FOR OFFICIAL USE ONLY Report No: ICR00005158 IMPLEMENTATION COMPLETION AND RESULTS REPORT - Credit No. IDA-60030 ON A CREDIT IN THE AMOUNT OF (58.9) MILLION (US$80 MILLION EQUIVALENT) TO THE Republic of Malawi FOR AN Agricultural Support and Fiscal Management Development Policy Financing December 22, 2020 Macroeconomics, Trade And Investment Global Practice Africa Region The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) CURRENCY EQUIVALENTS (Exchange Rate Effective March 29, 2020) Currency Unit = Malawi Kwacha MWK 770 = US$1 US$1.43 = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Hafez N. H. Ghanem Country Director: Mara Warwick Regional Director: Asad Alam Practice Manager: Vivek Suri Task Team Leader(s): Patrick Hettinger ICR Main Contributor: Sudhir Chitale The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) ABBREVIATIONS AND ACRONYMS ADMARC Agricultural Development and Marketing Corporation AGD Accountant General’s Department ASWAp Agriculture Sector Wide Approach CO Controlling Officer CPS Country Partnership Strategy CV Coefficient of Variation DHRMD Department of Human Resources Management and Development DPO Development Policy Operation DSA Debt Sustainability Analysis ECF Extended Credit Facility FISP Farm Input Subsidy Program FROIP Financial Reporting and Oversight Improvement Project GDP Gross Domestic Product GRS Grievance Redress Service IDA International Development Association IFMIS Integrated Financial Management Information System IHS Integrated Household Survey IMF International Monetary Fund INTOSAI International Organization of Supreme Audit Institutions LDF Local Development Fund MAPS-2 Methodology for Assessing Procurement Systems MDAs Ministries, Departments and Agencies MGDS Malawi Growth and Development Strategy MoAIWD Ministry of Agriculture, Irrigation and Water Development MoFEPD Ministry of Finance, Economic Planning and Development MoGCDSW Ministry of Gender, Children, Disability and Social Welfare MoITT Ministry of Industry, Trade and Tourism MoLHUD Ministry of Lands, Housing and Urban Development MT Metric Ton MTEF Medium Term Expenditure Framework MWK Malawi Kwacha NAO National Audit Office NPLs Non-Performing Loans ODA Official Development Assistance ODPP Office of the Director of Public Procurement PAC Public Accounts Committee PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PFMA Public Finance Management Act PPDA Public Procurement and Disposal of Assets Authority PSIA Poverty and Social Impact Analysis PSR Public Service Reform RBM Reserve Bank of Malawi SCT Social Cash Transfer SDR Special Drawing Rights SGR Strategic Grain Reserve TA Technical Assistance TLMA Traditional Land Management Area The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) UNFCC COP United Nations Framework Convention on Climate Change Conference of Parties UBR Unified Beneficiary Registry WBG World Bank Group The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) TABLE OF CONTENTS DATA SHEET ..................................................................................................................................... 1 I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES ............................................................. 4 A. Context at Appraisal ............................................................................................................. 4 B. Significant Changes during the Implementation ................................................................... 10 II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES ...................................................... 10 A. Relevance of Prior Actions................................................................................................... 10 B. Achievement of Objectives (Efficacy) ................................................................................... 13 C. Overall Outcome Rating and Justification ............................................................................ 24 III. OTHER OUTCOMES AND IMPACTS .......................................................................................... 24 A. Poverty, Gender and Social Impacts..................................................................................... 24 B. Environmental, Forests and Natural Resource Effects........................................................... 25 C. Institutional Change and Strengthening ............................................................................... 25 D. Other Unintended Outcomes and Impacts ........................................................................... 25 IV. BANK PERFORMANCE ............................................................................................................ 25 V. Risks to the Sustainability of Development Outcomes ............................................................ 27 VI. LESSONS LEARNED AND NEXT PHASE ......................................................................................... 28 A. Lessons Learned.................................................................................................................. 28 B. Next Phase ......................................................................................................................... 28 ANNEX 1. RESULTS FRAMEWORK ................................................................................................... 29 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES .................. 34 ANNEX 3. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT PARTNERS’/STAKEHOLDERS’ COMMENTS ................................................................................................................................... 37 ANNEX 4. SUPPORTING DOCUMENTS ............................................................................................. 38 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) . . DATA SHEET BASIC INFORMATION Product Information Project ID Program Name P153753 Malawi Agricultural Support and Fiscal Management DPO Country Financing Instrument Malawi Development Policy Lending DPF Options Programmatic Regular Deferred Drawdown Option Catastrophic Deferred Drawdown Option No No Crisis or Post Conflict Sub-National Lending Special Development Policy Lending No No No Organizations Borrower Implementing Agency Ministry of Finance, Economic Planning and Ministry of Finance, Economic Planning and Development Development Program Development Objective (PDO) Program Development Objective (PDO) The objective of the development policy operation series is to improve incentives for private sector participation in agricultural markets and to strengthen fiscal management through more effective expenditure controls and greater transparency. PROGRAM FINANCING DATA (USD) FINANCE_TBL Approved Amount Actual Disbursed World Bank Administered Financing Page 1 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) 80,000,000 84,267,052 IDA-60030 Total 80,000,000 84,267,052 KEY DATES Concept Review Decision Review Approval Effectiveness Original Closing Actual Closing 28-Jun-2016 13-Feb-2017 04-May-2017 24-Aug-2017 31-Mar-2018 31-Mar-2018 RATINGS SUMMARY Program Performance Overall Outcome Relevance of Prior Actions Achievement of Objectives (Efficacy) Moderately Satisfactory Satisfactory Moderately Satisfactory Bank Performance Satisfactory RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) SECTORS AND THEMES Sectors Mitigation Co- Adaptation Co- Major Sector/Sector (%) benefits (%) benefits (%) SECTOR0 TBL Agriculture, Fishing and Forestry 11 0.00 11.00 Other Agriculture, Fishing and Forestry 11 0 100 SECTOR0 TBL Public Administration 44 0.00 0.00 Central Government (Central Agencies) 44 0 0 SECTOR0 TBL Social Protection 17 0.00 17.00 Social Protection 17 0 100 Page 2 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) SECTOR0 TBL Industry, Trade and Services 28 0.00 28.00 Agricultural markets, commercialization and agri- 28 0 100 business Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Public Sector Management 22 Public Finance Management 22 Public Expenditure Management 22 Public Administration 22 Administrative and Civil Service Reform 11 Transparency, Accountability and Good 11 Governance Social Development and Protection 22 Social Protection 22 Social Safety Nets 22 Human Development and Gender 22 Nutrition and Food Security 22 Food Security 22 Urban and Rural Development 44 Rural Development 44 Rural Markets 33 Land Policy and Tenure 11 Disaster Risk Management 11 Flood and Drought Risk Management 11 Environment and Natural Resource Management 56 Climate change 56 Adaptation 56 ACCOUNTABILITY AND DECISION MAKING Role At Approval At ICR . Page 3 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES 1. This Implementation Completion and Results Report (ICRR) assesses the results of the first Agricultural Support and Fiscal Management Development Financing operation (DPO–I). The DPO-I was approved by the Board on May 4, 2017 and the credit amount US$84.3 million 1 was fully disbursed in a single tranche on September 8, 2017. The DPO-I closed on May 31, 2018. The DPO was designed as a two-operation series in which the prior actions for the second operation DPO-II were intended to be based on indicative triggers specified in DPO-I. The objectives for the two-operation series were to (i) improve incentives for private sector participation in agriculture, and (ii) to strengthen fiscal management through more effective expenditure controls and greater transparency. 2. Based on the progress on the triggers defined in DPO-I, the government and the Bank commenced the preparation of DPO-II. Progress with the preparation of DPO-II was broadly positive and the negotiations stage was completed. However, at that time concerns emerged about whether the supported reform program would stay on track. These concerns stemmed in part from governance issues and the uncertainty linked to approaching elections. The Bank, therefore, did not proceed with DPO-II. The Government and the Bank, however, continued the policy dialogue in the meantime. With a new Government now in place discussions have commenced on the preparation of a new program of support. 3. This ICR evaluates the “reform program” supported by the DPO series. Since a decision was taken to not proceed with DPO-II, the ICR evaluates results of reforms initiated by the prior actions for DPO-I as well as progress towards the indicative triggers in the DPO-I Program Document (PD), which were intended to form the basis for DPO-II. A. Context at Appraisal Political situation at appraisal 4. DPO-I was prepared over 2015-2017, after the Government of Mr. Peter Mutharika was elected in April 2014 following the “cashgate” scandal of 2013. 