Roads Sector Policy Support Programme Review

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Roads Sector Policy Support Programme Review

• FINDINGS OF PHASE 1 REVIEW AND MID-TERM
  EVALUATION OF ONGOING SPSP
• DAG Transport TWG, 26 February 2008

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Objectives of Study

• To analyse the achievements and possible
  shortcomings of the ongoing SPSP with a view to
  formulate a proposal for continuation, taking
  account of the lessons learnt
• The analysis should be based on seven key areas
  of assessment
• Determine whether the May 2005 report is still
  valid or needs to be adapted

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Objectives of Phase 1

• To assess the relevance, effectiveness,
  efficiency, impact and sustainability of the
  ongoing SPSP
• Re-assess the seven key areas
• Describe lessons learnt so far
• Draw conclusions
• If necessary, propose adaptations for a future
  continuation of the SPSP

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Objectives of Phase 2

• Based on the outcome of Phase 1, formulate a
  second SPSP for financing under EDF 10

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Objectives of Phase 3

• Based on the outcome of Phase 2, prepare a draft
  financing proposal

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The Study Timetable
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Objective of Presentation

• To present the findings of Phase 1, especially
• Lessons learnt so far
• Conclusions
• Proposed adaptations

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The Seven Key Areas

• Sector policy and strategy
• Sector budgeting and its medium-term perspective
• Sector and donor coordination
• Institutional setting and capacity issues
• Performance monitoring systems
• Macroeconomic framework
• Public financial management

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The Seven Key Areas

• Sector Policy and Strategy

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1. Sector Policy and Strategy

• Is Ethiopias sector policy and strategy coherent
  with the national poverty reduction strategy as
  enshrined in PASDEP?
• Only partially
• Inadequate provision of sustainable road
  infrastructure to the rural population
• Development of strong management and technical
  capacity to manage the network is lacking at
  regional and woreda level
• The capacity of the domestic road construction
  industry is still too low and development efforts
  weak

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1. Sector Policy and Strategy

• Does the policy need to be reviewed and adapted
  in the light of the National Transport Master
  Plan?
• Yes
• If plan adopted, will recommend a significant
  shift of resources towards woreda and community
  roads, with long-term goal of all kebeles being
  connected to the network
• Plan also includes a 20-year programme to develop
  a cadre of rural labour-based contractors
  nationwide
• Plan includes strengthening MWUD and allocating
  clear responsibility for this 20-year programme

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1. Sector Policy and Strategy

• Is the policy and strategy widely agreed by the
  sector stakeholders?
• No
• RSDP achievements welcomed, but Ministries of
  Health, Education and Agriculture all requesting
  roads to kebele centres as part of national
  development strategy
• TA also thinks balance is wrong
• TA thinks there is not enough transport-related
  education in the sector. Contractors say the
  same from their perspective
• Coordination and consultation on safety and plans
  is not effective enough
• Widespread ignorance of RSDP which is presented
  without sufficient prior dialogue in any
  formalised way. RSDP is not the only element of
  roads sector policy though it is often seen as
  such

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The Policy Instruments
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1. Sector Policy and Strategy

• Lessons learnt
• There needs to be a much stronger policy dialogue
  leading to a comprehensive roads sector policy
  document

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The Seven Key Areas

• Sector Budgeting and its Medium-Term Perspective

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2. Sector Budgeting

• Is the 3 years expenditure forecast of RSDP-III
  realistic and affordable?
• No

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2. Sector Budgeting

• Is GOE budgeting for roads sector conducive to
  bring about improvement at regional, district and
  sub-district level regarding access to transport?
  
• No
• No mechanism to ensure that block grants are
  sufficient for the purpose and are being
  allocated sufficiently for roads at regional,
  district or sub-district level

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2. Sector Budgeting

• Are collected road user charges sufficient to
  maintain Ethiopia's expanding road network and to
  sustain the considerable investments in the
  sector infrastructure?
• Seemingly not
• For 2007/08 total requests of 1.5 billion birr
  exceed available resources of 1.2 billion birr
• The real need is said to be greater than the
  requests
• Projections need to be made for subsequent years

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2. Sector Budgeting

• Lessons learnt
• Initial political commitment to RSDP-III is not
  proving to be financially sustainable
• Mechanisms need to be developed for effective
  and sufficient federal support to regional and
  local levels

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The Seven Key Areas

• Sector and Donor Coordination

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3. Sector and Donor Coordination

• Is ERA effectively leading the coordination of
  the sector development partners?
• Yes, but
• Does ERA represent the roads sector as a whole
  and all aspects of the policy?

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3. Sector and Donor Coordination

• Is the coordination process formalised and
  accepted by the sector stakeholders?
• No
• No evidence found of a formalised and accepted
  coordination process that includes other
  Ministries, the TA, Road Fund or other
  stakeholders.

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3. Sector and Donor Coordination

• Are the sector donors subscribing to the concept
  of a sector-wide approach with sector budget
  support as the preferred financing modality?
• Only partially
• European Commission yes
• DFID partly
• Others no.

