Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 43345-LAC

PROJECT APPRAISAL DOCUMENT

ON

PROPOSED CREDITS (3)

IN THE AMOUNT OF

SDR 1.5 MILLION (US$2.4 MILLION EQUIVALENT) TO THE COMMONWEALTH OF DOMINICA

SDR 1.5 MILLION (US$2.4 MILLION EQUIVALENT) TO GRENADA, AND

SDR 1.5 MILLION (US$2.4 MILLION EQUIVALENT) TO ST. LUCIA

FOR THE

ORGANISATION OF EASTERN CARIBBEAN STATES (OECS) E-GOVERNMENT FOR REGIONAL INTEGRATION PROJECT

IN SUPPORT OF THE FIRST PHASE OF THE

OECS E-GOVERNMENT FOR REGIONAL INTEGRATION PROGRAM (EGRIP)

April 29,2008

Global ICT and LAC-PREM Departments Caribbean Country Management Unit Latin America and the Caribbean Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 3 1,2008)

ASY C U DA CARICAD CARICOM CARTAC CAS CDB ClDA DFlD ECCB ECTEL EGRIP EU FY GEF IBRD ICB ICT IDA IDB IDRC IMF IOCR NCB NGO NSC OAS OECS PAD PFM PPP PPS Red GEALC REGU RTC SIGTAS TA TAL TASF TCO TORS

Currency Unit = XCD 2.65EC$(XCD) = US$1

1.6US$ = SDR 1

FISCAL YEAR January 1 - December31

ABBREVIATIONS AND ACRONYMS Automated System for Customs DAta Caribbean Centre for Development Administration Caribbean Community Caribbean Regional Technical Assistance Centre Country Assistance Strategy Caribbean Development Bank Canadian International Development Agency Department for International Development (UK) Eastern Caribbean Central Bank Eastern Caribbean Telecommunications Authority E-Government for Regional Integration Project / Program European Union Fiscal (Financial) Year The Global Environment Facility International Bank for Reconstruction and Development (World Bank) International Competitive Bidding Information and Communications Technologies International Development Association (World Bank) Inter-American Development Bank International Development Research Centre International Monetary Fund OECS Institutional and Organizational Capacity Review of the Core Public Sector National Competitive Bidding Non-governmental Organization National Steering Committee Organization of American States Organisation of Eastern Caribbean States Project Appraisal Document Public Financial Management Public Private Partnership OECS Pharmaceutical Procurement Service Network of E-Government Leaders of Latin America and the Caribbean Regional E-Government Unit Regional Technical Committee Standard Integrated Government Tax Administration System Technical Assistance Technical Assistance Loan UNDESNCARICAD E-Government Technical and Advisory Support Facility Total Cost of Ownership Terms of Reference

FOR OFFICIAL USE ONLY

TRIPS UN UNCTAD UNDESA UNDP WB / WBG WHO WTO

Agreement on Trade-Related Aspects of Intellectual Property Rights United Nations United Nations Conference on Trade and Development United Nations Department of Economic and Social Affairs United Nations Development Programme World Bank /World Bank Group World Health Organization World Trade Organization

Vice President: Pamela Cox Country Director: Yvonne Tsikata

Sector Director: Mohsen Khal i l Sector Director: Marcel0 Giugale Sector Manager: Philippe Dongier Sector Manager: N i c k Manning

Sector Leader: Randeep Sudan Sector Leader: Benu Bidani

Task Team Leader: Juan Navas-Sabater Co-Task Team Leader: Roberto Panzardi

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization.

OECS COUNTRIES OECS E-Government for Regional Integration Program

CONTENTS

Page

STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 I . A . B . C .

I1 . A . B . C . D . E . F .

I11 . A . B . C . D . E . F .

I V . A . B . C . D . E . F . G .