2 The new Government was actively promoting reforms following the scandal. It placed a short-term policy focus on strengthening public financial management and public service reform, which aimed at restoring financial controls and accountability after the “cashgate” scandal. Malawi’s 2016 National Agricultural Policy also set out an ambitious reform agenda in the agricultural sector, including the input subsidy program. Following the approval of DPO-I the implementation of the reform program was setting the stage for a follow up operation. However, the political situation became increasingly uncertain ahead of elections in 2019, including allegations that senior politicians had improperly benefitted from public contracts. In the new elections held in May 2019, the ruling Democratic Progressive Party (DPP) emerged as the largest legislative party winning 62 out of a total of 193 seats in the parliament and the incumbent Mr. Peter Mutharika was elected as a President for a second term. However, the elections were challenged and were declared void by the Supreme 1 The actual amount disbursed was more than the US$80 million approved by the Board because of the change in the SDR/US$ exchange rate. 2 The “cashgate” scandal refers to how, in September 2013, revelations came to light of misappropriation of public funds through fraudulent transactions carried out in the Government’s Integrated Financial Management Information System (IFMIS). This led to the withdrawal of on-budget support from many donors. Page 4 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Court. New elections were held in June 2020, in which the two main opposition parties which had joined together as the “Tonse Alliance” won decisively. Following clear results, Mr. Lazarus Chakwera was elected as the President. Economic situation at appraisal 5. The DPO series, which was designed to improve incentives for private sector participation in agriculture and strengthen fiscal management, was requested by the Government in 2017, against a backdrop of weak GDP growth, and fragile fiscal and balance of payments balances. In addition, the climatic shocks in 2015 and 2016, first floods and then a drought, exposed the inherent vulnerability of Malawi’s agriculture-based economy. 6. The pattern of growth in Malawi over the past ten years has been highly erratic. During 2015 and 2016, when the DPO-I was being prepared, real GDP growth was barely 2.8 and 2.5 percent per annum. The low GDP growth could be traced to vulnerability of agriculture, the main driver of growth in Malawi, to external shocks. In early 2015, floods affected the southern region, and this was followed by a drought which affected the entire country. This was further followed by the late onset of rains and erratic dry spells associated with the El Nino weather pattern in 2016. As a result of these shocks, maize output declined by 30.2 percent in 2015 and a further 14.7 percent in 2016. The agriculture sector (Table 1) contracted by 2.0 and 2.3 percent, respectively in 2015 and 2016. As a result of the contraction in agriculture output, especially maize, nearly 40 percent of Malawi’s citizens were projected to suffer from food insecurity in 2016/17. 7. Since 2013, Malawi has struggled with large fiscal deficits (including grants) of around 5-6 percent of GDP. This has been driven by domestic expenditure overruns and the clearance of arrears. Expenditure overruns came mainly from the settlement of arrears, increased cost of domestic debt service, and higher subsidies under the Farm Input Subsidy Program (FISP). Traditionally, prior to 2014, Malawi received significant ODA inflows in through the budget amounting to nearly 7.7 percent of GDP on average per annum from 2005/6 through 2012/13. This also increased substantially in 2012, following a change in government. Following the cashgate scandal in 2013, the share of this ODA routed through the budget reduced to only 3 percent of GDP. 8. Malawi’s external sector was also fragile in the years leading up to DPO-I appraisal. The impact of drought/floods required large scale food imports during 2015 and 2016. In addition, the import bill also increased due to additional fuel imports for emergency diesel power generators as the country suffered from prolonged power shortages due to a heavy reliance on hydropower. While some of these higher imports were compensated by higher tobacco production, tobacco prices remained low due to lower global commodity prices. As a result of these trends, the current account deficit was projected to be higher in 2016/17 by around 2 percent of GDP, thereby requiring higher ODA, including financing from the DPO-I. Page 5 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Page 6 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) The Government’s response 9. The Government’s medium-term development program was anchored around the Second Malawi Growth and Development Strategy (MGDS II) being implemented over 2011-2016 period. The objective of the MGDS II was to create wealth through sustainable economic growth and infrastructure development as a means of achieving poverty reduction. The Government, however, acknowledged that most of the objectives of the MGDS II were largely unmet. In the short term, the Government’s policy focus was on strengthening public financial management (PFM) and public service reform (PSR). The Government adopted a PFM reform program in January 2015 with the support of the IMF aimed at restoring financial controls and accountability mainly to redress the fiscal vulnerabilities exposed by the cashgate scandal. The Government also recognized the vulnerability of the agricultural sector and through the 2016 Agricultural Policy set out an ambitious reform program in agriculture. It is against this background that the Government approached the World Bank for support through a development policy financing (DPF) operation. Bank Rationale for Involvement - The DPO Series 10. The principal rationale for World Bank involvement was to support the design and implementation of more sustainable fiscal and agricultural policies at a time when there was a critical opening of policy reform space for the Government. The financing provided by the DPF operation was also crucial to meet the exceptional financing needs arising from the growing current account deficits in 2016 and 2017. The Bank’s strong response was due to three reasons. First, the repeated impact of climatic shocks led to widening fiscal and current account deficits, which helped prompt a critical review of Malawi’s agricultural policies, thereby opening up space for policy reforms in politically challenging areas such as reforms of the FISP, as well as the ways in which ADMARC and the SGR intervene in the maize markets. Second, the DPO-I operation formed a core part of the World Bank’s Country Partnership Strategy (CPS) (FY13-FY16). The CPS included Development Policy Financing (DPF) operations such as the DPO-I to support key, difficult policy reforms in agriculture and PFM, which were complimented by Technical Assistance (TA) operations and investment projects to strengthen institutions and infrastructure. A number of World Bank TA and investment operations could help in detailed implementation of policies in agriculture and PFM (See section IV on Bank Performance). DPFs and investment operations together constituted a multi-pronged attempt to help Malawi break the cycle of vulnerability. Third, the DPO-I was supported by significant depth of analytical work on the basis of which implementable policies could be discussed and formulated with the authorities. Relationship to the IMF and Other Development Partners 12. The DPO-I presented to the Board in May 2017 was to be implemented within the macroeconomic framework of the IMF’s ongoing ECF arrangement approved on July 23, 2012 which was extended up to July 2017. The IMF gave an assessment letter in support of the DPO-I which was part of the Board documents for the operation. In April 2018, the IMF approved a new three-year ECF program amounting to US$112.3 million. The policies supported by the IMF ECF were consistent with the DPO-I policies. The IMF’s program supported a sustainable macroeconomic framework, and fiscal policies to support growth and ensure debt sustainability. The IMF’s program also emphasized PFM reforms to improve transparency and accountability in the budget process and procurement. 13. The DPO-I was prepared in close coordination with development partners within the Group on Financial and Economic Management (GFEM) 3. The GFEM is a high-level consultative forum, chaired by the Minister of Finance, which meets on a six-monthly basis to review progress on key PFM, PSR and fiscal management reforms. 3 This was renamed as the High-Level Forum on Public Finance Management. Page 7 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) The preparation of Malawi’s PSR Action Plan was carried out by an independent Public Service Reforms Commission that consulted extensively with a broad array of stakeholders. Similarly, the PFM Action Plan was prepared by the Ministry of Finance, Economic Planning and Development (MoFEPD) in close consultation with the IMF and a wide range of development partners. The DPO was prepared especially in close collaboration with the European Union (EU), which was considering budget support to Malawi. In addition, the African Development Bank (ADB) resumed a form of sector budget support to Malawi as part of its response to the food security crisis. Original Program Development Objectives (PDOs) (as approved) 14. The PDOs of the DPO-I as approved were to (i) improve incentives for private sector participation in agricultural markets and (ii) to strengthen fiscal management through more effective expenditure controls and greater transparency. These objectives were to be achieved while protecting the poor during the transition. In setting up these objectives, the operation was expected to contribute to the broader goal of improving Malawi’s ability to absorb and recover from exogenous shocks. Original Policy Areas/Pillars Supported by the DPO-I operation (as approved) 15. The policy and institutional reforms to achieve these objectives defined above were grouped in two pillars: (a) making agricultural markets work better; and (b) strengthening expenditure management and accountability in public finances. These reforms supported the Government’s priorities outlined in the MGDS II, as well as the broader World Bank Group (WBG) goals of ending extreme poverty and boosting shared prosperity as laid out in the CPS. The detailed policies and targeted results are outlined in Table 2. Table 2: Prior Actions for DPO-I and Triggers for DPO-II as Approved Prior Actions Under DPO-I Indicative Triggers for DPO-II Pillar A: Making agricultural markets work better Prior action #1. The Recipient has, through its MoAIWD MoFEPD and MoAIWD make further parametric and MoFEPD, made parametric changes to FISP in fiscal changes to FISP by (i) further increasing the share of year 2016/17 namely: (i) increased the share of fertilizer retailed by private suppliers; (ii) further fertilizer retailed by private suppliers; (ii) reduced the reducing the level of subsidy to beneficiaries while level of subsidy to beneficiaries by introducing a fixed