Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB190 Project Name INSTITUTIONAL REFORM & CAPACITY BUILDING Region AFRICA Sector General public administration sector (100%) Project ID P078613 Borrower(s) GOVERNMENT OF SIERRA LEONE Implementing Agency Environment Category [ ] A [x] B [] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [x] S 2 [ ] S 3 [ ] S F [ ] TBD (to be determined) Date PID Prepared August 4, 2003 Estimated Date of Appraisal Authorization February 1, 2004 Estimated Date of Board Approval May 13, 2004 1. Key development issues and rationale for Bank involvement The objective of this project is to help the post-conflict Government of Sierra Leone (GoSL) to improve government accountability and its capacity to deliver services and promote economic development, especially at the sub-national level. One major contributing factor to the ten-year civil war in the nineties was the antagonism between a large section of the population who were marginalized from the political process and deprived of social services and economic development opportunities, and those who controlled resources through power and corruption. Although peace has been restored with a strong presence of the UN peacekeeping force, to sustain peace and stability requires the newly elected government to quickly establish credibility as one that manages the country in a transparent and accountable manner and one that can quickly deliver improvements in social service delivery and economic development. The government has chosen a route of political decentralization. By establishing democratically elected local councils, the government hopes to create a participatory local governance structure where people (including previously marginalized groups) can actively participate in the decision- making process at the local level. The Decentralization Task Force led by the Vice President is working on a national Decentralization Policy and a Decentralization Program. The policy will define a new inter-governmental relationship, including a new assignment of functional responsibilities, revenue authorities, and an accountability framework across various layers of government. The Decentralization Program will lay out a program for the transition period, during which functions and resources will be gradually transferred to local governments and intensive capacity building support will be provided. Page 2 The core component of the project is thus to assist government design and implement the decentralization program. The first stage of the work will focus on providing technical assistance in the areas of fiscal and administrative decentralization. Once the scope and pace of the decentralization program is defined, the project will finance a capacity building program for local governments, so they can discharge an increasing set of responsibilities for infrastructure development and social services deliveries. The team is collaborating with DfID and UNDP in the area of decentralization. These two agencies have been heavily involved in assisting the Decentralization Task Force to develop a decentralization policy and program, and DfID is likely to provide significant financing for local government election next year. IDA is expected to assist and finance the implementation of the decentralization and local government capacity building program. Another critical component is to support government’s continuing efforts in improving public expenditure management. The Bank has provided support in this area through a series of Economic Reconstruction and Recovery Credits (ERRCs) and the Second Public Sector Management Support (PSMS II). We will continue our close collaboration with DfID, EU, UNDP in this area, with the vision that improvement in expenditure accountability, along with a well-articulated poverty reduction strategy, will pave the way for moving towards a multi-donor budgetary support instrument. The two main pillars of the project support the two key themes of the GoSL’s 1997 National Governance Strategy -- decentralization and improving accountability, and are also consistent with the World Bank Transition Support Strategy for Sierra Leone in 2002-3. This project is not the only instrument of Bank assistance in institutional reform and capacity building. In fact, through our large sector projects the Bank can also support the transformation of the role of line ministries and agencies vis-à-vis local government, and help new local government develop its capacity. In addition, there are strong synergies between this project and our National Social Action Project (NSAP). The National Commission for Social Action (NaCSA), a social fund agency strongly supported by our NSAP operation, is itself decentralizing the decision-making power to local governments and intends to provide block grants to rural district governments for financing community projects and small public works projects. NaCSA also has the potential to become a capacity builder for local governments. We propose to explore the complementarities between NaCSA and IRCB in two ways: 1) While NaCSA will help local governments use the community driven development approach to identify, finance, and supervise community projects and small public works projects, IRCB will help local governments develop a capacity to manage larger-scale projects that are better managed at the district, town, or municipal levels; 2) IRCB will help design an inter-governmental transfer system, to be financed in the short term by a combination of government discretionary budget, NaCSA funding, and the development grant provided by this project. 2. Proposed objective(s) Page 3 The proposed Project Development Objectives is improve government accountability and its capacity to deliver services and promote economic development, especially at the sub-national level. 