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3. Sector and Donor Coordination

• Lessons learnt
• A more holistic leadership with a formalised and
  agreed coordination process could encourage more
  sector budget support

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The Seven Key Areas

• Institutional Setting and Capacity Issues

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4. Institutional Setting and Capacity Issues

• How do ERA and other key agencies assess their
  institutional performance from year to year?
• ERA amount disbursed (fivefold increase in 10
  years.). (The workload has increased, and
  physical and financial targets are being met.)
  Indicators produced by consultants appear to be
  secondary. BPR is assessing performance but this
  is not an annual exercise.
• For both construction and maintenance, monthly
  reports of progress against plan are evaluated
  internally but assessment of the quality of the
  works is at local level.
• RF biannual meeting with road agencies to
  compare performance against plan, identify
  bottlenecks and prepare next annual plan.
  Internal assessment as to whether on track
  against plan.
• Others MWUD has delegated most responsibilities
  to ERA oversight is by Board, not by Ministry.
  But ERAs performance has improved they are
  spending all the money.

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4. Institutional Setting and Capacity Issues

• Are staff development programmes of sector
  agencies effective and efficient and how is this
  measured?
• Efforts being made throughout public sector, but
  staff turnover is high
• There is inadequate training for contractors,
  traffic police and others

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4. Institutional Setting and Capacity Issues

• Are staff and resources used in an optimal way?
• No
• Resource planning practices by most of the
  agencies need substantial and urgent
  improvement the resource planning and
  management practices of the DMOs are the worst
• Increased workload and staff shortages mean that
  staff are being more intensively utilised than
  before. BPR may increase efficiency and
  effectiveness
• Question has been raised as to whether the Road
  Fund needs to spend so much time double-checking
  performance on maintenance contracts, when ERA
  has already conducted its own checks
• Compared with RRAs and MRAs. Consultancy
  Contract for Financial and Technical Audit
  Services, Louis Berger with Afro-Consult, August
  2005

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4. Institutional Setting and Capacity Issues

• What are the key issues regarding the development
  of the domestic consulting and contracting
  industry and how can development partners assist?
• Contractors are new since last 12 years and have
  short track records, low experience and not
  enough training
• Equipment tends to be poor and the pay for scarce
  equipment operators is very high only Alemgena
  can train for whole country. Chinese now
  bringing own operators
• Lack of finance and lack of financial and project
  management skills
• Payment delays, design changes, contract
  documents not clear, etc. leads to claims.
  Lack of materials testing facilities
• Lack of joint ventures which could help skills
  transfer
• Lack of arbitration means that the only recourse
  to solve disputes is to courts
• Most useful assistance would be to help MWUD
  prepare and implement a holistic programme for
  contractor development, including for RADA and
  equipment rental, training of skilled people

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4. Institutional Setting and Capacity Issues

• Lessons learnt
• There is no overall institution responsible for
  the roads sector
• There is a need for an anchoring ministry
• Sector budget support must include strengthening
  MWUD.

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The Seven Key Areas

• Performance Monitoring Systems

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5. Performance Monitoring Systems

• Are the mechanisms of monitoring and performance
  assessment adequate and do they render reliable
  results?
• Monitoring RSDP 16 indicators
• Density. OK.
• Traffic flow OK when number of counting stations
  consistent
• Roughness/road condition/VOC road condition
  assessment only and apparently based on different
  3000 km each year
• Freight and passenger tariffs OK at federal
  level
• Fatalities/accidents per vehicle should be
  vehicle-km?
• Maintenance budget, expenditure and km
  maintained unclear
• Maintenance costs unclear
• Time for contract administration difficult to
  understand no data for latest year
• Private/total construction ratio some weird
  fluctuations, includes international
• Labour-based/total construction ratio sharp
  fall, recording method questioned
• Actual axle load/legal limit ratio OK, but
  overloading is not just axle load issue
• Construction, rehabilitation and maintenance
  costs figures incomplete
• Journey time unclear how assessed buses and
  trucks lumped together
• Employment opportunity for local labour figures
  unclear and strange fluctuations
• Income generation source not stated
• Improvement in skill levels (road works) falling
  but figures not presented
• Conclusion clear report summary, but data
  sources and figures unclear

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5. Performance Monitoring Systems

• Are the mechanisms of monitoring and performance
  assessment adequate and do they render reliable
  results?
• Determining variable tranche disbursement 10
  indicators
• Density. Based on all standards roads, but
  figures seem to be based on the classified
  network
• Accessibility based on land area, not
  populations or kebele centres
• Maintenance asphalt roads in good condition
  OK, but what per cent of roads are asphalt?
• Maintenance gravel roads in good condition OK
• Maintenance expenditure of Road Fund OK
• Axle load control average overload of trucks
  OK for protection of network, not enough for
  safety
• Private sector development figures include
  international contractors (75)
• Capturing Road Fund in the budget OK
• Institutional capacity-building based on
  schedule, not on programme
• Road safety OK
• Conclusion need to develop clearer policy
  objectives with related performance indicators
  and targeted data collection

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5. Performance Monitoring Systems