maintaining a fixed value coupon with beneficiaries to value coupon with beneficiaries paying the difference pay the difference between the coupon value and between the coupon value and market price; and (iii) market price; and (iii) rolling out improved targeting of piloted improved targeting of beneficiaries. beneficiaries Prior action #2. The Recipient has, through MoAIWD, adopted revised guidelines that put in place transparent and objective criteria, as well as technical and financial reporting and accountability mechanisms, for maize draw down for price stabilization from the Strategic Grain Reserve. Prior action #3. The Recipient has, through ADMARC ADMARC (i) carries out a strategic review of its Limited: (i) published ADMARC Limited’s audited functions, governance arrangements and oversight financial statements for fiscal years 2013/14 and mechanisms; and (ii) undertakes reforms establishing 2014/15, respectively; and (ii) published monthly clearly defined responsibilities, guidelines for market reports outlining maize market distribution and intervention within price bands, clearer accountability, purchasing plans throughout the 2016/17 lean season. transparency and oversight mechanisms Prior action #4. The Recipient has enacted the (i) MoLHUD clarifies the status of existing leases and puts Physical Planning Act, 2016; (ii) Customary Land Act, in place the regulatory framework and physical 2016; (iii) Land Survey Act, 2016; and (iv) Land Act, 2016 infrastructure for cost-effective systematic improving administration and security of tenure. implementation of the Land Laws, including low-cost Page 8 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Table 2: Prior Actions for DPO-I and Triggers for DPO-II as Approved Prior Actions Under DPO-I Indicative Triggers for DPO-II boundary demarcation and sustainable land information management MoITT submits to Parliament a Warehouse Receipts Bill that improves access to agricultural commodity financing MoITT submits to Parliament an amended Control of Goods Bill with clearly defined and transparent procedures for the regulation of commodity exports and imports Prior action #5. The Recipient has, through its MoFEPD, MoFEPD, MoGCDSW and LDF expand the Social Cash MoGCDSW and LDF, agreed on institutional Transfer Program to be operational at the national level coordination arrangements for the expansion of the across all 28 districts Social Cash Transfer Program. Pillar B: Strengthening expenditure management and accountability in public finances Prior action #6. The Recipient has, through its MoFEPD, MoFEPD and DHRMD (i) review human resources NAO and DHRMD, completed an audit of the civil management business processes in order to strengthen service payroll system, reconciled the difference establishment control systems; and (ii) NAO completes between establishment, and payroll, for both salaries an audit of the pension roll and payment system, and and allowances, and deleted erroneous entries. takes appropriate remedial action to ensure consistency between the establishment register and payroll systems Prior action #7. The Recipient has, through its NAO, MoFEPD issues treasury minutes, for the year ended published the audited financial statements for the fiscal June 2012, June 2013, June 2014, June 2015 and June years 2011/12, 2012/13, 2013/14, 2014/15. 2016 tracking implementation of audit findings, and takes appropriate remedial action including on un- cleared items on bank reconciliation statements Prior action #8. The Recipient has, through its MoFEPD, MoFEPD and NAO (i) implement the provisions of the submitted to Parliament the Public Audit (Amendment) amended Public Audit Act, and (ii) the NAO submits a Bill 2016 with a view to strengthening the operational copy of the audited financial statement for the year independence of the National Audit Office in ended June 2016 directly to the Speaker of Parliament conformity with INTOSAI standards. in accordance with Section 15 of the Public Audit Act Prior action #9. The Recipient has: (i) through its Office MoFEPD (i) reviews the compliance of Controlling of the President, appointed Controlling Officers for all Officers with Section 10 of the Public Finance ministries, departments and agencies in conformity Management Act; and (ii) the Chief Secretary with the Public Service Management Act (Cap. 1:03 of implements necessary systems and takes appropriate the laws of the recipient) to perform their functions in remedial action for non-compliance by Controlling conformity with the provisions of the Public Finance Officers. Management Act (Cap. 37:02 of the laws of the recipient); and (ii) through said Controlling Officers, submitted required monthly returns 4 for their respective Votes for calendar year 2016 in conformity with the provisions of Section 10 of the Public Finance Management Act Source: Program document for DPO-I 4 This include five reports covering: (i) revenues (for revenue earning MDAs); (ii) expenditures; (iii) payroll; (iv) commitments; and (v) bank reconciliation. Monthly funding for MDAs is conditional on COs full compliance with these reporting requirements. Page 9 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) B. Significant Changes during the Implementation Revised Program Development Objectives (PDOs) 16. The PDO was not revised. Changes to indicators are explained in Table 4 in Section II Revised Policy Areas/Pillars supported by the Program. 17. NA II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES A. Relevance of Prior Actions Rating: Satisfactory 18. The relevance of prior actions in the DPO is rated satisfactory. For each of the policy areas contained in the DPO series, the discussion below will layout the main problem/issue, and how the prior actions were relevant in addressing it. The discussion will focus on the prior actions in DPO-I as well as progress on the triggers for the proposed second operation Details of these prior actions and indicative triggers are given in Table 2 above. Pillar A: Making Agricultural Markets Work Better Prior Action 1: Improved Functioning of the FISP Program. 19. The working of the FISP program in FY14/15 had a number of problems. First, the cost of the FISP program to the Government was high and growing. Second, the FISP led to an over specialization in maize. Third, the FISP program was targeted to the extremely poor. The Banks’ and Government’s analysis showed that the extremely poor would be better served by via a targeted social protection program while the FISP could be oriented to productive farmers that could make better use of the seed and fertilizer subsidies. 20. The PAs for DPO-I addressed these problems by: (i) increasing the share of fertilizer directly retailed by the private sector, (ii) reducing the level of subsidy to beneficiaries by introducing a fixed coupon with the beneficiaries paying the difference between the coupon value and the market value of the fertilizer, and (iii) Implementing a scheme that targeted productive farmers in two districts. 21. The triggers for DPO-II extended all the reforms stated above by: (i) further increasing the share of fertilizer retailed by private suppliers which increased the efficiency of the program; (ii) further reducing the level of subsidy to beneficiaries in real terms by maintaining the fixed nominal kwacha value of the coupon; and (iii) rolling out improved targeting of beneficiaries by expanding the number of productive farmers targeted. Prior Action 2: Improved Management of the Strategic Grain Reserve (SGR) 22. Through its drawdown and distribution from the grain reserves, and maize purchases in the market, the management of the SGR has a major influence on the maize markets. When DPO-I was appraised, the lack of clarity with the SGR operating modalities, uncertainty with annual purchasing and distribution plans, stock levels and entry into the market contributed to the volatility of maize prices. Page 10 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) 23. The prior actions for DPO-I 5 were designed to bring stability and predictability to maize prices, thereby helping smallholder farmers with marketable surplus participate in maize markets – which contributed to meeting the DPO-I objective of improving the functioning of agriculture markets. The prior actions were to put in place: (i) transparent and objective criterion for maize drawdown from the SGR and (ii) technical and financial reporting and accountability mechanisms. Prior action 3: Improved ADMARC Operations 24. Like the reforms of the SGR, the reforms of ADMARC were also designed contribute to the DPO-I objective of improving the functioning of the agricultural markets by making ADMARC interventions more transparent and predictable. At the time of appraisal of DPO-I, there was a consensus that the presence of ADMARC (together with the opaque operations of the SGR) impeded domestic markets for maize. ADMARC operations were unpredictable to market participants. Moreover, market participants were exposed to the risk of ADMARC selling at a price which was below cost. World Bank analysis showed that ADMARC’s social role in ensuring pan-territorial pricing and the food security objective of the SGR could be achieved in a much less disruptive fashion. 25. Towards improving the transparency of ADMARC operations, the DPO-I prior actions were that ADMARC had published: (i) audited financial statements for FY 2013/14 and FY 2014/15, and (ii) monthly reports outlining maize market purchasing and distribution plans throughout the 2016/17 lean season. 26. These policies were to be continued as triggers for DPO-II by (i) carrying out a strategic review of ADMARC functions, governance arrangements and oversight mechanisms, and (ii) Undertaking reforms establishing clearly defined responsibilities, guidelines for market interventions within price bands, clearer accountability, transparency and oversight mechanisms. Prior action 4: Improving Land Tenure Rights 27. Secure land rights are essential for investment in agriculture and diversification. Malawi’s legislative framework for land in FY 2014/15 was provided by the outdated Land Act of 1965. A reform of this legislative framework was essential for the commercialization of agriculture, one of the two objectives of the DPO. Reforms in this area sought to address the problems in both the Estate Sector and the Traditional Land Management Areas (TLMAs). More than 20 percent of Malawi’s agricultural land is leased to estates. By 2014/15 most of the leases had expired and some of the boundaries displayed in official records did not correspond to reality. This resulted in loss of public revenue as fees could no longer be collected as well as tenure insecurity. Similarly, large parts of the TLMAs remained un-demarcated resulting in tenure insecurity. 