satisfied; 6 = very Indicator 1 : dissatisfied) Value quantitative or 3.3 (ARCS) NA 2.5 2.5 Qualitative) Date achieved 12/31/2005 12/31/2010 06/30/2012 06/30/2012 100% achievement (a public administration sruvey was carried out on project Comments funds among 150 public servants and executives of 601 non-agricultural private (incl. % businesses located in Albania and operating in manufacture, commerce, services achievement) and construction) Indicator 2 : % of Senior manager time dealing with state administration Value 13 (small quantitative or 16.1 (ARCS) NA N/A survey) Qualitative) Date achieved 12/31/2005 12/31/2010 06/30/2012 06/30/2012 Comments (incl. % achievement) Use of MSTQ services, measured as number of calibration services provided Indicator 3 : (year-to-date) 50 (the "number of calibration 400 as of Value services" indicator 6/30/12 (and quantitative or 26 806 under the Export 800 as of Qualitative) Capability 12/31/12) Component, as per iii PAD) Date achieved 12/31/2006 12/31/2010 06/30/2012 12/31/2012 Comments (incl. % 101% achievement achievement) Indicator 4 : Number of inspection agencies Value quantitative or 33 NA less than 20 12 Qualitative) Date achieved 12/31/2011 12/31/2010 06/30/2012 02/28/2013 Comments (incl. % 100% achievement achievement) Reduced cost, time and steps for businesses to comply with business regulations Indicator 5 : affecting business entry and operations (as measured by ARCS/Doing Business surveys) Value Not available in Dropped in quantitative or Not available in PAD N/A PAD 2010 Qualitative) Date achieved 12/31/2005 12/31/2010 06/30/2012 02/28/2013 Comments Dropped in the restructuring approved by Bank management in January 2010 (incl. % because they did not measure the project activities very closely. Replaced with achievement) the above new PDO Indicators 1 and 2. (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Number of Government officials trained in Regulatory Impact Assessment and Indicator 1 : other regulatory review techniques (cumulative) 42 trained officials; Value 90 (target for 325 (the target for 115 high-level (quantitative 0 training training trainees) officials trained in or Qualitative) trainers) two workshops Date achieved 12/31/2006 12/31/2010 06/30/2012 06/30/2012 Comments 46% achievement with regards to training trainers; additionally trained 115 high- (incl. % level officials achievement) Indicator 2 : Number of RIA pilots carried out (cumulative) NA (the original indicator "number Value of regulatory (quantitative 0 regimes reviewed 3 3 or Qualitative) and streamlined" dropped as unclear and thus not iv comparable with the revised indicator) Date achieved 12/31/2006 12/31/2010 12/31/2010 06/30/2012 Comments (incl. % 100% achievement achievement) Number of kind of measurements in which GDMC is able to provide calibration Indicator 3 : services (cumulative) Value (quantitative 4 NA 30 30 or Qualitative) Date achieved 12/31/2006 12/31/2010 06/30/2012 06/30/2012 Comments (incl. % 100% achievement achievement) Number of accreditations granted in accordance with the European co-operation Indicator 4 : for Accreditation (EA) standards (cumulative) Value (quantitative 3 NA 24 24 or Qualitative) Date achieved 12/31/2006 12/31/2010 06/30/2012 06/30/2012 Comments (incl. % 100% achievement achievement) Indicator 5 : Number of accreditation assessors trained (cumulative) Value (quantitative 0 20 50 50 or Qualitative) Date achieved 12/31/2006 12/31/2010 06/30/2012 06/30/2012 Comments (incl. % 100% achievement achievement) Indicator 6 : % of adopted standards made available electronically (cumulative) Value (quantitative 77.4 NA 100 100 or Qualitative) Date achieved 12/31/2006 12/31/2010 06/30/2012 06/30/2012 Comments (incl. % 100% achievement achievement) Number of workshops organized by the METE to discuss Government's progress Indicator 7 : in business environment reforms with relevant stakeholders, including progress made in BERIS-supported reforms (cumulative) Value (quantitative 5 4 17 16 or Qualitative) Date achieved 12/31/2006 12/31/2006 06/30/2012 06/30/2012 v Comments (incl. % 94% achievement achievement) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 03/01/2007 Satisfactory Satisfactory 0.00 2 08/31/2007 Satisfactory Satisfactory 0.87 3 06/02/2008 Moderately Satisfactory Moderately Satisfactory 0.95 4 02/18/2009 Moderately Satisfactory Moderately Satisfactory 1.07 5 06/23/2009 Moderately Satisfactory Moderately Satisfactory 1.20 Moderately Moderately 6 01/17/2010 1.08 Unsatisfactory Unsatisfactory Moderately Moderately 7 05/25/2010 1.35 Unsatisfactory Unsatisfactory 8 12/04/2010 Moderately Satisfactory Moderately Satisfactory 2.08 Moderately Moderately 9 07/09/2011 3.76 Unsatisfactory Unsatisfactory Moderately Moderately 10 12/24/2011 4.35 Unsatisfactory Unsatisfactory Moderately 11 01/17/2012 Moderately Satisfactory 4.73 Unsatisfactory 12 06/24/2012 Moderately Satisfactory Moderately Satisfactory 6.48 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Extension of the deadline for the development strategy of the MSTQ system and the national 04/10/2007 S S 0.00 metrology strategy due to the importance of a broad consultation Extension of the deadline for completing the ARCS surveys as it was too early to measure 01/30/2008 S S 0.87 results due to delayed launch of implementing activities under the regulatory component vi ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Completion of only one (the second) ARCS due to implementation delays; 01/28/2010 N MU MU 1.08 enhancement of the result framework to better measure the originally expected outcomes First extension of the closing date to complete the metrology laboratory; extension of the 08/31/2010 MU MU 1.45 deadline for ARCS accordingly; further refinement of the result framework and update of the targets Second extension of the closing date to complete the metrology laboratory; addition of specific TA for inspections reform; replacement of the ARCS with 01/11/2012 MU MU 4.42 small business survey to measure the project outcomes; dropping formally TA to the Competition Agency as it was de facto dropped during the negotiations vii I. Disbursement Profile viii 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal Country background. Albania’s macroeconomic indicators and medium-to-long term outlook for economic growth conveyed a clear message: the high economic growth rates experienced in the last decade were unlikely to be sustained in the absence of deeper reforms to attract investment and foster exports. Remittances and informal activities - which had represented the most dynamic drivers of economic growth in the last decade - did not constitute the type of growth that would enable Albania’s sustainable development. Concerns also existed about Albania’s ability to finance its current account. Inflows of foreign direct investment (FDI) had increased in recent years, reaching 5% of Gross Domestic Product (GDP) in 2004, with the privatization of the last state-owned bank. However, the sustainability of FDI trends remained to be seen, and in the eyes of foreign investors, other countries, especially those that joined the European Union (EU) in 2004, were perceived as much more attractive than Albania. Barriers to business entry and operations. Several constraints affected the business sector’s ability to efficiently perform and grow in Albania. As indicated by the 2005 Administrative and Regulatory Cost Survey (ARCS), the most significant constraint to business development was the unfair competition faced from those businesses that did not comply with the legal and regulatory framework or/and were favored by politicians. Unfair practices arose to a large extent from the significant size of the informal sector which a variety of estimates placed at 40 to 45 percent of the official GDP. Not surprisingly, with regard to the competitiveness of the economy, in 2005 Albania ranked only 100th among 116 countries, lagging behind all European countries. The 2005 ARCS provided indications on the constraints affecting business entry and operations and their severity. The most problematic ones were: anti-competitive practices (79%), electricity (70%), tax rates (72%), corruption (69%), macroeconomic instability (68%), economic and regulatory policy uncertainty (59%), and information on laws and regulations (53%). Unfair practices were the result of a number of factors. These included: the inability of the public sector to facilitate entry and operations of businesses in the formal economy (through business-friendly regulations able to reduce compliance cost for formal, businesses and increase attractiveness of the formal economy) and ineffectiveness of public sector policies and institutions to create a level playing field for investment and combat informal/illegal activities. Unnecessary administrative rules and procedures created obstacles to entry into markets and discouraged growth of foreign investors and local entrepreneurs. The business licensing regime offered - among many - a clear example of difficulties affecting business entry. In Albania at the time about 30 institutions were involved in the issuance and administration of over 120 licenses, permits, authorizations, certificates or consents which were regulated under different laws, decrees, guidelines, regulations and 1 instructions issued by different ministries and government entities. Such a complex legal and regulatory framework together with poor access of business to information represented a significant barrier to entry. It: (i) created confusion and uncertainty for businesses trying to determine the specific requirements for each sector of activity; (ii) significantly increased their compliance costs, thus opening opportunities for corruption; (iii) determined inconsistent and discretionary application of the rule of law by the government officials (favored by the business sector’s poor access to information); (iv) created incentives for informality; and ultimately, (v) resulted in the competitive disadvantage that businesses faced versus informal/illegal/not-compliant businesses. Albania’s institutional capacity to identify and properly address barriers to entry and to promote healthy market competition in the formal economy was also weak. Despite the establishment of a Competition Authority (CA), and the enactment of EU-oriented competition legislation, Albania still lacked a competition culture at all the levels of the economy, including the policy makers, the general public, and business community. The lack of competition culture - which was considered the most pervasive competition problem in the region - negatively affected the ability of relevant authorities to enforce legislation on competition and advocate for regulatory and, more in general, economic reforms, based on competition principles. Enterprises capability to export. In Albania the process of trade liberalization had not been supported by a parallel development of public sector institutions able to facilitate domestic enterprises in competing more efficiently in domestic and international markets. Thus, while Albania benefited from a preferential access to EU markets, the Albanian Metrology, Standards, Testing, Quality accreditation (MSTQ) system was still far from being in line with EU standards and unable to support competitiveness of the business sector in domestic and foreign markets. Tests to verify conformity of traded goods with technical regulations were not properly done and did not meet recognized standards. Thus, the market was flooded with low quality and unsafe goods, imports could not be checked, and fees charged for technical inspections were considered as an additional national tax. Standards were outdated and not in line with EU norms; the vast majority of state-owned laboratory facilities were obsolete and unable to meet the industry’s demand for metrology and testing services. Consequently, enterprises did not have appropriate means to control the quality of imported goods or to certify that the quality of their exported goods met EU standards. In addition, in the absence of a functioning certification system, the enterprise sector had few incentives and opportunities to improve the quality of products both for the domestic and foreign markets. Furthermore, the role and functions of the MSTQ institutions were poorly known by