Country and sector issues .................................................................................................... 1 Rationale for Bank involvement ......................................................................................... 5 Higher level objectives to which the project contributes .................................................... 6

Lending instrument ............................................................................................................. 7

Project development objective and key indicators., .......................................................... 11

Lessons learned and reflected in the project design .......................................................... 20

PROJECT DESCRIPTION ............................................................................................. 7

Program objective and Phases ............................................................................................ 9

Project components ........................................................................................................... 13

Alternatives considered and reasons for rejection ............................................................ 21

IMPLEMENTATION .................................................................................................... 23 Partnership arrangements. ................................................................................................. 23

Institutional and implementation arrangements.. .............................................................. 23

Monitoring and evaluation o f outcomeshesults ................................................................ 25

Sustainability ..................................................................................................................... 26

Critical r isks and possible controversial aspects ............................................................... 26

Loadcredit conditions and covenants ............................................................................... 27

APPRAISAL SUMMARY ............................................................................................. 28

. . .

Economic and financial analyses ...................................................................................... 28

Fiduciary ........................................................................................................................... 29 Technical ........................................................................................................................... 28

Social ................................................................................................................................. 29

Environment ...................................................................................................................... 29

Safeguard policies ............................................................................................................. 30

Policy Exceptions and Readiness ...................................................................................... 30

Annex 1: Country and Sector or Program Background ......................................................... 31

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 49

Annex 3: Results Framework and Monitoring ........................................................................ 52

Annex 4: Detailed Project Description ...................................................................................... 62

Annex 5: Project Costs ............................................................................................................... 72

Annex 6: Implementation Arrangements ................................................................................. 73

Annex 7: Financial Management and Disbursement Arrangements ..................................... 76

Annex 8: Procurement Arrangements ...................................................................................... 82

Annex 9: Economic and Financial Analysis ............................................................................. 87

Annex 10: Safeguard Policy Issues ............................................................................................ 91

Annex 11: Project Preparation and Supervision ..................................................................... 92

Annex 12: Documents in the Project File ................................................................................. 94

Annex 13: Statement of Loans and Credits .............................................................................. 95

Annex 14: Country at a Glance ................................................................................................. 96

Annex 15: Map IBRD No . 33564 ............................................................................................. 111

OECS COUNTRIES

OECS E-GOVERNMENT FOR REGIONAL INTEGRATION PROGRAM

PROJECT APPRAISAL DOCUMENT

LATIN AMERICA AND CARIBBEAN

CITPO / LCSPS

Date: April 29, 2008

Country Director: Yvonne M. Tsikata Sector ManagerLlirector: Philippe Dongier, Nick Manning

Team Leader: Juan Navas-Sabater, Roberto Panzardi Sectors: Central government administration (SO%);General information and communications sector (40Yo);General public administration sector (1 0%) Themes: Regional integration (P);Other public sector governance (S);Managing for development results (S) Environmental screening category: Not Required

Project ID: P100635

Lending Instrument: Adaptable Program Loan Project Financing Data

[ ]Loan [XI Credit [ ]Grant [ ]Guarantee [ 3 Other:

For Loans/Credits/Others: Total Bank financing (US$m.): 7.20 (SDR 4.5 million equivalent) Proposed terms: The Credits will have a 10 year Grace Period, and a Final Maturity o f 35 years.

Borrower: Government o f St. Lucia Ministry o f Finance Financial Center, Bridge Street Castries St. Lwcia Tel: 758-468-5502 Fax: 758-452-6700 Government o f Grenada Keith Claudius Mitchell, Prime Minister Ministerial Complex St. George

Grenada Government o f the Commonwealth o f Dominica Dominica

Responsible Agency: OECS Secretariat Morne Fortune PO B o x 179 St. Lucia Tel: (758) 4522537 oecs@oecs.org www . oecs. org

Fax: (758) 453 628

Project implementation period: Start September 1 , 2008 End: June 30,2012 Expected effectiveness date: September 1 , 2008 Expected closing date: June 30, 2012

[ ]Yes [XINO Does the project depart from the CAS in content or other significant respects? Ret: PAD I.C. Does the project require any exceptions f rom Bank policies? Re$ PAD I K G. Have these been approved by Bank management?