28. One of the reforms supported by DPO-I prior action was to update the legal framework by enacting (i) the Physical Planning Act (2016), (ii) Customary Planning Act (2016), (iii) Land Survey Act (2016), and (iv) the Land Act (2016). These reforms were intended to strengthen land management, through improved service delivery and security of tenure, especially for the rural population. 29. The triggers for DPO-II were that the Government would implement the enacted law by clarifying the status of existing leases for the estate sector, initiating the demarcation for the TLMAs, and initiating pilots for low cost adjudication for customary estates. DPO-II Trigger: Improving the Warehouse Receipts Financing. 30. A reliable warehouse receipts financing system is important for improving agricultural risk management and resilience. While there was warehouse receipts financing taking place prior to the policy reforms initiated 5 The SGR reforms would be completed in DPO-I. No indicative triggers were specified for DPO-II (Table 2) Page 11 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) under DPO-I, the legal and institutional framework was complex and banks were reluctant to provide significant levels of financing. To address this problem, DPO-I set the submission of the Warehouse Receipts Bill to the parliament as an indicative trigger for DPO-II. DPO-II Trigger: The Control of Goods Act (COGA) 31. Malawian farmers faced an unpredictable export regime in 2014/15, especially in maize and soya. At that time, the COGA allowed the Minister of MoITT to administer export restrictions without clearly set transparent procedures. Maize exports were banned from July 2005 to January 2007 and again from December 2011 to 2015. The law thus created uncertainty for private sector players, including commercial banks. Consequently, domestic and foreign investors were reluctant to commit financing to commercial agricultural operations in Malawi. To address these problems, a proposed trigger for DPO-II was that the Government submit to parliament a new Control of Goods Act with clearly defined and transparent procedures for the regulation of commodity exports and imports. Prior action 5: Scaling up of the Social Cash Transfer Program (SCTP) 32. The DPO series supported the scale up of the SCT program. The scale up was designed to compensate to some extent, the DPO strategy of reorienting the FISP program from its safety net function – aimed at achieving food self-sufficiency for the ultra-poor—to a productivity enhancing focus by targeting the subsidy to productive farmers. In designing the scale up, the Bank was fortunate to have in place two projects: (i) strengthening the social safety net project (P133620), and (ii) the Social Support for Resilient Livelihood Project (P169198). The key to successful implementation of the scale up was to put in place more efficient payment mechanisms, a unified beneficiary registry and enhancement of institutional coordination. As a prior action for DPO-I, the Government put in place institutional mechanisms for the expansion of the SCTP. The SCTP was to be expanded under a planned DPO-II, to be operational at the national level across all 28 districts. Pillar B: Strengthening Expenditure Management and Accountability in Public Finances. Prior Action 6: Civil Service Reforms 33. By FY 2014/15, Malawi’s public sector wage bill had grown rapidly, crowding out resources for other current expenditures and making the Government heavily dependent on donor funding for service delivery. The rapid growth of the wage bill was primarily due to sustained increases in the number of civil servants, which grew from around 111,000 persons in 2008 to 186,000 in 2016, jeopardizing the sustainability of the overall public sector wage bill. Weaknesses in establishment and personnel controls have prevented the authorities from taking a more strategic view over public sector hiring as well as rendering the payroll vulnerable to fraud. In addition, the absence of an interface between the payroll and the IFMIS exposed the system to vulnerabilities. Prior action 6 aimed to improve the payroll management system and put in place stronger establishment controls. This was to be followed under DPO-II by (i) a review of human resources management business processes in order to strengthen establishment control systems; and (ii) the NAO completing an audit of the pension roll and payment system, and taking appropriate remedial action to ensure consistency between the establishment register and payroll systems. Prior Action 7: Completing the Accountability Cycle. 34. Strengthening the integrity of the PFM cycle was at the core of the reforms supported by the DPO. As per the PFM act, annual financial statements for the previous year had to be submitted to the Auditor General, who needed to complete the audit and submit the audited statements to the Treasury and to the parliament by December 31st. The Public Accounts Committee (PAC) of the parliament would review these audited accounts with Page 12 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) the Treasury and the Treasury would issue Treasury Minutes detailing the actions taken to complete the accounting cycle. In FY 2014/15, when the DPO-I was being processed, these reporting and reviewing requirements detailed above were not complied with. In fact, the audited statements for FY 2011/12 through FY 2014/15 were not submitted to the parliament. To address this problem, as prior action under DPO-I, (i) the NAO published audited financial statements from FY 2011/12 through FY 2015/16. 35. These reforms were to be continued beyond FY 2017/18, and as a trigger for a planned DPO-II operation, the MoFEPD was expected to issue treasury minutes for the year ending June 2012 through June 2016, tracking the implementation of audit findings and taking appropriate remedial actions including un-cleared items on bank reconciliation statements. Prior Action 8: Independence of the Auditor General and the National Audit Office (NAO) 36. In FY 2014/15 Malawi’s legal framework for the National Audit Office (NAO) did not comply with the international standards promulgated by the International Organization of the Supreme Audit Institutions (INTOSAI). These standards prescribe independence of the audit institution to be laid down in the constitution and legal protection against interference in the legislative framework. In order to address this shortcoming, prior actions under the DPO-I supported submitting to the Parliament a new Public Audit (Amendment) bill 2016 with a view to strengthening the operational independence of the NAO in conformity with the INTOSAI standards. This was to be followed as prior actions for planned DPO-II, by (i) implementing the provisions of the amended Public Audit Act, and (ii) by ensuring that the NAO submitted the audited financial statements for the year ended 2016 directly to the Speaker of the Parliament in accordance with section 15 of the Public Audit Act. Prior Action 9: Controlling Officers 37. At the heart of the public sector accountability system in Malawi are the responsibilities attached to heads of ministries, departments and agencies (MDAs) as vote holding “Controlling Officers” (COs). The COs are expected to ensure that proper records are maintained, and public assets safeguarded. These responsibilities are spelled out in the PFM Act 2003 (Section 10), and the Public Service Act 1994 (Sections 21-25). Included also are reporting requirements to the Secretary to the Treasury on financial matters and the Secretary to the DHRMD (on behalf of the Chief Secretary) on personnel matters. By FY 2014/15, when DPO-I was appraised, this system was not working well. Many COs were not formally appointed, statutory reports were irregularly furnished, and many heads of MDAs did not clearly delegate financial and personnel responsibilities to subordinate officers and hold them accountable for compliance with rules and regulations. 38. To address the problems spelt out above, prior actions in DPO-I were that: (i) the COs be formally appointed by the President in conformity with the Public Service Management Act, and (ii) the CO submit their monthly returns for their respective votes for the calendar year 2016. These policy reforms were to be continued as indicative triggers for the planned DPO II by, (i) the MoFEPD reviewing the compliance of the controlling officers, (ii) the chief secretary implementing the necessary actions for non-compliance by the COs. B. Achievement of Objectives (Efficacy) Rating: Moderately satisfactory 40. The achievement of objectives is rated moderately satisfactory. The discussion below describes how the reform program supported by the DPO series achieved the objectives of the operation, as measured by the RIs set for DPO-I and RIs set during the preparation of DPO-II. Page 13 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Results indicators Relevance and Measurability of RIs and Appropriateness of Targets 41. The results framework was largely relevant (See Table 3). For instance, the RIs for private sector participation in fertilizer markets, estate land leases and the TLMAs, SCTP coverage, civil service reform, and clearing the backlog of audited statements, were appropriate and measurable. However, the RIs for some reforms/prior actions proved difficult to measure in practice: • The FISP subsidy was defined as the subsidy or coupon value as a percent of the market price of fertilizer. The value of the subsidy, a RI, therefore depended on the market price of the fertilizer (related to the world price) over which the Government had no control 6. Instead, the DPO could have simply tracked the value of the coupon as a proxy for the fertilizer subsidy. • Second, the RI for the SGR and ADMARC reforms was the coefficient of variation in maize prices. This was appropriate but ultimately impractical because the contribution of the reform to changes in price volatility is not readily observed, but instead requires significant amounts of data collected over multiple years and sophisticated statistical techniques. Instead, the DPO could have considered tracking the public announcements for maize market interventions by SGR and ADMARC. • Third, the RIs for the policies on implementation of COGA, the Independence of the NAO and on controlling officers, were qualitative and took the form of ensuring that Government complied with the new laws/regulations. Since compliance has many dimensions, these RIs were difficult to measure. Moreover, these RIs could only ensure the compliance in letter and not the spirit of the law (explained below). Table 3: Results Indicators for DPO-I, Proposed Results Indicators for DPO-II, and Actuals. Results Indicator (RI) Baseline in DPO-I RIs in Proposed DPO-II Achievement Achievement FY14/15 FY17/18 (As RIs in FY18/19 DPO-I (RIs) in DPO-II (RIs) in approved) (Not approved) 1/ FY17/18 FY18/19 1/ Pillar A: Making agricultural markets work better PA#1: Private Sector retail of 0 >70 >70 fertilizer (%) Actual Achieved 76 88.6 Achieved Achieved FISP subsidy (%) 97 < 70 in2016/17 <65 <60 in 2017/18 Actual achieved 64 in 2016/17 69 Partially Partially 77 in 