both consumers and the industry, and each institution operated independently without a clear vision for the medium term development of the MSTQ system and without taking into consideration needs of the Albania’s economy/industry. Country strategy. The new Government - which took office in September 2005 - had shown a strong commitment to attract investments and foster exports, and strengthen policy design and program planning. With support from the donor community and the Bank, several programs were underway to improve functioning of the energy market, tax 2 administration and to fight corruption. The Government had been and remained committed to address unfair practices and regulatory policy uncertainty, and improve access to, information on business regulations. In this regard, following the Foreign Investment Advisory Service (FIAS) recommendations, the Government had taken a range of steps to establish a better institutional infrastructure to support regulatory reform. By Order of the Council of Minister (number 170, 31 October 2005), the Government established a Regulatory Reform Task Force chaired by the Prime Minister for the formulation and monitoring of regulatory reform plans. The Prime Minister (PM) had given the Minister of Economy, Trade and Energy (METE) the mandate to implement these regulatory reforms. In doing this, METE was to be supported by the existing Department of Market Policies (DMP) of the METE - which was to be further strengthened by additional staff working full-time on regulatory reforms. Rational for Bank assistance. Through the careful combination of complementary investment and policy-based operations, the Bank was well-placed to provide a comprehensive program to support improvements in the business environment. The Business Environment Reform and Institutional Strengthening (BERIS) project was to assist the Government in attracting investment and fostering exports. It was to be supported by a parallel operation, the three-year Development Policy Loan (DPL) planned for FY07 to support medium-term policy and structural reforms to strengthen governance, sustain private sector-led growth and improve public service delivery. BERIS was also to be a part of a package of closely linked operations, such as for land management and accounting/auditing work, aimed at fostering a business environment conducive for private sector growth. The Bank’s involvement in the sector was expected to help mobilize the support of the donor community, and contribute to better policy decision-making, institutional capacity and implementation processes. Finally, the Bank’s experience in other countries was expected to help the Government in designing a coherent reform program 1.2 Original Project Development Objectives (PDO) and Key Indicators The overall objective of the BERIS was to assist the Government in: (i) facilitating business entry and operations in the formal economy; and (ii) strengthening the enterprise sector’s capability to increase exports towards regional and EU markets. Expected project outcomes were to include reduced costs, time and steps for businesses to comply with regulations affecting business entry and operations. Key results indicators were: (i) number of regulatory regimes reviewed and streamlined; (ii) reduced time and costs on meeting regulatory requirements (as measured by ARCS/Doing Business); (iii) number of officials trained in Regulatory Impact Assessment (RIA) and other regulatory quality techniques; (iv) number of workshops organized by the Government to discuss business environment reforms with relevant stakeholders; and (v) number of calibration services provided. 3 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO was not revised. Some key indicators and some outcome targets were revised with the approval of the Bank management. Some key indicators were revised to measure the originally expected project outcomes more accurately (“corrective restructuring”). The “cost, time and steps for business to comply with business regulations affecting business entry and operations” indicators were replaced by “level of business satisfaction with quality of regulation” (1=very satisfied; 6=very unsatisfied) and “% of senior manager time dealing with state administration” (based on the ARCS data) in the January 2010 restructuring approved by the Bank management. Specific targets were established for the new indicators (no targets were available for the original indicators). The target for “number of calibration services provided”, measuring the use of the MSTQ services by the enterprise sector, was increased from original 50 to 450 in January 2010 (by the original closing date of January 15, 2011) and to 400 in January 2012 by the final closing date of June 2012 (or 800 at the end of 2012) to reflect the improved capacity of the GDM’s existing laboratories. A new key indicator – “number of inspection agencies” with a baseline of 33 and target of <20 (30%) – was added in the restructuring approved by Bank management in January 2012 to measure the additional project activities supporting inspections reform and institutional strengthening (“adaptive restructuring”). These changes were within the original PDO. 1 1.4 Main Beneficiaries The main beneficiaries were domestic and foreign businesses that were expected to benefit from streamlined business regulations and access to information on business regulations, as well as from availability of improved MSTQ infrastructure. The direct project beneficiaries included public sector institutions involved in drafting business regulations and delivering public services (MSTQ institutions, Competition Policy Unit, CPU, DMP, etc.) for businesses. In addition, consumer protection and business associations, although non-direct project beneficiaries, were expected to continue to be involved during project implementation. 1.5 Original Components (i) Facilitating business entry and operations (Euro 1.70 million). This component aimed at addressing the Government’s weak capacity to establish and implement business friendly and pro-competitive regulatory regimes. As a result of the project, the 1 The other indicators referred to in Section 1.2 were component level indicators. The “number of regulatory regimes reviewed and streamlined” was dropped through the restructuring approved in January 2010 because it was unclear based on the PAD what it means. The target for the “number of officials trained in RIA and other regulatory quality techniques” was reduced from 325 in 2010 to eventually 90 in June 2012 through the restructuring approved in January 2012 because the training approach changed from training trainees to training trainers. 4 Government was to have in place well-functioning mechanisms for systematically assessing and improving the business environment and the CPU would have developed capacity for assessing impact of regulations on market competition by: (a) Improving quality of regulations affecting business entry and operations (Euro 1.42 million). This sub-component - which had been designed with FIAS support – was to assist in strengthening the institutional framework and capacities necessary to improve in a systematic manner the quality of regulations affecting business activity. This was to be done by: (a) building regulatory capacities and a regulatory management system in line-ministry and at the central level; (b) developing the capacity to improve the quality of new regulations, through the RIA, public consultation and complementary methods; (c) upgrading the quality of existing regulations partially via targeted reviews of regulation in selected areas/industries, and partially via improving the access to business- related laws and regulations in Albania; (d) developing and implementing a monitoring and evaluation (M&E) system for regulatory reforms.; and (e) undertaking small business surveys and two ARCSs to assess outcomes of the component. (b) Strengthening, the institutional capacity to draft business regulations enabling healthy market competition (Euro 0.28 million). This sub-component aimed at addressing the lack of healthy market competition by strengthening the capacity of the CPU of the METE to assess impact of regulations on market competition. (ii) Strengthening the enterprise sector’s capability to export to regional and EU markets: Strengthening the MSTQ system (Euro 5.67 million 2 ). This component aimed at addressing the enterprise sector’s difficulties in competing in domestic and foreign markets due to poor national MSTQ infrastructure and services. As a result of the project, the General Directorate of Metrology and Calibration (GDMC), General Directorate of Standardization (DPS) and Directorate of Accreditation (DA) would have acquired the ability to deliver EU-compatible MSTQ services to meet business sector needs. This was to be achieved by: (a) assisting in drafting and implementing a comprehensive medium-term strategy, including reviewing the institutional and legislative framework, to bring each of the MSTQ institutions closer to EU requirements and to meet industry’s needs; (b) increasing the business sector awareness of the challenges and opportunities of competing in EU markets; (c) strengthening the capacity of the GDMC, including modernizing the metrology infrastructure and, in particular, construction of a modem metrology laboratory, to perform basic measurements and calibrations services; (d) strengthening the capacity of the DPS by helping translate and adopt the pool of EU standards and making them electronically available to users.; and (e) strengthening the capacity of the DA by helping develop a pool of experts to carry out assessments of laboratories and personnel. 2 Metrology Euro 5.06 million; Standardization Euro 0.15 million; Accreditation Euro 0.2 million; and Inter-institutional activities Euro 0.255 million. 5 (iii) Project Coordination Support (Euro 0.23 million). This component aimed at ensuring proper implementation and coordination of the project activities, including support for financial management, procurement, M&E requirements. It was also to support organization of periodic business surveys, integrated public information campaigns for the MSTQ system and competition policy, and building of a more effective public-private sector dialogue on reforms. The component was also to assist in the dissemination of progress made by the Government in improving the business environment among the business community, policy makers and other relevant stakeholders. As a result of the project, METE would have acquired the capacity for monitoring and evaluating progress in improving the business environment and implementing effective consultation with the business sector. 1.6 Revised Components The facilitating business entry and operations component was revised: (i) by adding a new activity under the sub-component (a) called “establishing an institutional and legal framework for inspections reform” to advance the inspection reform designed and launched under the project and to strengthen the project impact (estimated cost Euro 200,000); (ii) by substituting the ARCS with small business surveys due to project implementation delays and lack of time to carry out the ARCS and removing it as a dated covenant (reference to ARCS was removed from the following PDO indicators: “business satisfaction with quality of regulation” and “% of senior manager time dealing with state administration”); and (iii) by retroactively cancelling the sub-component (i) (b) because it was de facto cancelled during the negotiations and METE did not anticipate to need the funds and removing reference to the intermediate result related to the CPU. In addition, it should be noted that the MSTQ component was not revised, but the targets for “number of kind of measurements in which GDMC is able to provide calibration services” were reduced from 50 as of January 2010 when it was introduced to 30 in January 2012. 3 This indicator measured the improved capacity of both GDM’s existing labs and new metrology lab. Because construction of the metrology lab and procurement of equipment for the existing laboratories experienced delays and procurement of some equipment was cancelled due to overall delays, the target had to be reduced to measure only the improved capacity of the GDM’s existing labs (see Section 2.2). 