[ ]Yes [XINO [ ]Yes [XINO _ _

I s approval for any policy exception sought f rom the Board? [ ]Yes [XINO

[XIYes [ ] N o

[XIYes [ ] N o

Does the project include any critical r isks rated “substantial” or “high”? Re$ PAD III.E. Does the project meet the Regional criteria for readiness for implementation? Re$ PAD I K G. Project development objective Re$ PAD II. C., Technical Annex 3 The overall development objective o f the project i s to promote the efficiency, quality, and transparency o f public services through the delivery o f regionally integrated e-government applications that apply economies o f scale.

Project description [one-sentence summary of each component] Re$ PAD ILD., Technical Annex 4 The project i s designed as an APL, with two key phases.

In Phase 1, the project has two main substantive components:

Component 1 : Horizontal (Cross-Sectoral) E-Government Interventions. This would involve the fol lowing sub-components: (i) Policy and Strategy Implementation; (ii) Legal and Regulatory Framework Implementation; (iii) I C T Standards and Total Cost o f Ownership Optimization; (iv) Regional E-Government Institutional Framework Strengthening; and (v) Automated Registries

and Multi-Purpose Identification Systems.

Component 2: Vertical (Sectoral) E-Government Interventions. This component will support fbrther regional harmonization and upgrading o f existing information systems in the core areas o f public finance, as wel l as extend e-government on a pi lot basis to other sectors: (i) E- Government in Public Financial Management ; (ii) E-Government in Tax Administration; (iii) E- Government in Customs; (iv) Electronic Government Procurement; and (v) E-Government in health and other social and productive sectors.

In Phase 2, the program expects other sectoral e-government interventions will be included, primarily in tourism, agriculture, health and education, among others.

A third component for project management i s also included in both phases.

Which safeguard policies are triggered, if any? Re$ PAD IKF. , Technical Annex 10 None.

Significant, non-standard conditions, if any, for: Re$ PAD III. F. Board presentation: NIA

Loadcredit effectiveness: Effectiveness conditions: 1) the Governments will s i g n the subsidiary agreements with the OECS Secretariat; 2) the Governments and the OECS Secretariat wil l adopt the Project Operational Manual; 3) the Regional E-Government Unit has been established, through the recruitment o f i t s core staff, including Project Manager, Procurement Specialist and Project Accountant; and 4) Regional Technical Committee has been created, through appointment o f the respective representatives by the participating governments and institutions.

Covenants applicable to project implementation: NIA

I. STRATEGIC CONTEXT AND RATIONALE A. Country and sector issues’

1. The OECS was established in 1981 under the Treaty o f Baseterre. I t has at present a membership o f nine (9) states including Grenada, Anguilla, Antigua and Barbuda, the British Virgin Islands, Dominica, Montserrat, St. Ki t ts and Nevis, St. Lucia and Saint Vincent and the Grenadines. With the exception o f Anguilla, British Virgin Islands, and Montserrat, which are al l British territories, the remaining independent six member states o f the OECS (Antigua and Barbuda, Dominica, Grenada, St Ki t ts and Nevis, Saint Lucia, and St Vincent and the Grenadines) share many common characteristics. They are a l l similar in size, climate, topography and history, and each has a very open economy with limited diversity in production and a dependence on tourism andor a few export commodities which are sold, in many cases, in protected markets. Decades o f reliance o n traditional markets, and o n trade preference, have given way to a new reality, where agriculture plays a much smaller role in most economies, and where a much harsher and more competitive international wind blows. In many respects, the OECS i s wel l positioned. Endowed, for the most part, with strong traditions o f democratic participation and political stability, favorable locations, excellent climates and an early targeting o f universal primary education, many OECS countries already possess a number o f ingredients necessary to adapt to the challenges o f the 21St century.