2017/18 achieved achieved PA#2 and PA#3 Coefficient of variation in 0.51 0.38 0.38 maize prices Actual 0.27 0.44 Achieved Partially achieved PA# 4 Estate land leases notified 0 >30000 6In 2016/17, there was a sharp fall in the market price of fertilizer and consequently there was huge rise in the subsidy as a share of the market price – although the coupon value was kept constant. Page 14 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Table 3: Results Indicators for DPO-I, Proposed Results Indicators for DPO-II, and Actuals. Results Indicator (RI) Baseline in DPO-I RIs in Proposed DPO-II Achievement Achievement FY14/15 FY17/18 (As RIs in FY18/19 DPO-I (RIs) in DPO-II (RIs) in approved) (Not approved) 1/ FY17/18 FY18/19 1/ Actual 34433 Achieved No of leases renewed or 0 10,000 cancelled Actual 10,000 Achieved Systematic low cost 0 At least in 3 adjudication of customary districts estates started. Actual In 6 districts Achieved Number of TLMAs 0 >50 This was demarcated initiated only for DPO-II Actual All 285 Achieved demarcated Establish framework for Framework not (i) Framework in This was warehouse receipts in place place and initiated only financing operational for DPO-II (ii) >0 Bank loans secured against warehouse receipts. Actual (i) Framework Partially was not in place achieved until February 2020 (ii) No bank financing under new regulations yet. Put in place an amended Trade bans and Trade restrictions This was Control of Goods Act. licensing issued implemented initiated only in a non- consistent with for DPO-II transparent the COGA way. Actual COGA regulations Partially were not achieved gazetted until July 2020. Maize bans continue PA# 5 SCTP coverage, no. of 18 28 28 districts. Actual 27 28 Achieved Achieved SCTP coverage, no. of 176000 >300,000 beneficiaries. Actual 280231 Partially achieved Pillar B: Strengthening expenditure management and accountability in public finance. PA#6 Civil servants on payroll six 8004 < 500 months after exiting employment. Actual 166 Achieved Page 15 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Table 3: Results Indicators for DPO-I, Proposed Results Indicators for DPO-II, and Actuals. Results Indicator (RI) Baseline in DPO-I RIs in Proposed DPO-II Achievement Achievement FY14/15 FY17/18 (As RIs in FY18/19 DPO-I (RIs) in DPO-II (RIs) in approved) (Not approved) 1/ FY17/18 FY18/19 1/ PA#7 Backlog of audited financial 5 years backlog Backlog to be Continued timely statements presented to the 2011/12– cleared. submission. Parliament. 2014/15 Actual Backlog cleared. Submissions Achieved Partially completed only achieved till 17/18. PA#8 Strengthen independence of Independence Independence Independence of the NAO of NAO not guaranteed NAO continued in consistent with through 2018/19 international implementing a standards new legal framework (2017/18) Actual New act The Audit reports Achieved Achieved implemented submitted directly to the parliament PA#9 Compliance of Controlling No compliance >90 percent COs >90 percent COs officers with monthly with monthly meeting monthly meeting monthly reports. reports. reporting reporting requirements requirements Actual Target met Target partially Achieved Partially met achieved 1 / These RIs were set during the preparation of DPO-II. They were not approved and will be used as a proxy for progress on the indicative triggers in DPO-I PD Page 16 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Pillar A: Making Agricultural Markets Work Better 7 Prior Action 1: Improved the Functioning of the FISP Program 42. First, the Government initiated the targeting of the FISP program to productive farmers in line with the DPO-I prior action. Second, as indicated in Table 4 below, the Government was successful in partially meeting the DPO-I RIs. Beginning FY 2016/17, the Government opened up fertilizer retailing to the private sector. By FY 2017/18, the private sector retailed nearly 76 percent of the total fertilizer marketed achieving the RI for DPO-I. Third, beginning FY 2016/17, the Government implemented a systemic change to the FISP subsidy regime. Up to the 2015/16 planting season, the Government provided the targeted farmers with a low value coupon which the farmer could use to obtain fertilizer and seed packs without any co-payments. As indicated in Table 4 below, the fertilizer subsidy for farmers (the coupon value as a percent of the market price of fertilizer) amounted roughly 97 percent prior to FY 2015/16. Beginning FY 2016/17, the Government provided the farmers with a higher value coupon 8 but required the farmer to pay the full difference between the coupon value and the market price as copayments, thereby significantly reducing the subsidy to the farmers. As a result of these policies, the farmer subsidy for fertilizer reduced from a baseline of 97 percent in FY 2014/15 to 64 percent in FY 2016/17 but increased to 77 percent in FY 2017/18. This indicates that the Government met the DPO-I result indicator for FY 2016/17 but fell short of meeting it for FY 2017/18. 44. The FISP reform continued beyond 2017/18, along the lines of the indicative triggers and the retailing by private sector further increased to 88 percent by FY 2018/19. The Government also kept the value of the 50 Kg fertilizer coupon at MK 15,000 thereby effectively capping the budgetary subsidy and reducing the farmer subsidy to 69 percent in FY 2018/19. The increase in the level of subsidy in FY 2017/18 and FY 2018/19 from its FY 2016/17 level was mainly due to the fall in the market price of fertilizer over which the Government had no control 9. However, by maintaining the fixed value coupon over multiple years, the reform was effective, even if there were issues with the results indicator. In addition, the Government also successfully expanded the reorientation of the FISP program from 2 districts in FY 2017/18 to 4 districts by FY 2018/19. An analysis carried out by DfID showed that targeting the FISP scheme to productive farmers resulted in higher productivity gains especially in maize. 45. On July 31, 2020, the newly elected Government of President Chakwera, announced a reformulation and renaming of the FISP to the Affordable Inputs Program (AIP). The AIP is designed to address some challenges facing the FISP such as (i) suppliers buying coupons from desperate farmers, (ii) contracts given to suppliers who could not perform to people’s satisfaction, and (iii) only a few farmers targeted in a village, which led to farmers sharing inputs. The announced AIP has three main elements that address these challenges which could represent a change in reform momentum: (i) the inputs will be made available to all smallholder farmers; (ii) the smallholder farmers will be entitled to the same input package as in the FISP i.e., 50Kg bag of urea, 50Kg bag of NPK and 5 Kg bag of hybrid maize seed; and (iii) the 50 Kg bag of fertilizer will available for MK 4495, which is lower than the FY18/19 farmer contribution of MK 6700 (Table 4) 10. Given that the input packages are available to all smallholder farmers, the Government estimates that Malawi will produce about 2.5 Million MTs of excess maize which will be available for exports. 46. FISP reforms were generally successful. The AIP retains many of the elements of the FISP but extends the availability of the input pack to all smallholder farmers. While this change addresses the challenges of targeting the input subsidy to selected farmers, there is a real question of the fiscal impact and hence the affordability of 7 The high value of subsidy 77% was mainly due to the sharp fall in the market price of fertilizer. 8 At a nominal price. 9 This is the problem with the design of the Results Indicator as discussed above. 10 As indicated before in the FISP, this depended on the market price of fertilizer. Page 17 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) the AIP. Over the next few months, as a part of the preparation of the next operation and the general policy dialogue, Bank staff will carefully track the impact of the AIP on the selection of suppliers, timely availability of inputs and the excess production/exports of maize and the fiscal impact. Prior Action 2: Improved Management of the Strategic Grain Reserve 45. As a prior action11 for DPO-I, the Government adopted guidelines for the procurement, storage and drawdown from the strategic grain reserves. The guidelines were developed by a consultant (Price Waterhouse). A committee that included participation from development partners was constituted and met regularly 12 to oversee drawdowns from the SGR. By and large, the drawdowns were in line with the guidelines and were approved by the committee. There hwas, however, been one instance in September 2018, when the Government withdrew nearly 8 percent of the SGR maize stock without recourse to the guidelines and distributed it free to the households judged to be food insecure. 11 This prior action had no indicative trigger for DPO-II in the DPO-I PD. 12 The oversight committee met four times in 2019. Page 18 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Prior Action 3: Improved ADMARC Operations 46. In line with the prior actions for DPO-I, (i) ADMARC published audited financial statements for FY 2013/14 and FY 2014/15, and (ii) ADMARC published monthly reports outlining maize market distribution and purchasing plans for the 2016/17 and 2017/18 seasons 13. 47. ADMARC reforms continued beyond 2017/18 in line with the triggers specified for DPO-II as follows: • ADMARC strategic review was done and was validated by stakeholders. In line with one of the restructuring options suggested by the review, a cabinet decision was taken to split ADMARC function into social and commercial arms under a joint holding company. The process of hiring the General Manager for the two arms yet not been concluded. • ADMARC Board was diversified to include representatives from grain traders and other private sector representatives. • The audited statements for FY 2016/17 and FY 2017/18 were uploaded on the ADMARC website, as well as the maize purchase reports. However, these reports were not published for FY 2018/19. • The plans for leasing idle warehouse space for 2017/18 were made publicly available. However, plans for 2018/19 and the 2019/20 were not published. 48. While there has been progress, there is still a long way to go before achieving a predictable, transparent functioning of the maize markets; which was the main objective of these reforms. The SGR management is now governed by a reasonable framework for maize withdrawals, overseen by a well-diversified and empowered committee. Yet there have been instances where maize withdrawals have been arbitrary and have bypassed the committee. Similarly, the ADMARC split, while approved will take time to be fully functional. Finally, there has been slippage in the timely publishing and full transparency of ADMARC maize purchase and sales plans especially in FY 2018/19 after the program was unsupported by the follow up Bank operation. 