1.7 Other significant changes The closing date of the project was extended for 18 months in total with the approval of the Bank management. The extension of the closing date from January 15, 2011 to January 15, 2012 was required to complete the construction of the metrology laboratory that was delayed due to initial effectiveness delay, long preparation of the MSTQ strategy, change of the construction site and procurement delays (see Section 2.2). The second extension to June 30, 2012 was required to compensate for further construction delays. It 3 These changes were approved in restructurings approved by Bank management on January 28, 2010 and January 11, 2012. 6 also allowed provision of additional support to advance the inspections reform (see paragraph 1.6). There were no other significant changes in the design, scope or scale 4. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Project Preparation: The project took into consideration a number of lessons that affected implementation and outcomes positively, as follows: • Reforms were championed at the highest level of government. In this context, the Task Force for Regulatory Reform chaired by the Prime Minister and including a number of relevant ministries and various working groups in METE/DMP chaired by ministers was engaged in the regulatory reforms. The DMP was given a clear mandate to account for cross-ministerial coordination of regulatory reform and regulatory quality enhancement. The project built the institutional capacity within METE/DMP and other line-ministries to assure the quality of new regulations and streamline regulatory requirements to high impact areas, such as licensing and inspections by using properly adapted regulatory tools, such as the RIA. • The engagement of the private sector and civil society was a major driver for change. The project design emphasized stakeholder participation and extensive consultation with private sector players. • It was perceived that successful reforms require comprehensive, gradual and a continued approach. The BERIS was designed to assist the Government in building the capacity for business environment reforms able to prioritize and sequence reform interventions, and to achieve sustainable results. • Another important lesson that was incorporated into the project was the establishment of an M&E system. The M&E system increased transparency in the use of public resources and Government’s accountability for reforms, and improving the public-private sector dialogue on reforms. • BERIS was designed to overcome poor governance of public sector institutions that delays implementation of reforms, reduces sustainability of outcomes and weakens enforcement capacity. By addressing the four principles of the Governance Filter introduced by the CAS, BERIS emphasized the importance of 4 Minor changes included reallocation of Loan funds in the amount of Euro 88,000 and of Credit funds in the amount of SD 201,000 from Consultants, Goods Categories and Unallocated Categories to Works Category for financing the increased (unforeseen and underestimated) costs of construction of the metrology laboratory under the component (ii) (the contract value was increased from Albanian Lek 393 million to Albanian Lek 445 million.. The reallocation was made possible by savings gained from consolidating activities under one large contract under the component (i) (a), reducing the scope of M&E activities under this contract during implementation, cancellation of the component (i) (b) and availability of some unallocated funds under the components (i) and (iii). 7 devoting continued attention to governance issues in project design and implementation. • Implementation of investment operations benefits from clear links and complementarities with other Bank-financed operations, including policy-based lending. BERIS created synergies with other Bank-funded projects (e.g., land management project, accounting and auditing work), the DPL and FIAS activities. BERIS ensured that adequate resources were available to help implement some policy conditionality in case of delays of linked policy based loans and reforms. Project design. The PDOs were clear and important for the country and the Country Assistance Strategy (CAS) and responded to the Borrower’s development needs. It should be noted that this was the first Bank funded project in Albania that was to be implemented without a stand-alone project implementation unit (PIU). The implementing ministry was considered having sufficient capacity for managing the project although, initially, the lack of capacity slowed down the implementation. To mitigate this risk, the project allocated resources for some external consultants for fiduciary activities. In spite of the initial impact on implementation, the implementation of the project by the ministry demonstrated the commitment to and ownership of the project by the Government. With regards to risks, the PAD also identified a number of valid risks. However, the risk that the construction of the metrology laboratory could be exposed to delays was not mentioned in the PAD even though the design included TA as mitigation measure to ensure expeditious completion of construction. There was no “Quality at Entry” review carried out for this Project. 2.2 Implementation Factors outside the control of the government and implementation agencies Weather conditions and unforeseen technical difficulties. Adverse weather conditions (snow) and unanticipated work on the new site during the excavation period in the spring of 2011 delayed the construction of the metrology lab – the main investment of the project – for a couple of months (see below a paragraph on implementation delays). Procurement of some equipment for the lab had to be postponed and procurement of some equipment was eventually cancelled due to overall delays. Due to that, the targets for measuring the number of kind of measurements provided by GDM to the business sector were reduced. Factors generally subject to government Even though all the technical aspects and the drafting of the decree on light RIA were completed on time and without any major issue, the adoption of this legal piece is pending by the Government since May 2011. This is related to the decision that the Prime Minister should take about whether to place the RIA authority within METE or close to the Prime Minister office. The Decree is not measured in the project targets, but failure to 8 swiftly adopt this other crucial piece of legislation undermines the sustainability of the results. The Decree would enable the institutionalization of the light RIA introduced under the project and the endorsement of subsequent actions, as well as lead to improvement in the drafting of legal and sub-legal acts and to a new format for the explanatory memorandum accompanying proposed legislation. The Government’s decision in mid-2007 to change the site for the new metrology lab to a more convenient location delayed the launch of project activities by over one year, but led to more sustainable outcomes and efficiency gains. In retrospect, it is understandable that such a building was delayed. It was not a normal industrial, residential, or office- type building, but a unique one requiring an appropriate location and strict technical specifications. The land initially selected was located in a busy part of Tirana, subject to noise and vibration. The new site for the metrology building was located in a non- residential area outside Tirana, and had a surface which was twice as large as that of the plot previously identified. Unlike the originally identified site, this new parcel of land did not require demolishing any existing buildings. Appointment of key staff. The head of the implementing unit in METE was changed three times during the life of the project. The lack of continuity and part time involvement in the project may have contributed to delays in project implementation. Factors generally subject implementation agency control Management effectiveness. At the beginning, there were difficulties in ensuring efficiency of procurement work and coordination of project activities between the METE and the MSTQ agencies because of METE’s internal procedures and change of project coordinators (see above). This delayed processing of procurement documents and purchasing of goods and services. Based on the issues mentioned above, the likelihood of achieving the PDO and implementation progress was rated moderately unsatisfactory in years 2010-2012. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E design. The original PDO indicators for facilitating business entry and operations, as measured by ARCS/Doing Business surveys, (“reduced cost, time and steps businesses to comply with business regulations affecting business entry and operations”) were dropped in the restructuring dated January 2010 because it was deemed better to measure the PDO with other proxy indicators that more directly measure the project activities (“% of senior management time dealing with statement administration” and “business satisfaction with the quality of regulation” 5). These proxy indicators were to indirectly 5 Based on ARCS surveys and then, based on the 2012 restructuring, based on small business surveys. 9 indicate changes in business entry and operations. The original result framework lacked a PDO indicator for measuring strengthened enterprise sector’s capability for exports. Therefore, in the same restructuring of January 2010, a component indicator “number of calibration services provided” was moved to the PDO level to measure use of MSTQ services and to serve as a proxy of strengthened enterprise sector’s capability for exports. This indicator measured the use of GDMS’ calibration services by enterprises that, based on using the services, could certify that the quality of enterprises’ products meet EU standards. “Number of calibration services” measured the performance of the laboratories of the GDM. The result framework was appropriately adopted in January 2012 to measure the advances in inspections reform. The project included a number of component outcome indicators related to the MSTQ component a few of which remained and many others were refined to be more accurate. The Doing Business indicators on the component level were dropped because they did not directly reflect the project activities. Three new indicators were added to fully measure the project activities (“number of RIA pilots carried out”, “number of fields in which GDM is able to provide calibration services”, “% adopted standards made available electronically”). The revised indicators provided a fuller picture of project results except that, due to the delays, the final result framework did not capture the completion of the new metrology laboratory because its operations were launched after project closure. M&E implementation. An M&E system was initiated at the start of the project, and the services of an international consultant were obtained to provide advisory services. During the initial stages of the project, M&E mainly focused on project inputs, such as recruitment of consultants and procurement issues. As the project gathered momentum, the focus of M&E shifted to project outputs, and achievements in relation to targets specified in the Results Framework agreed with the World Bank. The advisor facilitated establishing a system in METE to collect data on the project performance indicators from the implementing agencies. In the last year, a Public Administration Survey was conducted to assess the outcomes and impact of the project from the perspective of the final beneficiaries. Given the crucial role the Metrology building was to play in the MSTQ system, the urgency of setting up a Critical Path Analysis (CPA), was stressed throughout the M&E consultancy. A CPA was adopted for the civil works relating to the new metrology building, and was updated monthly. M&E utilization. The Government had assigned high priority to the effective and efficient management of the BERIS Project. Project management within METE was carried out by a Review Committee specially appointed for this purpose. This committee was headed by the Advisor to the Minister, who was also the Coordinator of the MSTQ component of the BERIS Project, and included specialists within METE in charge of regular project monitoring, procurement and financial management. The management team was provided project monitoring data generated by the M&E system. 