2. The OECS countries face a number o f common challenges. First, they are al l seeking new sources o f growth and a way to reduce vulnerability, against a backdrop o f an increasing competitive global environment. Second, they al l face fiscal imbalances and high debt ratios, compounded by their inherent vulnerability as small island developing states. Most o f the economies are vulnerable to changes in external markets and severe shifts in trade, and are prone to natural disasters such as hurricanes. In such an environment, business as usual wil l no longer suffice. The current challenge facing the sub-region i s how to reinvigorate and sustain growth alongside the following imperatives - reducing high unemployment and poverty rates, restoring fiscal and debt sustainability, diversifying the economy, and securing a more sustainable external position.

3. These multi-faceted challenges have prompted the World Bank Group to design its assistance strategy in a way that reflects both the national and the regional development needs o f these countries. In order to address the pressing developmental concerns o f the region, The Wor ld Bank’s Country Assistance Strategy (CAS) for the OECS approved in September 2005 for the period FY06-FY09 proposes a new way o f doing business to help these small states meet the challenges facing them at this critical stage o f their development. The CAS supports the sub-region’s development agenda through two main pillars: (i) supporting growth and improving com etitiveness; and (ii) reducing vulnerability and strengthening disaster r isk management! Accelerating growth in the OECS will largely

’ Given the regional nature o f this project, the PAD w i l l refer to regional issues in addition to specific country issues. I t must be noted that in t h i s PAD, unless otherwise specified, the te rm “region” and associated terms should be interpreted to refer to the OECS member states only, which include Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines, al l members o f the World Bank Group.

World Bank Group Country Assistance Strategy for the OECS for the period FY06-FY09, September 6,2005, p. v

1

depend on the sub-region’s ability to improve competitiveness and strengthen i t s performance in the global economy.

4. There have been many studies o n small states -- a l l o f which tend to make the same point, namely that small states face huge challenges o f size and isolation, and that their prospects rest on standard pol icy improvements that are not unique to small states (governance, trade integration, infrastructure, etc.). In l ine with these observations, the Wor ld Bank has embraced a new approach that focuses o n improved governance, public sector modernization, and enhanced regional integration. The success o f this new approach i s evident in a recent e-government program in the islands o f Cape Verde, where innovative steps were taken to integrate and improve connectivity with the outside world. Technical s a w y and strong political backing opened the way to broad changes in the findamental nature o f government in Cape Verde. The following i s a list o f some o f the key results achieved by the Cape Verde e-government project:

0 Increased transparency 0 Enhanced tax collection 0

0

Reduced opportunities for fraud and corruption Reduced unit cost o f public service delivery

5. An autonomous Cape Verde government unit3 in charge o f implementing technology across ministries - the Operational Information Society Nucleus or N O S I - was created in 19984, and was focused o n efficiency, integration, and transparency in government. With a staff o f just 50 employees, N O S I has led ambitious e-government reforms in the past eight years: it set up a network linking 3,000 computers in the public sector; designed and implemented an integrated financial management system that provides budget information in real time; set up a national identification database unifying information from several public registries, a hospital information system that allows for sharing o f patient records across hospitals; an integrated financial management system (SIGOF) which integrates tax revenue, federal government budget, the Controller’s office and the Treasury, and has developed domestic capacity to design software applications adapted to the needs o f Cape Verde’s public sector.

6. Outcomes o f this project validate the new approach chosen by the Wor ld Bank Group towards small states, i.e. an approach that focuses on issues critical to small states: namely, improved governance, public sector modernization, and enhanced regional integration. In addition, the Cape Verde experience was we l l received by OECS officials, who welcome the lessons that may be applicable for the proposed E-Government for Regional Integration Program (EGRIP) as a way o f ensuring a stronger footing from the start.