49. The only indicator for improved functioning of the maize markets was reduced maize price volatility. As indicated in the Table 5 below, the coefficient of maize price variation reduced from 0.51 in FY 2014/15 to 0.27 in FY 2017/18 thereby meeting the RI targets of DPO-I, but increased to 0.44 in FY 2018/19. In retrospect, however, the link between the price volatility and the functioning of the maize markets depends on many other factors including climate, informal trade across borders. As noted in paragraph 41, measuring the contributions of the policy reform and other factors affecting price volatility can only be measured in the medium term after many years of consistent and transparent maize market interventions. In short, one cannot conclude from the data in Table 5 that, in spite of the continued reforms, the maize market functioned worse in 2018/19 than in 2017/18. 13 See letter from Malawi Minister of Finance to CM on May 7th 2018. Documents available on file. Page 19 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Prior Action 4 Improving Land Tenure Rights 50. For the estate sector, in 2014/15, almost all land leases had expired and none were notified. Under the newly enacted land laws, the Government notified nearly 34,433 leases by 2017/18 against a DPO-I result indicator of 30,000. In addition, the Government also prepared a manual for systematic demarcation and low-cost surveying and initiated the low-cost adjudication of customary estates in 6 districts against a DPO-I target of 3 districts. 51. The actions for demarcation in the TLMA sector were introduced during the preparation of DPO-II. By 2018/19, all the 285 TLMAs were demarcated exceeding the target of 50 set as a DPO-II result indicator. Page 20 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) DPO-II trigger: Improving the Warehouse Receipts Financing 52. The policies for improving Warehouse Receipts Financing (WRF) were triggers for the planned DPO-II and not prior actions for DPO-I. The proposed DPO-II results indicators measured (i) the warehouse receipts financing framework to be in place and operational in 2017/18, and (ii) some (>0) bank loans secured against warehouse receipts by 2018/19. 53. The Government has made significant progress in creating the institutional and policy infrastructure for the WRF. On the basis of technical assistance provided to the Ministry of Industry, Trade and tourism (MoITT), by the International Finance Corporation (IFC) i, a new Warehouse Receipts Act (WRA) was drafted and passed by the Parliament, assented by the President and was gazetted in February 2018. The regulations under the law were only discussed and validated by all stakeholders in July 2019 and were only gazetted in February 2020 (after DPO- II was dropped). A completion report for the IFC Advisory Project, which focusses on the institutional development, rates the project as “satisfactory”. The progress of the WRF however falls short of the targets set as triggers for DPO -II. The WRF framework went into effect only in February 2020 against the target of 2017/18 set in DPO-II. Moreover, there is very little data available to assess whether the new law has indeed led to an increase in the warehouse receipts financing. DPO-II trigger: The Control of Goods Act (COGA) 54. To address the uncertainties in the current law, in line with the triggers in DPO-I, a new COGA was drafted with the help of a consultant. The new law has clearly defined and transparent procedures for the regulation of commodity exports and imports. The new law was passed by the Parliament in May 2018, and was assented by the President in June 2018. The regulations under this law were drafted and validated by the stakeholders, vetted by the Ministry of Justice and have been gazzetted on July 24, 2020 (after DPO-II was dropped). 55. The main results indicator for this policy is: by 2017/18, any commodity trade transaction and licensing requirement are implemented consistent with international standards in line with the regulations of the new COGA. The new Act became operational only on July 24, 2020. Traders will be required to obtain an import or export license from Ministry of Trade for goods covered under the revised Act and from Ministry of Agriculture for agricultural products. Prior action 5: Scaling up of the Social Cash Transfer (SCT) Program 56. The DPO-I set a target RI for expansion of the SCT program from 18 districts in 2014/15 to 28 districts by 2017/18. Actual results show that, by July 2019, the SCT program had expanded to all 28 districts (Table 7). A new target for the number of beneficiaries for the SCTP was only set for a planned DPO-II. Nevertheless, the total number of beneficiaries expanded from 170,000 in 2014/15 to 267,000 in 2017/18 including a considerable increase of extreme poor beneficiaries, but fell short of the target of 300,000 set for a proposed DPO-II. Page 21 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Pillar B: Strengthening Expenditure management and accountability in public finances. Prior action 6: Civil Service Reforms 57. As a prior action for DPO-I the Government completed the civil service payroll audit, which in the first phase scrutinized establishments, nominal rolls, payrolls and actual payments of salaries and allowances. This was followed by carrying out physical headcounts reconciling the difference between the establishment and payroll. As the trigger for DPO-II, the Government repeated the process with pensions. Technical assistance for these reforms was provided by the World Bank’s Financial Reporting and Oversight Improvement Project (FROIP). 58. The payroll and pension audits showed a number of anomalies to be addressed by the Government. An important problem with the present system was the use of the same employee number for multiple pensioners and discrepancies between the payment records and the HRMIS system. The Government is actively addressing these anomalies (by mandating a single employee number) and launching a forensic audit of the pension system. As a baseline, in 2014/15 there were 8,004 civil servants on the payroll six months after exiting employment. The DPO-I target was to reduce this to less than 500 by 2018/19. As a result of the pension/payroll audit and follow up actions, the number has been reduced to 166 in FY 2018/19 and thus meeting the results indicator of the DPO- I operation. Prior Action 7: Completing the accountability cycle 59. The main objective of completing the accountability cycle was to ensure that audited financial reports are submitted in time, reviewed by the Parliament (PAC) and action is taken on them by issuing the Treasury Minutes. Going by the results indicators (Table 8), the Government met the RIs for DPO-I as well as made progress towards meeting the RIs for the proposed DPO-II. Clearing the five-year backlog and maintaining the pace of reforms is indeed a big step forward in completing the accountability cycle. However, while the quantitative benchmarks were met, in order for the policy reform to be effective, the instructions in the Treasury minutes should be acted upon. The latter requires behavioral change, addressing corruption and governance problems, overcoming bureaucratic inertia and weak capacity, all of which are hard to do in the context of a Development Policy Financing operation. Table 8: Result Indicators for Completing the Accountability Cycle For DPO-I Baseline Target Status Reduction in the Five-year backlog Backlog cleared FY 2011/12-FY 2016/17 all reports submitted, PAC backlog of published in 2014/15 by 2017/18 reviewed and Treasury Minutes issued. audited financial statements Page 22 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) presented to the FY 2017/18 – Report submitted to the Parliament parliament on December 31, 2018, but not discussed by the For proposed DPO-II Public Accounts Committee (PAC). This was Five-year backlog Backlog because there were elections and the Parliament in 2014/15 cleared, with Committees were dissolved. After the new timely elections in May 2019, the new PAC was formed submission by and the 2017/18 report was discussed on March 2018/19 10th, 2019 and the Treasury minutes issued. The 17/18 report is on the website. FY2018/19 – The report submitted to the Parliament but not Tabled (New elections, No PAC). Source: MoFEPD Prior Action 8: Independence of the Auditor General and the National Audit Office (NAO) 60. The Government met the results indicators set for DPO-I. The Public Audit Act 2003 (the ‘Principal’ Act) was amended and a new Public Audit Act No. 10 of 2018 is in place. The new audit legal framework is substantially compliant with international best practice. After an initial appointment in June 2018 that did not follow the spirt of the Act, the Government withdrew the appointment, and re-started the appointment process, so that the Auditor General would be appointed in line with the provisions of Section 184 of the Constitution and consistent with the Public Audit Act 2018. 61. In line with the results indicators set for the planned DPO-II, the Auditor General submitted the FY 2017/18 financial statements to the Parliament concurrently with its submission to MoFEPD on 31 Dec 2018. Prior Action 9: Controlling Officers 62. The objectives of this policy, as set by the qualitative results indicators of the DPO-I were met. The system of monthly submission by the COs to the MoFEPD was reinstated. In a letter to the Bank on May 7th 2018, the Minister of Finance reported that the compliance rate was more than 90 percent (in line with the DPO-I result indicator). A high degree of compliance was ensured because the Ministry of Finance instituted a rule by which no funding release to the MDA unless a monthly report is received and reviewed. To support this, since FY 2016/17, the CO have been formally appointed by the President. In addition, the MoFEPD established an Inspectorate of Finance providing pre-auditing of payment transactions and enforcement of the PFMA in seven MDAs. Despite these measures, however, discussions with the officials of the MOF indicated that in 2019, there were some slippage in the rate of compliance and some monthly submissions were delayed. Overall rating for achievement of objectives (efficacy) 63. The achievement of objectives was rated moderately satisfactory because the Government was able to fully meet 10 out of the 11 RIs. While there was no backtracking on the reforms initiated as prior actions in DPO- I, the progress in implementation of the policies that formed triggers for DPO-II was slow. For the following reasons: • The increase in FISP subsidy in FY 2017/18 and FY 2018/19 from the FY 2015/16 levels was mainly due to the fall in the market price of fertilizer over which the Government had no control. However, the key objective to shift from a fixed farmer contribution to a fixed government contribution (thereby reducing a source of high fertilizer subsidies) was achieved. Page 23 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) • The