10 Through the above mentioned consultancy, M&E capacity has been enhanced at METE, with special attention to: (i) the acceptance of the M&E function as a ten-step process covering readiness assessments and agreement targets to impact assessments and long- term sustainability of the M&E function; (ii) data gathering with the use of appropriate formats and questionnaires for monitoring of results; (iii) the use of the monitoring- feedback-control-decisions-making loop in steering the project through site meetings and monthly progress reviews; (iv) the use of beneficiary assessments such as the Public Administration Survey, and the Business Survey to assess project impact; and (v) The use of Critical Path Analysis to monitor important and complex components of projects. The experienced gained and M&E capacity developed during the life of the project will stand in good stead for the implementation of future projects by METE. 2.4 Safeguard and Fiduciary Compliance The Environmental Category under the MSTQ system component was rated as “B”. The project financed: (i) metrology equipment; and (ii) the civil works for the construction of the new metrology laboratory for the GDMC. There were no issues in compliance with environmental safeguards. The metrology equipment purchased for the project had no adverse environmental impact; the equipment was considered “clean”, with no potential air or water emissions or waste products. The metrology facility which was built was provided with modem environmental control devices. In compliance with Bank requirements, the GDMC prepared and disclosed a basic Environmental Management Plan (EMP) describing the standards to be followed for the construction of the metrology laboratory. The project did not finance any land acquisition and no land was expropriated. The project did not entail any social risk or risk of adverse social impact. On the contrary, by increasing accountability of the government institutions dealing with the business sector, and improving transparency and efficiency of the government-to-business/final consumer relationship, the project contributed to improved public perception of the government institutions. The business community and the consumer association – which have also played a significant role in identifying the areas of the business environment requiring project attention - continued their involvement in project implementation. The financial management of the project was assessed as “Moderately Satisfactory” due to delays experienced in processing payments and providing counterpart funds. It had been anticipated at appraisal, that the Single Treasury System would have been developed and disseminated to budgetary organizations including METE, and would be used for financial management and financial reporting aspects of the project. Due to delays in the implementation and dissemination of the system, the PMU maintained a parallel system in excel spreadsheets for project accounting and financial reporting. Although the Single Treasury System was implemented, there were still significant delays in the processing of payments mainstreamed (mainly those related to IDA credit) through the System. As a result, the Designated Account (DA-A) for IBRD Loan was inactive for more than 2 years and payments from the IBRD loan was done using direct payments and special commitments. There were no outstanding audit reports for the 11 Project and all audit reports were found satisfactory to the Bank. Quarterly interim unaudited financial reports (IFRs) were submitted periodically to the Bank. The project audits received “unqualified” opinions of the audited financial statements and no major systems and control issues were identified by the auditors during the course of the audit. No major procurement issues were encountered. 2.5 Post-completion Operation/Next Phase The project achieved most of its objectives and key elements for project sustainability are in place. The consolidation of key institutions/processes has been achieved (RIA, General Inspectorate, and Business Registry). The RIA (once the legislation is approved) is expected to be used for all new legislation considered by the Government and the Business Registry is already in use and has provided a valuable tool for the private sector. In addition, the Government’s commitment to EU integration and the additional technical assistance to be provided through the EU Instrument for Pre-Accession (IPA) provide a good reassurance for the sustainability of this Project. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation The objective, design and implementation of the project are highly relevant to Albania’s and the World Bank’s development objectives. The World Bank Group continues to play an important role in Albania with assistance in this area. The latest CPS focuses on three strategic objectives, one being support to recovery in Albania’s growth rates through improving the business climate, through regulatory and institutional reforms to boost competitiveness and investments. One area in which concrete progress is observable concerns the legal and regulatory framework for business, which has been substantially overhauled and modernized (CPS Progress Review). The National Strategy for Development and Integration (which progress review is underway) also considers this (business environment) where a big improvement has been achieved, but that continues to remain an important objective for the mid-term strategy. Project interventions to improve business environment are highly relevant. The new Inspections Law contributes to improving the business climate as it is the basis for streamlining the inspections regime to facilitate business operations. The Electronic Business Legislation Registry contributes to the same since it has improved access to and transparency about all business regulatory acts. The pending RIA Decree that was based on project work would institutionalize the light RIA for all business legislation. Project interventions to improve provision of internationally compatible MSTQ services are likewise highly relevant for improving the enterprise sector’s competitiveness and exports. The project-financed strategy for the integrated development of the MSTQ system continues to provide a medium-term strategy for facilitating integration with the EU and for institutional development of the project beneficiary agencies. To 12 accommodate the growth in calibration services provided by the GDM, the project targets for calibration services were increased in a restructuring (the targets for other MSTQ agencies were also increased). On the other hand, the number of kind of measurements in which the GDM is able to provide calibration services needed to be reduced to a more realistic level because some equipment procurement was cancelled due to the risk of further delays and because construction of the new lab was delayed (see 2.2.). It was deemed not desirable to further extend the closing date of the project because with the completion of the new GDM lab the outcomes were known to materialize and because the project beneficiary agencies had access to financing equipment on EU funds. 3.2 Achievement of Project Development Objectives The project facilitated business entry and operations in the formal economy and strengthened the enterprise sector’s capability to increase exports towards regional and EU markets to a substantial extent, as measured in terms of meeting the revised project targets. The targets for “business satisfaction with quality of regulation”, “volume of use of MSTQ services, measured as number of calibration services provided” (as a proxy for enterprise sector’s increased capacity for exports) and “number of inspection agencies” were achieved. Lack of survey data on reduced “senior management time with dealing with state administration” remained a shortcoming in the assessment. As a result of the project, there is a greater ease of doing business in Albania. Private entrepreneurs are now benefiting from a vastly streamlined set of business processes in that they have a lesser number of approvals to get through in starting investments and production (number of inspection agencies down to 12 from 33). The technical expertise provided under the project has been instrumental in enhancing the skill levels of public officials responsible for policy formulation and implementation of laws and regulations affecting private entrepreneurs. The advisory services provided have instilled a new mind-set to dealing with the business environment – transforming it from one of “regulation” to “facilitation”. This change has contributed to a major improvement of business environment for private entrepreneurs engaged in production and exports. At the same time, the greater ease of doing business was complemented by a major upgrading of Albania’s MSTQ system to ensure that the quality standards of goods produced conform to EU standards. The project-financed strategy for the integrated development of the MSTQ system should help the relevant authorities consolidate and take reforms beyond the project’s achievements. The technical assistance provided and the financing of needed investments have begun to benefit the private sector in regard to product standards and quality assurance. The agencies involved in project implementation also benefitted from the project, through enhanced knowledge of systems and procedures relating to project management, monitoring and evaluation. The contribution and accomplishments of the project are summarized below and detailed in Annex 2. 13 Objective 1: Facilitation of Business Entry and Operations The objective of facilitating business entry and operations was achieved to a substantial extent. Improved business satisfaction with quality of regulations. Business satisfaction with quality of regulations improved from 3.3 in 2005 to the targeted 2.5 in mid-2012]. 6 According to the public administration survey carried out on project funds among 150 public servants and executives of 601 non-agricultural private businesses located throughout Albania and operating in manufacture, commerce, services and construction 7, the regulatory reforms planned by the Government in 2006 have clearly had an effect both in terms of perception by the business community and impact on that community. Below are the results of the public administration survey about business satisfaction with the quality of regulation as well as with some other aspects of the business environment: (a) General obstacles showed a marked improvement in most areas. The largest improvement was in electricity supply; from 70% in 2004 calling it a significant obstacle, the percentage had dropped to 41% in 2012. There was also a large decline in the perception of tax rates as a serious obstacle, although it was still mentioned by a majority of respondents (51% in the current survey compared to 72% in 2004). Other areas seen as problematic in 2004 that showed large improvement were corruption, macro-economic stability and anti-competitive practices. Perceived problems of crime, theft and disorder were ranked about the same in both years, but in each case, by under 40% of the respondents. (b) Regarding administrative obstacles, 70% reported that they were satisfied or very satisfied with the bureaucratic behaviour of the public authorities, and almost as high a percentage reported that that the Albanian government was efficient in delivering services. In the areas of registration and re-registration procedures, the positive effect of the National Registration Centre appears visible; answers of respondents in the area of licensing do not show a significant change, negatively or positively, a not unexpected result from the National Licensing Centre’s shorter period of operation. Here, too, a majority of respondents reported satisfaction with the quality of services received. (c) Although a majority of businesses reported having been subjected to at least one inspection by a state agency in the 12 months prior to the survey, the proportion was considerably lower than the one observed for the survey conducted in 2004 when virtually all businesses had been inspected at least once in the year before the survey. In view of a reduction of inspections since 2007 and the plan for further simplification through the new law passed a year ago, this area warrants 6 1 = very satisfied; 6 = very dissatisfied 7 1 = very satisfied; 6 = very dissatisfied. The surveys assessed the impact of recent legal and regulatory reforms upon service levels performed by public institutions, including the impact of RIA. Over 150 public servants were interviewed. 