• Are the indicators well chosen and consistent to
  assess the sector achievements from year to year?
• Four areas in particular need attention
• Accessibility need to identify at woreda and
  kebele level
• Condition needs more formal assessment and needs
  to include per cent of network that is paved
• Procurement and contract administration, and time
  for payments
• Private sector development should identify
  domestic contractors by size of contractor

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5. Performance Monitoring Systems

• Is the process of stakeholder consultation and
  the flow of information widely accepted as being
  sufficient and adequate for decision-making?
• No
• Annual reports not available in English
• Big data gap regarding woredas and kebeles
• Lack of overall responsibility for the
  implementation of the road sector policy
• Consultation on policy, RSDP-III and ERA
  restructuring needs greater focus

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5. Performance Monitoring Systems

• Lessons learnt
• A Roads Department is needed in the Ministry of
  Works

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The Seven Key Areas

• Macroeconomic Framework

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6. Macro-Economic Framework

• Is the present process of assessing the
  macro-economic context adequate and providing
  reliable information for decision making?
• Yes, but
• Although the overall macro-economic assessment
  taking into account total estimated revenues,
  loans, assistance and debt service and
  expenditure at federal and regional level appears
  to be sound,
• the current budget process is inappropriate in
  terms of priority setting and achieving policy
  objectives. The budget is based on a line-item
  classification looking at inputs rather than at
  prioritising expenditure with the aim of
  achieving policy goals

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6. Macro-Economic Framework (continued)

• Programme budgeting is being introduced (pilot
  implementation is ongoing with IMF support) to
  integrate strategic planning with financial
  planning and management. A programme means a
  group of activities and projects under a single
  manager which uses resources to contribute to a
  single policy objective

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6. Macro-Economic Framework

• Lessons learnt
• Programme budgeting would really be meaningful
  once we have a comprehensive programme to
  support, linked to policy and with an anchoring
  institution for implementation

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The Seven Key Areas

• Public Financial Management

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7. Public Financial Management

• Are the present methods of assessing budget
  credibility, comprehensiveness and unification
  adequate for decision making?
• Not yet
• Large variations between original budget and
  expenditure outturns for ERA in particular in
  2005/06 (20 underspending) and also 2006/07 (6
  underspending)
• Budget does not include Road Fund
• Medium-term budget does not yet fully unify
  recurrent and capital expenditures (although this
  will be rectified under programme budgeting)

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7. Public Financial Management

• Are procurement procedures used by ERA and other
  sector agencies transparent and according to best
  international practices? Do they provide value
  for money?
• Yes and no
• So long as planning, control and design
  procedures are inadequate, procurement procedures
  cannot provide value for money

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7. Public Financial Management

• Do sector agencies provide timely audited
  accounts and reports that confirm good financial
  management?
• MOFED audit report 2005/06 (only in Amharic)
  reveals problems, audit not finalised
• ERA 2005/06 audit report reveals problems,
  especially at District level
• RF 2005/06 audit report is unqualified (i.e.
  satisfactory)

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7. Public Financial Management

• Lessons learnt
• Budget reform is in its initial stages and needs
  to be continued
• Better planning control and project preparation
  needed
• Financial management needs to be strengthened
  especially at the level of MOFED, which is the
  receiver and disburser of sector budget support

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Conclusions and Suggested Adaptations of SPSP

• Conclusion 1
• The sector policy needs to be modified to include
  the development of a comprehensive sector policy
  that includes local roads and contractor issues,
  with clear overall responsibility anchored in
  MWUD, and a realistic match between plans and
  resources
• Suggested adaptation to SPSP
• A target date should be set for agreement on
  such a holistic policy, with anchorage in MWUD
  implemented by the end of SPSP 2

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Conclusions and Suggested Adaptations of SPSP

• Conclusion 2
• It is essential to strengthen MWUD with a Roads
  Department to take this responsibility (including
  ERA, Road Fund) and establish linkages with RRAs,
  CRs (RADA?), Transport Authority, Traffic Police
  and domestic construction industry.
• Suggested adaptation to SPSP
• Such a strengthened MWUD should be included in
  the supported policy

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Conclusions and Suggested Adaptations of SPSP

• Conclusion 3
• Budget reforms should continue and credible,
  unified and comprehensive linkages with policy
  and plans should be developed
• Suggested adaptation to SPSP
• There should be progress towards a holistic and
  realistic programme budget for the roads sector,
  anchored in MWUD and in the agreed policy

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Conclusions and Suggested Adaptations of SPSP

• Conclusion 4
• MWUD must ensure formalised consultation with
  sector stakeholders
• Suggested adaptation to SPSP
• Consultation processes and events can be
  included in the performance indicators for
  variable tranche disbursement

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Conclusions and Suggested Adaptations of SPSP

• Conclusion 5
• For ERA reorganisation, consultation with donors
  is essential. There is also a need to review
  designs and specifications for road works
• Suggested adaptation to SPSP
• None as such, but should ERA reorganisation be
  delayed until the holistic policy is in place and
  the future MWUD/RD role defined?