maize price variation increased in FY 2018/19 from the FY 2017/18 level. However, there are various factors influencing maize price variation, of which the prior actions in this area helped reduce one component of volatility. • Both the WRA and the COGA reforms were intended as triggers for the follow up operation. In both these areas, the laws were approved by the parliament, but there was a delay in designing and gazetting the regulations. • In both the Audit Report and the Controlling Officer submissions, the basic institutional structure has been created. There was a slowdown in their effective use. Table: 9 Results Indicator and Target Achievement Exceeded Achieved Partially/mostly achieved Not Total achieved Progress on DPO-I 10 1 11 prior actions -FISP subsidy Progress on 4 7 11 Indicative triggers for -FISP subsidy DPO-II 1/ -Maize price variation -Warehouse Receipts Financing -COGA -SCTP coverage -Audit Report Submission -Controlling officers reporting Source: Table 3 1/ These are measured by the RIs set during DPO-II discussions, not approved, used as a proxy for progress on the indicative triggers in DPO-I PD. C. Overall Outcome Rating and Justification Rating: Moderately satisfactory 64. The relevance was rated satisfactory and the outcome and efficacy are rated moderately satisfactory. Therefore, the overall outcome of the DPO is rated moderately satisfactory. III. OTHER OUTCOMES AND IMPACTS A. Poverty, Gender and Social Impacts 65. The DPO series supported poverty reduction in four ways. First, the FISP reforms supported by the DPO series reduced the subsidy levels and increased the efficiency of the program to increase agricultural productivity by targeting more productive farmers instead of the poor who often did not make effective use of the subsidy. The DPO program compensated for this impact on the poor by substantially expanding the social cash transfer program, which is a more efficient means to target the poor. Moreover, the expansion of the SCTP was focused on poor and vulnerable women. Second, the policies for improved management of the SGR and the ADMARC reduced agricultural market distortions and maize price volatility thereby enhancing the welfare of net food buyers – who are mainly the poor farmers. Third, land reforms, which lead to improved tenure security would Page 24 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) benefit smallholders especially female farmers as well as improving the incentives for commercialization. Fourth, PFM reforms that aim to help strengthen expenditure management and budget execution, public accountability and transparency, were expected to contribute towards improved service delivery and were in principle pro poor. B. Environmental, Forests and Natural Resource Effects 66. The reforms supported by the DPO series were expected to contribute towards improved climate resilience in Malawi. First, in agriculture, reforms to the FISP, which has long crowded out public expenditure in the agriculture sector, would free up fiscal space to enable a more balanced set of agricultural investment activities including in climate-smart agriculture as set out in the new National Agricultural Policy. Similarly, improved functioning of agricultural markets should lead to the reversal of incentives that have tended to encourage maize mono-cropping, growing on marginal and drought-prone land resulting in soil erosion and a general lack of agricultural diversification. Second, improved security of land tenure could lead to higher levels of investment in land stewardship, and thus reduce land degradation. C. Institutional Change and Strengthening 67. The success of the reforms supported by the DPO series depended crucially on strong institutions to implement them. The overall strategy of the Bank program was to rely on the DPO to put in place/initiate major policy reforms and rely on parallel Bank TA and investment operations to strengthen institutions to implement them. For instance, in agriculture, the reforms of FISP, SGR and ADMARC were all initiated by the DPO and were supported by the ASWAp technical assistance and the agricultural commercialization project. The reforms in expenditure management were inspired by the institutional problems exposed by the cash gate scandal and were largely designed to strengthen institutions in payroll systems, audit, and improved functioning of the controlling officers- all of which were supported in parallel by technical assistance operations of the Bank. A list of all the supporting Bank TA and investment lending operations in support of institutional strengthening is given in Table 10. D. Other Unintended Outcomes and Impacts 68. None. IV. BANK PERFORMANCE 69. Design and quality and entry. The overall rating of Bank’s performance is rated moderately satisfactory. The design targeted several key timely policy measures which leveraged agricultural policy reforms related to FISP, ADMARC, and the SGR, amongst others, which also contributed to improvements in fiscal sustainability. It further offset potential poverty impacts of adjustments to the FISP by ramping up cash transfers, thereby increasing efficiency. The Bank was quickly able to respond to the government’s request for assistance because staff could draw on a shelf of analytical work as well as ongoing TA and investment operations (See Table 10). In addition, the design of the program was closely aligned to Government’s own thinking on the reform efforts. The agricultural reforms supported by the DPO series, for instance, drew on Government’s own Agricultural reforms policy (2016). Finally, the fiscal management reforms were designed closely with IMF’s program addressing the issues highlighted by the cashgate scandal. 70. While most of the policies supported by the DPO series were well designed at entry, reforms were difficult to sustain through a changing political situation, weak capacity and poor governance. For instance, the operation (and the associated TA) supported the creation of the institutional framework and rules for managing the SGR and the ADMARC but all this could not reverse the internal incentives of the system and guarantee that maize market interventions were transparent and rule based. Similarly, the operation supported the creation of new laws for Page 25 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) warehouse receipts, the COGA, independent Audit Office, reporting requirements for Controlling Officers, yet the actual operation of these institutions remains unsatisfactory due to weak capacity and governance issues. 71. Quality of supervision. The supervision of the DPO series was detailed and was closely linked to the preparation of the follow up operation. In addition, implementation of major policy reforms was tracked through the supervision of the associated investment and TA projects. As indicated in Table 10, the FISP reforms were tracked through the Agricultural TA and the Agricultural commercialization project while the expenditure management public finance reforms were tracked through the Financial sector TA operation. Monitoring the results indicators also took place as part of regular economic policy dialogue with the authorities. Bank staff was also responsive to changing economic situation by adjusting the prior actions and the triggers thereby making them more specific, as well as including the emerging important reform areas such as the procurement reform. Despite the Bank staff efforts, there were concerns that the program, as it stood, focused too much on creating institutions and policies and not enough on “results” and “outcomes” and that reforms may not stay on track. These concerns together with the changing political situation led to dropping the second operation nearly one year after the first operation closed. Table 10: DPO policies and analytical underpinnings Prior Actions Analytical underpinnings TA/Investment Projects Pillar A: Making agricultural markets work better Prior action #1 Malawi Economic Monitor-1: Managing ASWAp Technical Assistance FISP reform Fiscal Pressures Agricultural Commercialization Agriculture Public Expenditure Review Project Pathways to Prosperity in Rural Malawi Poverty and Social Impact Assessment Prior action #2. Malawi Floods Emergency Response ASWAp Technical Assistance Improving Strategic Grain Reserve Technical Assistance Agricultural Commercialization (SGR) management. Project Strengthening El Niño Preparedness and Response Technical Assistance Prior action #3. Malawi Economic Monitor-3: Absorbing ASWAp Technical Assistance Improving ADMARC management Shocks, Building Resilience Country Economic Memorandum Prior action #4. ASWAp Technical Assistance ASWAp Technical Assistance Improving administration and Land Tenure Policy Notes / Working security of land tenure. Papers Prior action #5. Poverty and Social Impact Assessment Social support or resilient Expansion of the Social Cash Malawi Poverty Assessment livelihood project Transfer Program. Social Protection Public Expenditure Review Malawi Economic Monitor-4: Emerging Stronger Pillar B: Strengthening expenditure management and accountability in public finances Prior action #6. Malawi Policy Notes Series FROIP Technical Assistance Payroll and pension reforms Malawi Economic Monitor-2: Adjusting in Turbulent Times Prior action #7. Public Expenditure Review FROIP Technical Assistance Update the audited financial Public Expenditure and Financial statements Accountability Assessment (PEFA) Prior action #8. Public Expenditure Review FROIP Technical Assistance Page 26 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Strengthening the operational Public Expenditure and Financial independence of the National Audit Accountability Assessment Office Prior action #9. Malawi Policy Notes Series Public Services Modernization Compliance of Controlling Officers Governance Binding Constraints Policy Technical Assistance to monthly reporting requirements Note Country Economic Memorandum V. Risks to the Sustainability of Development Outcomes 72. At appraisal, the overall risk to the operation was judged to be high, so were the rewards. On the basis of the systemic operation rating tool, four main risks were identified: (i) political and governance, (ii) macroeconomic, (iii) institutional capacity, and (iv) fiduciary. Measures were taken to reduce these risks. For instance, building broad support for policy reforms, including with development partners, supported implementation of reforms to the FISP. Moreover, policy dialogue on macroeconomic issues and further investment in disaster risk management helped reduce macroeconomic volatility and vulnerability to climate shocks. Weak institutional capacity was supported by selecting only critical areas of policy dialogue, and reforms were also supported by World Bank and development partner projects. Nonetheless, the Government’s performance was hobbled by some of these risk factors. For instance, while the Government was able to put in place institutions and regulations for transparent maize market operations, these were undermined by political and Governance considerations. In September 2018, in response to the sharp fall in maize production, the Government overrode the rules to withdraw maize from the SGR. The PFM reforms faced risks of institutional capacity. For instance, there have been delays in submitting the audit reports. Similarly, while the audit findings are widely published, Treasury minutes are not regularly issued, making it difficult to judge if actions have been taken. Further, while there is an increased compliance of the COs in submitting monthly reports, Bank staff have no (evidence) judgement on the action taken on these reports. 