14 further periodic checking. As to disputes arising out of inspections, the three authorities with the highest number of disputes in the 2004 survey (police, fiscal authorities and the electrical corporation, the latter being a private company since 2009) continue in that position. (d) About a tenth of the respondents in this survey were exporters and a fifth reported being engaged in import transactions. A large majority of import companies reported satisfaction with the service quality of the customs administration. Reduced % of senior manager time dealing with state administration. The project did not carry out a survey on the impact of the project on reducing senior management time dealing with state administration because the surveys carried out covered in general many aspects of business satisfaction with the regulation. Doing a survey only for this specific question was not considered to be economically effective. Reduced the number of inspections agencies. The inspection system reform was one of the priorities of the Government of Albania under the Regulatory Reform agenda that the project supported. The project helped establish an institutional and legal framework for inspections reform. The Inspection Law was passed on June 16, 2011, and the Central Inspectorate was established in September 2011. Based on the Law, the number of inspectorates was consolidated from 33 to the targeted 12. The consolidation process has already started and will continue throughout 2013. Implemented the RIA program. The project helped implement the RIA program in a systematic manner, applied it to selected legislation (3 pilots), and developed the capacity of METE and a group of government officials for improving the quality of regulations. This was achieved first by a series of reports on RIA and second through awareness- raising and training activities and seeking feedback from key stakeholders. The institutionalization of the light RIA and its application on all legislation is pending adoption of the Decree instituting the RIA system since March 2011 (see Section 2.2). Initially, the design of the RIA light system was coordinated by the Department of Trade Policy (DTP) of METE, and it was responsible for its monitoring and evaluation until June 2010. Thereafter, the coordination of the RIA light system was transferred to the Department of Regulatory Reform (DRR) within METE. Both DTP and DRR have demonstrated the capacity to monitor the outputs of the RIA system, which included: (i) training programs of public officials in RIA, which to date has produced 42 trained officials; (ii) involvement of 23 of these 42 participants in the preparation of the three RIA pilots (see below); (iii) promoting the implementation of the light RIA with two workshops in the last quarter of 2011 with the participation of 95 directors and heads of legal and policy departments from all line ministries, leaders of independent institutions and business people, as well as 20 deputy ministers and general secretaries of line ministries; (iv) RIA pilots in which officials participated in the drafting of two Albanian laws: (a) “The Veterinary Service in Albania”; (b) “Law on Environmental Protection”; and (c) the Inspection Law. 15 The main impacts of the implemented RIA system include: (i) enhanced skills of government officials in drafting new laws and regulations; (ii) benefits to private entrepreneurs in terms of more appropriate laws; and (iii) greater public awareness of new and existing laws through the Electronic Business Legislation Registry. 8 In addition, the Government has successfully introduced some key principles relating to the quality of regulations through a process of regulatory reform. Of these the most important were: (i) periodic public consultation; (ii) accountability of the state administration; (iii) consistency of new legislation; and (iv) transparency. In this regard, the RIA has been a very useful tool that has helped Albania policy makers and officials to improve the understanding of economic and social impacts of regulation, assess trade-offs between alternative regulations, and identify the most suitable ones. Establishment of the Electronic Business Legislation Registry: Greater transparency has also been provided through the setting up of the Electronic Business Legislation Registry. The business community and the public are greatly benefiting from the business electronic registry (http://www.rlb.gov.al/) as it provides the following services and advantages among others: • The portal offers both to the business community and public unlimited, easy, quick, and free access of all business regulatory acts. With the portal, users can down-load, copy and print anywhere the regulatory acts they are interested in. • In the portal users access in a single and concentrated library the complete legislation (vertical, horizontal, primary, etc.) that is directly linked to doing business of all sectors and services in Albania. • The portal ensures that users can get automatically all the updated regulatory acts based on the activity or the institution chosen by the user. • The business electronic registry is equipped with a search engine that allows users to quickly obtain the desired results. In addition, users can acquire regulatory acts based on institutions or the field of activities. • Within the portal, the business community can find various economic/financial announcements of public institutions. METE has received positive feedback from business community on the services electronic registry offers in assisting businesses operations. 8 These impacts were also monitored by the DTP and DRR, supported by reports by relevant institutions, self-assessments by relevant officials, business surveys, and the IFC/World Bank Doing Business Surveys. 16 Objective 2: Strengthening the Enterprise Sector’s Capability to Export to Regional and EU Markets The project achieved its objective of strengthening the enterprise sector’s capability to export by improving the MSTQ institutions’ capacity for delivering EU-compatible services to a high extent. : Completion of a Medium-Term Strategy in 2008 (updated in 2011) to Establish an Internationally Recognized MSTQ System. Prior to project effectiveness, the equipment and training that had been provided within EU CARDS 2003 could not be used effectively due to lack of clear objectives, strategy, policies, vision and of an action plan for the operation of the GDM. The project financed preparation of the comprehensive Medium Term Strategy on Quality Infrastructure (including metrology, accreditation and standardization), which foresees an investment plan, assessment of economic impact of new investments, a detailed action plan for implementation, as well as revisions of the institutional and legislative framework, to bring each of the MSTQ institutions closer to EU requirements by 2022 and to meet industry needs. It will guide the Government in using the donor financing going forward. If properly implemented, the MSTQ strategy will have considerable impact on the development of Albania (export competitiveness of products, removal of technical barriers to imports, domestic consumer safety, protection of health and the environment). 9 Increased use of MSTQ Services by Enterprises to Increase Export Capability. The GDM has increased capacity for providing more calibration services, as demonstrated by the increase of calibration services provided to the enterprise sector from 26 in 2006 to 806, as of December 2012. This was made possible by the new equipment provided under the project and also the contributions from the EU IPA program. The use of calibration services is contributing to increase sales of the enterprises’ products in export markets. Furthermore, under the auspices of the project, legal metrology was reorganized by consolidation of branch and district offices leading to the establishment of four regional centers, which were equipped with mobile measurement units, making it possible to reach a far larger number of customers. Capacity building in the GDM has benefited from the services of the Long-Term Advisor and from the collaboration with the Czech Metrology Institute funded under the project. Increased capability of the GDM to Provide Different Kind of Measurements. The GDM has increased the number of kind of measurements in which it is able to provide calibration services from 4 in 2006 to 30 in December 2012. Because of the broader range of services that the GDM is able to provide more type of enterprises with a broader 9 International recognition of the tests done in a country is based on many factors, including the existing of testing facilities; calibration facilities to calibrate the testing equipment used; national reference measurement standards, so that all the measurements done in that country use the same references; up-to- date and internationally compatible technical regulations; up-to-date and internationally compatible technical regulations; up-to-date and internationally compatible standards necessary for tests and technical regulations; internationally compatible accreditation system in order to accredit calibration and testing laboratories, certification, inspection and personnel training organizations. 17 range of products can be served by the GDM. This has widened the sectoral coverage of the GDM’s operations and project impact. With the new laboratory operational, GDM is able to apply for EU funding for more lab equipment to meet the needs of even a broader range of enterprises. A Modern Metrology Laboratory Operational. Construction of a modern metrology laboratory was completed in June 2012, although with a delay, to provide basic measurement and calibration services to meet the industry needs. The laboratory is fully operational since January 2013. It has the capacity of providing a much bigger volume of services to meet the enterprise sector’s needs. The construction of new metrology laboratories was critical for Albania to upgrade its quality infrastructure to EU standards. While financing was received for equipment from other donors (e.g. EU and GTZ), none of these donors provided funding for construction works. At the same time, the purchase of equipment and training of GDMC staff was, for the most part, conditional on the existence of modern metrology laboratories. Because of these constraints, Albania was not able to take full advantage of EU financing for metrology infrastructure in the past. Internationally Compatible Standards. The Directorate of Standardization (DPS) made available 100% of adopted EU standards electronically. Entrepreneurs are now in a position to access their website, including information about 23,000 standards records and download needed standards information for Albanian standards. Of them, 18,000 are EU compatible, while the rest are either pure Albanian standards or other international standards. In terms of impact on business facilitation, entrepreneurs are now in a position to access the website and download needed standards information for Albanian standards. This has eliminated the hassle of visiting the DPS premises twice (now they can do the order online and have to visit DPS offices only to show evidence of the payment and close their order). The public awareness campaign has also been conducted through promotional activities such as World Standards Day (this activity was broadly followed by the national mass media), supported by a printed catalogue of Albanian standards, the first ever printed Annual Report (for 2010), and a number of promotional materials. The EU has commended the work of the DPS. The EU has commended the work of the DPS. In particular, the EU has commented that “there has been progress in the area of free movement of goods, particularly with regard to adopting EN standards as Albanian standards and in establishing the managing board of Standardization". The DPS is currently an affiliate member of CEN/CENLEC (the European Organizations for Standardization), and it plans to secure full membership by December 2012. The project provided some important technological means for reaching the requirements of “Condition 6” to be fulfilled for ensuring full membership. Progress towards Internationally Compatible Accreditation System. The Directorate of Accreditation (DA) granted accreditation services based on regulations services, standards, and accreditation principles to 24 Conformity Assessment Bodies (CABs) targeted. Fifty assessors/lead assessors have been trained up to standards and EA documents, as targeted. The DA, on its own initiative has computerized the procedures involved in the accreditation process for the benefit of CABs seeking accreditation process. As a result of this upgrading and capacity building process in the DA, some 18 foreign investors have begun to collaborate with CABs accredited by DA in connection with the setting up of export oriented ventures. This is a significant development impact, as it has helped improve the business environment, as perceived by private investors. The vision of the DA is to become a signatory of a mutual recognition agreement with the European Accreditation and EA in the field of testing laboratories, and thus achieving the EA-MLA status. 