7. Public sector modernization has been targeted by various reports as the key to improving efficiency and competitiveness in the region. The OECS Institutional and Organizational

http://siteresources.worldbank.org/EXTFINANCIALMGMT/Resources/3 13217-1 196229169083/4441154-

Originally called Administrative and Financial Reform, or RAF 1 196275288288/4444688-119637 1176805/NOSIcasestudydraft45.doc

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Capacity Review o f the Core Public Sector (IOCR)’ states that “the institutions relating to public sector management need a major overhaul.” Presently, the public sector i s over- emphasizing control o f inputs and compliance with rules and regulations rather than with effectively and quickly delivering expected outputs. If it i s to reduce costs and improve efficiency, the public sector must become more concerned with the cost-effectiveness, quality, and timeliness o f outputs. The need for public sector modernization was echoed by the citizens o f the OECS who participated in a 2005 survey managed by the World Bank.6 Respondents felt that the public sector i s inefficient and poorly managed. The report attributes unsatisfactory quality o f selected public sector services7 to institutional deficiencies such as inadequate managerial autonomy, weak accountability, and ineffective enforcement mechanisms. The report also notes that citizens in the region are receptive to regional approaches and integration.

8. The public sector strategy in the OECS states i s to improve the delivery o f public sector services, improve internal efficiency (including lower costs o f public service delivery), improve coordination between agencies, and increase transparency through the use o f ICTs with the overall objective o f contributing to regional integration. This strategy i s consistent with the lessons learned from the Cape Verde experience.

9. Modernizing the public sector and the delivery o f public sector services through the use o f ICTs could potentially be done in a number o f ways. In order to target the sectors where interventions are most needed, and are also in line with country priorities, specific areas for e-government interventions were selected during a stakeholder workshop held in 2007. In anticipation o f the workshop, the country representatives had submitted their country priorities, and during the workshop, these country priorities were discussed and then matched across countries. Input o n regional priorities was also obtained from the OECS Secretariat, as wel l as from the ECCB. In selecting the specific interventions to be included in the project, in addition to the perceived priori ty by the participating countries, a number o f additional criteria were utilized, in particular the following: (i) i t s l ikely developmental impact and contribution to the public sector modernization agenda; (ii) the extent o f contribution to or impact on pol icy harmonization and regional integration; (iii) likelihood o f achieving early results or “Quick Wins”. Further prioritization took place o n the basis o f (iv) cost o f implementation within available budget; and (v) local capacity for adoption and sustainable use.

10. Ultimately the key public sector areas selected using the above framework were Legal and Regulatory Environment, and Registries and Multi-Purpose Identification Systems in Component 1 , and Public Financial Management, Customs Administration, Tax Administration, and Procurement in Component 2. A performance or results-based approach has been integrated into the project, and in particular, Component 2. The proposed systems upgrades and activities under this component incorporate potential support for results based

OECS Institutional and Organizational Capacity Review o f the Core Public Sector (IOCR), pages 48-49,90. The survey was conducted by Market Research Surveys, Ltd., and managed by the World Bank. Research was

Serious dissatisfaction was expressed with the services o f the police, the courts, public hospitals, solid waste conducted between February and April, 2005.

disposal agencies and agencies responsible for sale o f agricultural produce and environmental protection. 7

3

management. For instance the SMARTSTREAM, Standard Integrated Tax Administration System (SIGTAS), and Automatic System for Customs Data (ASYCUDA) al l support application o f a results focus through management and decision making tools for operational and strategic management reporting'. The integrated e-government project wil l provide the backbone for implementing the proposed reforms.

11. ICT-fuelled public sector modernization in the identified areas will help the OECS countries improve the business environment, and otherwise contribute to private sector development. A s noted in the Doing Business 2007: OECS report, the region does wel l in certain areas, but falls behind on other key indicator^.^ OECS countries fa l l behind on the ease o f getting credit, enforcing contracts and closing a business. Results are mixed for trading across borders, registering property and paying taxes. This project would directly contribute to the ease o f doing business in the OECS by digitizing records, enhancing online access, and facilitating data exchange and processing. These improvements would enhance the ease o f enforcing contracts, filing and paying taxes, and trading across borders. They would also improve the overall quality and timeliness o f the information produced by the various public sector ministries and agencies, thus creating an environment conducive to improved governance and public oversight. In addition, by streamlining the public sector processes and information exchange, the OECS can foster an enabling environment for the fin-ther development o f the private sector so that i t can assume a more active role in future growth.