73. There have, however, been two developments which were not foreseen at appraisal of the DPO series but have posed significant risk to the sustainability of the development outcomes. First, dropping of the follow up operation, after considerable effort by the Government and the staff has adversely affected the Government’s reform effort. Since dropping the DPO-II, many of the reforms have not been closely tracked by the Bank staff 14 as well as the Government. This has especially been the case of PFM reforms. There is real risk that reforms of the audit cycle, the CO compliance, implementation of the new COGA will slow down and perhaps be diluted beyond 2020. Second, the reform program has also suffered from the unexpected political developments. A yearlong political impasse followed the contested May 2019 elections. In 2020, those elections were annulled by the supreme court. New elections were held in June 2020, in which the two main opposition parties which had joined a “Tonse Alliance” won decisively. There was a great deal of political uncertainty underlying the reform process until the clear election results in June 2020. 14 Unless these reforms are also supported by parallel TA or investment lending operations. Page 27 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) VI. LESSONS LEARNED AND NEXT PHASE A. Lessons Learned 74. The DPO-series confirmed general good practice lessons such as work closely with the Government, build on the Government’s own program, have strong analytical foundation, work closely with the sector staff and focus on a few objectives which have the greatest impact. There are, however three operation-specific lessons. • First, there should be a reconsideration in Malawi on the way prior actions and results indicators are defined and agreed upon. Often prior actions are designed to create legislative frameworks (SGR law, COGA, WRA, ADMARC), and institutional reforms. However, in Malawi, these are undermined by weak capacity and governance problems. Future operations could consider more strongly linking prior actions and triggers to implementation of reforms. Similarly, when possible, results indicators should be easier to track and more closely measure to outcomes (See the discussion in Section B, Achievement of Objectives – discussion on RIs). • Second, strengthening linkages with Bank TA and investment lending operations, when possible, would support implementation and supervision of the DPO. One of the strengths of the DPO series was that it was linked closely to a set of Bank TA and investment lending operations. However, a closer link between the actions tracked in the TA operations and the prior actions and RIs of the DPO series would have supported implementation and supervision of the DPO. For example, the IFC Advisory project to support the WRA rates the outcome satisfactory while it falls short of the targets set in the DPO. Similarly, it would have been better if the maize price volatility (RI) was also part of the supervision of the agricultural commercialization project, which would have ensured a better tracking of this indicator. • Third, a DPO series needs to adequately account for a lengthy process of legislative change. The analysis in the ICR indicates that in Malawi it takes a long time to implement legislative change. Developing and implementing laws is time consuming, unpredictable, and not fully under the control of the executive. In this DPO, there were delays in putting in place laws for ADMARC, the COGA, the WRA and the Audit Reform act, which should be taken into account for future operations. B. Next Phase 75. New elections held June 2020 produced a clear mandate and Mr. Lazarus Chakwera was elected as the President. The World Bank is working closely with the new Government in determining the next phase of the reform program and Bank support for it. As per official communications of the Bank to the Government 15, the next phase of the Bank support to a budget support operation and structural reform would involve a new set of actions to strengthen governance and growth. These would build upon the Government’s new reform program, policy dialogue in recent years, as well as the reforms/triggers for DPO-II. It would further be more action oriented and take account of some of the lessons learnt in Section A. An identification mission was held in October 2020. 15 Letter from the Minister of Finance on August 27, 2020 to the World Bank Regional Vice President. Page 28 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) ANNEX 1. RESULTS FRAMEWORK . RESULTS INDICATORS Pillar: Making agricultural markets work better Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Private sector share of retailing Text 0 >70 76 under FISP (%) 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion FISP Subsidy % Text 0 <70 in 2016/17; <60 in 64 in 2016/17; 77 in 2017/18 2017/18 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Partially achieved Page 29 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Coefficient of variation in maize Number 0.51 0.38 0.27 prices 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Estate land leases notified Text 0 >30000 34433 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion No. of leases renewed or Number 0.00 10000.00 10000.00 cancelled 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Page 30 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Systematic low cost adjucation Text 0 At least in 3 districts In 6 districts of customary estates started. 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion SCTP coverage, no. of districts. Number 18.00 28.00 27.00 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Pillar: Strengthening expenditure management and accountability in public finance Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Backlog of audited financial Number 5.00 0.00 0.00 statements presented to the Parliament. 30-Jun-2015 30-Jun-2018 30-Jun-2018 Page 31 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Comments (achievements against targets): Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Civil servants on payroll six Text 8004 <500 166 months after exiting employment. 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Backlog of audited financial Text 5 years backlog 2011/12– Backlog to be cleared. Backlog cleared statements presented to the 2014/15 Parliament. 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Page 32 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Strengthen independence of Text Independence of NAO not Independence New act implemented the NAO consistent with guaranteed through international standards implementing a new legal framework (2017/18) 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Compliance of Controlling Text No compliance with >90 percent COs Target met officers with monthly reports. monthly reports. meeting monthly reporting requirements 30-Jun-2015 30-Jun-2018 30-Jun-2018 Comments (achievements against targets): Achieved . Page 33 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES A. TASK TEAM MEMBERS Name Role Preparation Richard James Lowden Record Task Team Leader(s) Steven Maclean Mhone Procurement Specialist(s) Srinivas Gurazada Financial Management Specialist Ahossame Ayaba A. L. Ahodehou Team Member Holger A. Kray Peer Reviewer Ivan Drabek Team Member Alejandro De la Fuente Team Member Colin Andrews Team Member Yutaka Yoshino Team Member Maiada Mahmoud Abdel Fattah Kassem Team Member Time Hapana Fatch Team Member Jorge A. de Thompson R. Araujo Peer Reviewer Habib Nasser Rab Peer Reviewer Christine Makori Counsel Valens Mwumvaneza Team Member Trust Chamukuwa Chimaliro Team Member Efrem Zephnath Chilima Team Member Ronette Gwendolyn Arushia Jordan Team Member Zione Edith Kansinde Procurement Team Mercy Chimpokosera-Mseu Team Member Priscilla Flaness Kandoole Team Member Sunganani Violet Kalemba Team Member Kevin Carey Team Member Page 34 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) Steven R. Dimitriyev Team Member Supervision/ICR Patrick Hettinger Task Team Leader Sudhir Chitale Lead contributor Time Fatch Team member Anthony Msendema Team member Komana Lubinda Team member Yalenga Nyirenda Team member Saidu Goje Team member Efrem Chilima Team member Chipo Msowoya Team member Mercy Chimpokosera-Mseu Team member Tamara Mughogho Team member Trust Chimaliro Team member Miriam Kalembo Team member Tinyade Kumsinda Team member Esther Lozo Team member Lydie Ahodehou Team member Page 35 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) . B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY15 5.625 52,308.19 FY16 10.684 32,313.29 FY17 43.697 193,068.37 FY18 0 8,910.00 Total 60.01 286,599.85 Supervision/ICR FY18 .050 54,707.60 Total 0.05 54,707.60 . Page 36 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) ANNEX 3. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT PARTNERS’/STAKEHOLDERS’ COMMENTS N/A Page 37 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) ANNEX 4. SUPPORTING DOCUMENTS The World Bank (2017), Program Document for a proposed credit in the amount of SDR 58.9 Million (US$80 Million equivalent), to the Republic of Malawi for an Agricultural Support and Fiscal management Development Policy Financing. Report No. 112055-MW The World Bank, Internal Document (2018), Program Document for a proposed grant in the amount of SDR 55.7 Million (US$80 Million equivalent), to the Republic of Malawi for the Second Agricultural Support and Fiscal management Development Policy Financing. Report No. 124403-MW The World Bank (2015), Implementation Completion and Results Report for the Malawi, Economic Recovery and Development Policy Operation. Report No. ICR 3296 The World Bank (2019), Malawi Public Expenditure Review. The World Bank (2019), The Malawi Economic Monitor. Strengthening Human Capital Through Nutrition. IMF (2018), The 2018 Article IV Consultation Report. IMF (2019), The second and third review for the three-year ECF arrangement. UK Aid (December 2017), Two studies on the 2016/17 farm input subsidy program. The International Finance Corporation (IFC), January 2020, completion report for the Advisory Services on the Warehouse Receipts. Page 38 of 39 The World Bank Malawi Agricultural Support and Fiscal Management DPO (P153753) MAP Page 39 of 39