3.3 Efficiency The project achieved its objectives efficiently to a substantial extent. Efficiency in the original project was based on qualitative description of benefits, including more business- friendly regulatory environment, increased compliance of Albanian goods and services with EU requirements and improved governance of public institutions, leading ultimately to better public finances. The preparatory work related to the construction of the metrology lab and the construction itself took longer than anticipated, but did not significantly reduce the efficiency of achieving the outcomes in view of the long-term benefits that will be gained from the project investments. Many project investments will have long-term benefits by improving Albanian’s enterprise sector’s competitiveness because they will be more compliant with EU requirements (i.e., impact of the MSTQ strategy, improved MSTQ capacity); lower costs due to the creation of a more business- friendly regulatory environment; and by improving governance of some public institutions (i.e., DA, DPS, GDM, Electronic Business Legislation Registry, the light RIA). 3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory The overall outcome is moderately satisfactory. The project remains highly relevant to the country and for the World Bank’s assistance strategy aimed at boosting competitiveness and investments and with the Government’s commitment to EU integration that the project supported. The project achieved the targets for facilitating business entry and operations in the formal economy and strengthening the enterprise sector’s capability to increase exports towards regional and EU markets to a substantial extent. Efficiency of achieving the outcomes was somewhat affected by the implementation delays, but the long-term benefits especially those related to the greater capacity of the new metrology laboratory to provide more services to the companies, as well as the benefits resulting from an improved inspection regime (subject to it being implemented fairly) overcome the negative effects of the initial delays. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development N/A (b) Institutional Change/Strengthening 19 The project had a profound impact on the institutions that participated (METE, DA, GDS and GDM), bringing about fundamental institutional changes and strengthening management. In addition, under the project a Central Inspectorate was established to oversee inspectorates in line ministries, coordinate works of various inspectorates, and oversee the entire inspection reform. The positive aspects brought about by the project which strengthened these institutions included capacity building, staff training and new methods and approaches to problem solving. In addition, through the advisory services of the M&E Consultant, METE officials developed a better understanding that M&E was not a mechanical process of checking results against some agreed targets, but a systematic approach to assessment of progress, starting with monitoring of results, discussing performance with key actors, especially on shortfalls and corrective measures, and evaluating results, in terms of the impact made by the project. The advisory services emphasized importance of a good results-based M&E system to measure and evaluate outcomes and feed such information back into the ongoing processes of progress review and project management. A framework used for this purpose was designed based on a World Bank Study entitled “Ten Steps to Monitoring and Evaluation”. (c) Other Unintended Outcomes and Impacts (positive or negative) The technical expertise provided under the project has been instrumental in enhancing the skill levels of public officials responsible for policy formulation and implementation on regulations affecting private entrepreneurs. The advisory services provided instilled a new mind-set to and approaches in dealing with the business environment – transforming it from one of “regulation” to “facilitation”. This change has contributed to a major improvement of business environment for private entrepreneurs engaged in production and exports 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops The project funded a Public Administration Survey to assess the impact of recent legal and regulatory reforms upon service levels performed by public institutions, including the impact of RIA. The survey showed that the regulatory reforms planned by the Government in 2006 have clearly had an effect both in terms of perception by the business community and impact on that community. It was further to be emphasised that the answers to some questions may have been a reflection of the global economic crisis, such as, for example, reported difficulties in obtaining financing. The completed survey was based on interviews with executives of 601 non-agricultural private businesses located throughout Albania and operating in manufacture, commerce, services and construction. The sample design criteria included 101 businesses operating partly or fully with foreign capital, and 87 out of all the contacted businesses was involved in the last two years in export/import activities. The survey was designed to cover obstacles to business operations and growth (both general and administrative); registration and licensing; premises, construction and infrastructure; inspections; tax administration, import and export; disputes and conflict resolution; gifts and bribes; and crime. 20 4. Assessment of Risk to Development Outcome Rating: Moderate The risk for development outcome is considered moderate. The risks are related to the pending adoption of the Decree to institutionalize the light RIA. The failure to swiftly adopt this other crucial piece of legislation undermines the sustainability of the results achieved under the project (see 2.2 and 3.2). The key investment of the project - the metrology laboratory - is operational. Sustainability of the BERIS’s achievements has been enhanced by the Government’s commitment to improve Albania’s business environment and to provide EU compatible MSTQ services, as well as desire for further EU integration. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory The Bank responded in a timely manner through the careful combination of complementary investment and policy-based operation to support relevant improvements in the business environment. The Bank also incorporated lessons learned in implementing similar operations in other countries to help the Government in designing a coherent reform program. Some lessons worked, some did not. The Bank should have paid more attention to the time required to implement a complex, multi-component project involving preparatory work and construction of a world class metrology laboratory and to the lack of in-house/country capacity to manage such a project in a short period of time. (b) Quality of Supervision Rating: Satisfactory Project supervision was satisfactory. Supervision missions were carried out at least twice a year and project supervision reporting was candid and action-oriented. Project supervision focused on development impact in a sense that the Bank team reported on key issues candidly, discussed project performance indicators and adjusted them, as needed, to better reflect project outcomes. The Bank team used additional experts, such as a metrology expert to review procurement documents, and an engineer to monitor construction of the metrology lab to facilitate better quality of supervision and better monitoring of project implementation. The Bank was responsive to the Government’s requests throughout Project implementation, and demonstrated flexibility and understanding in the use of project resources. As and when required, the Bank responded positively to the Government’s requests for project restructuring in response to external environment and evolving country needs because of the long-term benefits of the changes even though they led to implementation delays (i.e., change of the site of the metrology laboratory). The initial timetable and scope of improving quality of regulations were ambitious or unclear and needed to be adjusted to meet the country circumstances and capacity due to the complexities of the reform (i.e., a light RIA), which was done with 21 Bank input. As a result, the closing date of the project had to be extended twice. The project M&E framework had to be adjusted later to better reflect the project results. There were quite frequent changes in task managers (three) for this project which impedes continuity and lead to implementation delays, as the new task managers took time to familiarize themselves with the project. However, this was mitigated by the fact that the most of the fiduciary staff on the Bank team that appraised this project worked on the project through project closing and the last task manager of the project was based in the country office and could respond to the client’s needs quickly and effectively. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory Overall, the Bank was responsive to the client’s needs from the design stage through to project closing with close supervision and excellent support from the country office. Based on the above the overall Bank performance in ensuring quality at entry and quality of supervision is rated as moderately satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory. The Government performance is rated moderately satisfactory. The Government worked closely with the Bank throughout project preparation, and negotiations. However, there were some lapses by the Borrower during implementation, especially at the inception that led to delays. Delays in making the project effective, finalizing the land for the metrology building and delays in providing counterpart funding and passage on the Government Decree on the RIA were some of the shortcomings. However, as project implementation progressed, some of these delays were minimized. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory The overall implementation agencies performance is rated as moderately satisfactory. There were several changes at the coordinator position at the METE, which led to delays in implementation. In general, the implementing agency’s performance was satisfactory; however, METE’s lack of experience in working with the Bank and lack of knowledge of Bank procedures delayed implementation, especially in the area of procurement in the early stages of project implementation. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory Although, the Borrower has completed the Project successfully, albeit with delays, in a challenging external environment they could have shown more commitment to its early implementation. Based on the above, the overall Borrower performance is rated as Moderately Satisfactory. 