3. Preliminary description The project will support an institutional reform and capacity building program that encompasses the following components. Recognizing the implementation capacity constraint, we intend to focus on a small set of critical interventions within each component. A. Decentralization and Local Government Capacity Building The premise of this component is that certain service delivery and development needs of the population can be addressed more effectively by empowered local governments with a strong capacity to manage participatory development planning and implementation with accountability. Thus the operational focus is to help the Decentralization Task Force systematically design and implement a Decentralization Program, which focuses on building up the capacity of local governments to respond to these needs and strengthening downward accountability of local governments to their population. A1.Building a strong center to lead and support decentralization This subcomponent will provide support to the Decentralization Task Force and the leading institutions (Ministry of Local Government and Community Development, and Ministry of Finance) to develop the necessary capacity to lead the decentralization process, including critical tasks such as developing a policy framework, designing a decentralization program, and monitoring its implementation. It will also support the transformation of line ministries in line with government’s Decentralization Policy and build their capacity to coach local governments and monitor their performance related to delegation functions. A2. Start-up investment in local government administrative infrastructure Given that elected local councils have not been in existence in the past thirty years, to get them “up and running” immediately after election, the project will provide some modest start-up investment in office infrastructure, communications equipment, transport, as well as orientation training for councilors and their staff. The main beneficiaries will be the twelve district councils. A3. Development Grant Facility The objective of this grant facility is to finance the initial inter-governmental transfer system. This will complement the financing that will be provided from NaCSA, the social fund, to rural districts, and other sources of funding. Given that NaCSA focuses on rural districts and seems to have sufficient funding relative to the absorptive capacity of the districts, the Development Grant Facility can usefully focus on the five urban centers of the country. A4. Local Government Capacity building Training and technical assistance will be provided to help local government generate local revenue and perform functions that are devolved or delegated to them. Although the Decentralization Task Force is proposing a rather comprehensive list of functions to be decentralized, the implementation process is most likely to be gradual, given the severe capacity constraint at the local level. Through learning-by-doing, local government who can demonstrate Page 4 competence and accountability at the first phase of decentralization will be allowed to take on a broader set of responsibilities. A5. Promoting downward accountability of local governments to their population This component will 1) finance an extensive education and sensitization program so people understand the roles and responsibilities of local councilors, chiefdom councils, public servants, and communities; 2) provide training for communities groups and NGOs on skills to monitor government performance and advocating for government accountability and transparency; 3) promote community-driven development in urban local government; 4) support initiatives aimed to improve the transparency of local government activities and functions. B. Public Expenditure Management Reform The main objective of this component is to improve the government capacity for transparent and accountable management of public expenditure. The project will help government review the existing statutory and regulatory framework for public financial management and implement a new framework, which promotes transparency, clarifies responsibilities among actors and among levels of government, and provides checks and balances in the system. The project will also provide technical and financial assistance to players with internal and external control functions. C. Improving Public Sector Human Resource Management The focus of this component is to help government address three issues: 1) to revise the current grading and pay structure so as to achieve internal equity, and external competitiveness for a select number of critical public sector job families that have consistently experienced difficulties attracting qualified people; 2) to design a strategy for encouraging competent professionals to work for local governments; 3) to design a civil service training policy. It is expected that implementation work in this area will be mainly financed by the second DfID Governance Reform Support Project. D. Promoting Knowledge Transfer and Networking The magnitude of capacity building needs at the central and local government levels is not matched by the availability of training providers inside and outside Sierra Leone. The project will promote knowledge transfers and networking among practitioners within and without the country. Activities may include 1) supporting a Local Government Association; 2) establishing a Global Distance Learning Network site in Sierra Leone; 3) capacity building for the Institute for Public Administration and Management (IPAM). E. Project Implementation and Coordination The Ministry of Local Government and Community Development will lead the implementation of the Decentralization and Local Government Capacity Building Component; the Ministry of Finance will lead the implementation of the Public Expenditure Management Reform Component; and the Establishment Secretary’s Office will implement the component on Improving Public Sector Human Resource Management. The implementation arrangement for the component on Knowledge Transfer and Networking will be identified during project preparation, depending on the scope and design of the component. Page 5 The Governance Reform Secretariat (GRS) in the Ministry of Presidential Affairs is responsible for the overall coordination of the project, ensuring that the necessary linkages between various reform components are fully exploited. 4. Safeguard policies that might apply OP 4.01 and OP 4.12. 5. Tentative financing Source: ($m.) BORROWER/RECEPIENT 0 INTERNATIONAL DEVELOPMENT ASSOCIATION 20 Total 20 6. Contact point Contact: Yongmei Zhou Title: Economist Tel: (202) 458-1671 Fax: Email: yzhou1@worldbank.org