22 6. Lessons Learned The following lessons can be learned from implementing the BERIS project: Project design: Construction of the metrology laboratory - one of the major components – was completed with a delay in June 2012 and the lab became operational in January 2013, after the project closure. The project design should have taken into consideration the complexity and time in constructing a metrology laboratory, especially in a country, where such buildings do not exists. The construction of a state of the art metrology laboratory is unique and requires expertise to monitor and supervise. The counterparts in the METE lacked the required expertise, which was also lacking in-country. The Bank also underestimated the complexity and time required for the construction of the laboratory. In addition, the design did not anticipate how much time was required to prepare and consult on the medium-term MSTQ strategy that provided the foundation for the project’s MSTQ activities. It is recommended that the preparatory work be financed prior to project launch and the Bank team invests more in planning complex project activities with more expertise. Complexity of design. The inclusion of too many components/sub-components in a project negatively affected implementation because both the client and the Bank had limited resources for effective supervision and implementation. When clients have limited capacity to begin with, it may be prudent to limit components to fewer with a similar implementation format. Similarly, the project should not have too many indicators. Fewer, measurable and objective monitoring indicators and a well-designed evaluation system will better assess the baselines and subsequently achievement of project outcomes. Effective implementing agency: This was the first Bank funded project in Albania that was to be implemented without a stand-alone PIU. Experience from the project indicates that this was not initially the most optimal solution, as the METE lacked experience in Bank procedures and policies, there was no operational manual to guide them at the inception of the project, and METE project related staff had to work full time on their normal work and also take on project responsibilities, without added compensation. This resulted in initial delays in project implementation which were tried to be mitigated by hiring consultants. A well-functioning implementation unit, staffed with competent and committed people and fairly remunerated is essential for a successful implementation of a multi-component and a complex project, such as this. Continuity of project staff contributes to the success of a project. The Bank team that prepared this project did not continue to work through most of the project life. The task manager was changed three times, as were the counterparts. This disrupted project continuity and contributed to delays in responding to the changing external environment and to meeting the demands from the Borrower quickly and effectively. It is advisable that project management and supervision activities are planned early and transferred appropriately. 23 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies (b) Cofinanciers N/A (c) Other partners and stakeholders N/A 24 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate (EURO Estimate (EURO Appraisal millions) millions) Component 1 – Facilitating 1.71 1.40 82 Business Entry and Operations Component 2 – Development and Strengthening of the 5.67 6.09 107 MSTQ System Component 3 - Project 0.23 0.17 74 Coordination Total Project Costs 7.61 7.66 100 Unallocated 0.05 0.00 Front-end fee IBRD 0.01 0.01 Total Financing Required 7.67 7.67 (b) Financing Appraisal Actual/Late Type of Estimate st Estimate Percentage Source of Funds Cofinancing (USD (USD of Appraisal millions) millions) Borrower 0.50 0.50 100 IBRD/IDA 9.30 9.25 83 25 Annex 2. Outputs by Component Overall, the project continues to be highly relevant for the Government’s efforts to advance EU accession and improve the investment climate in Albania. Component 1: Facilitation of Business Entry and Operations Progress under this component was satisfactory. Activities under the Regulatory Impact Assessment (RIA) assumed considerable importance, and constituted the core of Component 1. The RIA is a tool that helps policy makers and officials to improve the understanding of economic and social impacts of regulation, assess trade-offs between alternative regulations, and identify the most suitable ones. (a) Improving Quality of Regulations Affecting Business Entry and Operations: The two-year consultancy financed by the project established an overall view of the country’s regulatory and reform system and provided proposals on the design and establishment of the Regulatory Impact System, Reform on Inspection, Electronic Registry of Business Legislation and information on the Licensing System in Albania. Implementation of the RIA program was carried out in a systematic and stepwise manner, first by a series of reports on RIA and second through awareness-raising activities and seeking feedback from key stakeholders. The reports prepared during the early stage of the project included: (i) an Assessment of the Government of Albania’s Capacities; (ii) the Inception Report for the Establishment of a RIA system in Albania; (iii) Draft Report on a Panorama of Options for the Design and the Introduction of a RIA System in Albania; and (iv) a draft Working Paper on a Tentative Design of the Albanian RIA System. In March 2011, METE sent for approval to the Council of Ministers the amended Council of Minister’s Decree No. 584 on the “Adoption of Council of Minister’s Regulation”. The aim of the amended decree was to improve drafting procedures of every legal/sublegal act. It also included a new format of the Explanatory Memorandum. This amended decree was on the Agenda of the Council of Ministers. The Regulatory Reform and Quality Infrastructure Department (DRRIC) had, on the basis of Council of Minister’s legislative program, selected specific legislative acts that were to be closely monitored during the drafting process and the compilation of the explanatory memorandum. The awareness-raising and participatory activities consisted of a series of workshops on RIA, starting in 2009. These workshops provided an opportunity to receive feedback from participants on the effort and capacity needed to launch the RIA. Participants included key stakeholders from the private sector, officials of METE, and relevant representatives of other line institutions. These activities laid the foundation for the RIA by dissemination of information on what the RIA is about, and how to approach RIA. 26 After successfully participating in RIA training programs and pilot studies, government officials have better drafting legislation skills in analyzing the information and data to be included in a field/sector that would be regulated. Government officials have benefited both at a theoretical and practical level. The training conducted by the consultants has provided knowledge on Regulatory Impact Assessment/Inspections. The acquired knowledge was successfully applied in two pilot studies. The pilot studies aimed at drafting, based on RIA principles, two Albanian laws: (i) “The Veterinary Service in Albania”; (ii) “Law on Environmental Protection” and (iii) the Inspections Law. Greater transparency has also been provided through the setting up of the Electronic Business Legislation Registry. The inspection system reform was one of the priorities of the Government of Albania under the Regulatory Reform agenda that the Project supported. There was a significant amount of work to be done to advance the inspections reform. According to the model for inspection outlined in the Inspections Law, the new inspection organization was to include a small new central structure (General Inspectorate) that was to oversee inspectorates in line ministries, coordinate works of various inspectorates, and oversee the entire inspection reform. The General Inspectorate and Inspectorates within the line ministries needed training in applying the new principles, procedures and ethics; inspectorates in line ministries needed to be restructured and merged from 33 to less than 20, and over 50 sectoral technical regulations need to be amended to reflect the new organizational structure and the Inspection Law. To build on the Project work, there was a need to further strengthen METE’s capacity for providing RIA training and to strengthen monitoring of regulatory reform processes by monitoring establishment and issuance of licenses at national level and introducing regulatory impact analysis in the legislative practices in Albania. In this regard, the Bank agreed with METE through the January 2012 restructuring to the inclusion of four new consultant services assignments under Part A.1 to advance the inspections reform: (a) a legal advisor for drafting rules of organization, functioning and the detailed functions of the Central Inspectorate of Albania; (b) a legal advisor for drafting amendments to laws and regulations enabling uninterrupted functioning of merged inspectorates and Central Inspectorate; (c) an advisor for drafting regulations enabling merging of inspectorates and their internal regulations; and (d) a senior international advisor for inspection and regulatory reform in Albania. These consultancies supported building regulatory capacities and developing a regulatory management system for inspections. After the amended RIA Decree No. 584 comes into force, the DRRIC will organize RIA training in the line ministries based on the training material prepared by the consultant. Inspection Reform. The Inspection Law was passed on June 16, 2011, and the Central Inspectorate has been established. As a result, a number of inspection bodies are in the process of being merged to reduce the total number from 33 to 12 during 2013. The Electronic Business Legislation Registry became fully operational on February 19, 2011, under the responsibility of the National Agency of Information Service and METE 27 (www.rlb.gov.al). 10 The project financed IT equipment for the DTP and registry for business regulation. The Register provides free information services to the public 11 and contains all legislative acts in electronic format, namely: (i) all laws and regulations related directly or indirectly to business activities; (ii) all laws and all Decisions of the Council of Ministers related to business; (iii) all rules, orders, common legal acts or acts specific to each Ministry, Council of Ministers, and other institutions; and (iv) all procedures, application forms and guidelines provided by Ministries and other institutions pursuant to the laws or Decisions of the Council of Ministers. Thirty line ministries (including METE) and independent institutions have contributed to data entry and continuously update the registry. Monitoring and administration continue to be conducted by the IT department of METE, with its Regulatory Reform Unit responsible for further improvement of the web-site. The support for the small business surveys and two “Administrative and Regulatory Cost Surveys – ARCSs” to assess outcomes of the sub-component was not done. It was decided not to carry out the ARCS, as planned in the PAD and as revised in the amendments of the legal agreements, but to undertake a small business survey measuring the key outcome indicators and PDOs and a public administration survey to monitor and evaluate reform progress within the public administration. This was a suggestion received from the Government and the team considered it justified, because it covered most of the question to which we were interested and there were time limitations to carry out a full ARCS. (b) Strengthening, the Institutional Capacity to Draft Business Regulations Enabling Healthy Market Competition. This activity was dropped during negotiations and the project never financed any direct assistance to the CPU because the CPU was, in practice, a small unit within the Department of Market Policies (DMP) (the original Project implementation unit) in METE that was soon merged with other functions in DMP. METE did not foresee a need METE has received positive feedback from business community on the services electronic registry offers in assisting businesses operations. These achievements under the Project have been complemented by the establishment of the National Registration Center, consisting of a main office and 31 branches. This Center is a one-stop-shop for business registration in one day, representing a substantial reduction in time for opening a new business, and a considerable simplification in licensing procedures. These were implemented by the Government of Albania with the support of other donors, within the context of the Project. 10 The project financed the IT, software development, preparation of a manual, and training of officials in METE, line ministries and other independent institutions. 11 The Electronic Registry of Business Legislation offers the following services free of charge to the public: (i) searching of legal acts, regulations, guidelines, application formats, directories; (ii) status of all legal acts in force, abrogated or in draft form; (iii) possibility to collect, via the website, suggestions and comments from users on draft acts or acts that are currently in force. 28 Component 2: Strengthening the Enterprise Sector’s Capability to Export to Regional and EU Markets Strengthening the MSTQ Systems: Medium Term Strategy and Legislative Framework: In March 2008 the Albanian Government approved the National MSTQ Strategy (including a strategy for metrology, standardization and accreditation) prepared with the help of three individual consultants funded under the project. This strategy aimed to bring each MSTQ institution closer to EU requirements and practices. In November 2010 the long term metrology adviser initiated revision of the strategy which was finalized at the end of 2011. Increasing Business Sector Awareness: Several public relations campaigns were carried out by a firm funded under the project, a communications campaign for the GDS, “World metrology day” for the GDMC and promotional materials for the GDA. Strengthening the Capacity of the General Directorate of Metrology (GDM): Capacity building in the GDM benefited from the services of the Long-Term Advisor funded under the project during 2008-2011. The consultant assisted GDM in project implementation and capacity building by preparing procurement documents for consultants, metrology equipment and civil works, designing and implementing programs for the development of metrology regional centers and closure of district/field offices, designing training programs for staff and industry laboratories, establishing the measurement traceability in accordance with EU best practices and requirements, arranging contacts with other metrology institutes, relevant stakeholders, including other MSTQ institutions and donors, etc. Capacity building for the GDM also benefited from the collaboration with the Czech Metrology Institute. The project funded the design and supervision of construction of a modern metrology laboratory, as well as its construction under two separate contracts and small local contracts with civil and mechanical engineers and an architect. The new metrology building was completed in June 2012, and became operational in January 2013. The building itself is a large and specialized one designed to house highly sensitive instruments and equipment, which are to be used to ensure the accuracy of all measuring instruments serving industry, especially the export sector in Albania. This five-storied building has a floor area of over 5,500 sqm. and has provisions for a wide range of connections with utility services and specialized equipment. The project also funded large equipment packages for the existing laboratories and new laboratory. Due to delays, the number of packages was reduced (see Section 2.2). General Directorate of Standardization. This department of METE has produced tangible results using the lowest allocation amounting to 2 percent of the total funding under the Project. There are two sub-components supported by the project: (a) upgrading of the database of standards and ICT Infrastructure to meet EU requirements; and (b) conducting a public awareness campaign. Under the first sub-component, the hardware consisting of four servers and network devices and the necessary software are in place. 29 About 23,000 standards records have been inputted. Of these, about 18,000 are EU compatible, while the rest are either pure Albanian standards or other international standards. The department has met its target relating to the percentage of adopted standards made available electronically. The public awareness campaign has also been conducted through promotional activities such as World Standards Day (this activity was broadly followed by the national mass media), supported by a printed catalogue of Albanian standards, the first ever printed Annual Report (for 2010), and a number of promotional materials. The EU has commended the work of the DPS. In particular, the EU has commented that “there has been progress in the area of free movement of goods, particularly with regard to adopting EN standards as Albanian standards and in establishing the managing board of Standardization". Directorate of Accreditation (DA). The mission of the DA is to provide Conformity Assessment Bodies (CABs) with accreditation services based on regulations services, standards, and accreditation principles. The vision of the DA is to become a signatory of a mutual recognition agreement with the European Accreditation and EAin the field of testing laboratories, and thus achieving the EA-MLA status. The Project has supported capacity building of this institution through activities which included: (a) training of 55 staff members; (b) monitoring the DA’s assessment team during surveillance visits; and (c) an assessment visit by two DA staff organized in Sweden. Experts from the Swedish Accreditation Board (SWEDAC) have been monitoring the DA’s assessment team through surveillance visits. Furthermore, four representatives of the DA participated in two assessment visits in Sweden, to gain first-hand experience in the accreditation process. The DA, on its own initiative has computerized the procedures involved in the accreditation process for the benefit of CABs seeking accreditation process. As a result of this upgrading and capacity building process in the DA, some foreign investors have begun to collaborate with CABs accredited by DA in connection with the setting up of export oriented ventures. This is a significant development impact, as it has helped improve the business environment, as perceived by private investors. Component 3: Project Coordination Support. Project coordination and support was carried out under the auspices of the METE. The unit was headed by an official from the METE supported by two consultants (financial management and procurement). It must be noted that the head of this unit spent only part of his time on the project and in addition, the candidate appointed to this position was changed three times during the life of the project. The lack of continuity and part time involvement in may have contributed to delays in project implementation. In line with the M&E requirements, METE took steps to evaluate the impact of the BERIS Project by carrying out a public administration survey (see below). This, however, depended on the gathering of substantive and robust data (see Sections 3.2 and 3.6 for results). A business survey was not carried out as most of the issues affecting business were covered under the administrative survey. In addition, data was not available on the impact on exports as a result of the new metrology building, due to delays in the facility becoming operational. 30 A Public Administration Survey. Over 150 public servants were interviewed. The survey showed that the regulatory reforms planned by the Government in 2006 have clearly had an effect both in terms of perception by the business community and impact on that community. It was further to be emphasised that the answers to some questions may have been a reflection of the global economic crisis, such as, for example, reported difficulties in obtaining financing. The completed survey was also based on interviews with executives of 601 non-agricultural private businesses located throughout Albania and operating in manufacture, commerce, services and construction. The sample design criteria included 101 businesses operating partly or fully with foreign capital, and 87 out of all the contacted businesses was involved in the last two years in export/import activities. The survey was designed to cover obstacles to business operations and growth (both general and administrative); registration and licensing; premises, construction and infrastructure; inspections; tax administration, import and export; disputes and conflict resolution; gifts and bribes; and crime. 31 Annex 3. Economic and Financial Analysis N/A 32 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Silvia Minotti Team Leader ECSPF Yannis Katsoulakos Competition Policy Expert ECSPF Rochelle Hilton Operations Advisor ECSPF Greta Minxhozi Sr. Country Officer ECCAL Paula Genis Operations Officer ECSF2 Ibrahim Hackaj Sr. Operations Officer ECCSD Silvia Mauri Operations Expert ECCU4 Nicholay Chistyakov Sr. Finance Officer LOAGl Elona Gjika Financial Management Specialist ECSOQ Vinod K. Goel Consultant EASFP Serap Gonulal Sr Financial Sector Spec. FCMNB Ioannis Katsoulakos Consultant ECSPF Peter Farup Ladegaard Principal Operations Officer CAFJ2 Belita Manka Counsel LEGOP Kirsten Burghardt Propst Senior Counsel LEGEM Petrus Henricus Van Senior Program Officer PRMPS Heesewijk Supervision/ICR Donato de Rosa Country Sector Coordinator ECSPF Jose C. Janeiro Senior Finance Officer CTRLN Blaga Djourdjin Procurement Specialist ECSO2 Paula Genis Operations Officer ECSF2 Elona Gjika Financial Management Specialist ECSOQ Vinod K. Goel Consultant EASFP Peter Farup Ladegaard Principal Operations Officer CAFJ2 Belita Manka Counsel LEGOP Ida N. Muhoho Sr Financial Management Specialist ECSO3 Kirsten Burghardt Propst Senior Counsel LEGEM Tarik Sahovic Operations Officer CEUIC ECCKO- Evis Sulko Country Operations Officer DIV Hiran Herat Consultant ECSPF 33 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) USD Thousands Stage of Project Cycle (including travel and No. of staff weeks consultant costs) Lending FY06 42.96 260.67 FY07 14.10 68.14 Total: 328.81 Supervision/ICR FY07 11.05 60.74 FY08 29.36 93 FY09 36.58 114.92 FY10 40.38 94.82 FY11 38.58 99.08 FY12 28.32 106.11 FY13 0.98 0 Total: 568.67 34 Annex 5. Beneficiary Survey Results See Section 3.2. 35 Annex 6. Stakeholder Workshop Report and Results N/A 36 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 37 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N/A 38 Annex 9. List of Supporting Documents Project Appraisal Document Aide Memoires, Implementation Support and Result Reports Consultants Terms of References and Reports Borrower strategies Progress Reports and M&E Data of METE Country Assistance Strategy FY11-FY14 39 IBRD 33359R1 19°E 20°E 21°E MONTENEGRO Maja Jezercë (2693 m) Valbona Valbon KOSOVO MALSI E lps banian A ALBANIA North Al TROPOJË To Podgorica MADHE Bajram Han i Hoti Curri Koplik Dri Fierzë n HAS To Lake SHKODËR Prizren Scutari Krumë PUKË Shkodër Koman (Scutari) Pukë Fush Kukës Arrëz Kalimash 42°N 42°N KUKËS Bunë LEZHË Zall-Rec MIRDITË Shëngjin Drinit Bay Rubik Drin i Zi Kurbneshi Lezhë Rrëshen Lake Peshkopi Shkopet Ulzës Fushë Kuge Laç Ulëz Burrel Rodonit Bay LAÇ DIBRA Mamurasi M AT Krujë Lalëzit Adriatic Bay KRUJË FY R DURRËS Fushë Krujë Bulquizë BULQIZË MA CEDON I A Sea Durrës Vorë Vo rë TIRANË (TIRANA) Shijak Durrësit TIRANË Bay Ibë Librazhd To Kavajë Krrabë Struga LIBRAZHD KAVAJË Elbasan PEQIN Lake Vidhës Vid hës Perrenjas 41°N Peqin Ohrid ELBASAN 41°N Karavastasë HNJË L U S HN Cërrik Bay Lushnjë POGRADEC Lake Kajan Prespa Gramsh Pogradec KUÇOVË GRAMSH FIER Kuçovë Little Fier Berat Lake Prespa Marinzë Patos Maliq DEVOLL B E R AT K O R Ç Ë Korçë Kafaraj Ballsh Bilisht Vjosë MALLA- APAR S K R APA R 0 10 20 30 40 Kilometers KASTER Çorovodë Selenice 0 10 20 30 Miles Vlorës Vlorë TE P E L E N Ë Bay Krahës Ersekë 19°E Mavrovë PËRMET VLORË KOLONJË Tepelenë Kelcyrë Përmet ALBA N I A P GREE CE Vjo in ë s du J I R OK AS TË R G JI SELECTED CITIES AND TOWNS s Gjirokastër M DISTRICT CAPITALS 40°N DELVINË 40°N ou NATIONAL CAPITAL Delvinë nt To RIVERS Ioánina ai Sarandë MAIN ROADS Kakavija n GREECE s RAILROADS SARANDË This map was produced by the Map Design Unit of The World Bank. DISTRICT BOUNDARIES The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any INTERNATIONAL BOUNDARIES endorsement or acceptance of such boundaries. 20°E 21°E JULY 2009