12. With a significant amount o f help from the EU, C I D A and other donor agencies, the OECS already has a significant head start in the direction o f public sector reforms. Dominica, St. Lucia, and St. Vincent have a few e-government related projects that are planned or currently underway, which are in some cases supplemented by technical assistance focused o n the underlying pol icy reforms. Grenada recently negotiated a Technical Assistance Project that wil l assist the Government to begin the process o f modernizing i t s public sector.

13. In general, across the entire region, much attention i s being directed towards public sector reforms, including the revision and update o f the Legal and Regulatory environment, modernization o f the Budget and Treasury systems, introduction o f new Taxation mechanisms, and the restructuring o f the C iv i l Registry. While significant progress was already achieved in some countries and sectors, much s t i l l remains to be done in the OECS both in the context o f the overall systems' introductiodupgrade, and the revision o f the underlying policies and processes.

14. As mentioned previously, the EGRIP components were selected based on the first Bank mission in February 2007, which met with over 70 decision-makers in al l Member States and stakeholder organizations, a follow-up Stakeholder Workshop in M a y 2007, followed by further consultations in November 2007 and an appraisal and technical discussions workshop in March 2008. The regional consultation processes provided the basis to create the main project components that are classified according to their cross-cutting (horizontal) or sectoral

http://www. fiscalrefo~.net/usaid-egat_fisca1_workshop/proceedings~ar%206-06/0smond-

Doing Business 2007: OECS, Copyright 2006, p. 1

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Kamel%20(SIGTAS)_March%206%202006.pdf 9

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(vertical) nature. component two focuses o n selected vertical applications.

Hence, component one i s devoted to horizontal initiatives, whereas

B. Rationale for Bank involvement

15. This project emerges from an increasingly strongly articulated political wil l and determination for sub-regional cooperation and in particular the realization that cooperation in the area o f e-govemment, understood broadly as the application o f I C T for public sector modernization, can produce important outcomes in terms o f reducing the cost o f doing business, improving public sector efficiency, transparency and accountability, as wel l as lead to more sub-regional harmonization and integration. The project wishes to fol low in the footsteps o f the widely successhl sub-regional cooperation in the area o f telecommunications, and aims at expanding that cooperation to the broader I C T field.

16. Due to the scarcity o f financial resources for e-government development across the region, the Wor ld Bank i s wel l positioned to provide the necessary resources and knowledge to implement this project. By using a regional approach to promote integration, competitiveness, public sector efficiency and transparency, the e-government initiative will provide the countries o f the region the benefits o f economies o f scale and related synergies.

17. This project, consistent with the core principles o f the OECS FY06-09 CAS guidelines, seeks to modernize public administration and rationalize public service delivery to enhance growth, and improve the efficiency and effectiveness o f public services. In addition, i t complements other related Bank activities, notably, support for stimulating growth and improvement o f competitiveness as wel l as improvement o f the quality o f social services.

18. The timing o f the OECS EGRIP project provides an opportunity to effectively leverage o n the findings and recommendations o f the OECS Fiduciary Policy Note completed in October 2007. The project design takes into consideration conclusions o f this comprehensive study which focused o n the issues o f budgeting, financial management, auditing and procurement." The Note provides a wide range o f recommendations aimed to smoothen and make more effective implementation o f government-led programs and initiatives. One set o f recommendations is focused o n improving the efficiency o f the financial management and procurement systems permeating the entire cycle o f public sector activities, which i s particularly relevant to the objectives o f this project and provides h r the r justification to some o f the proposed components.

19. The project is also complementary to other donor activities in the region and i s formulated with due consideration o f the C A R I C O M Connectivity Agenda (2003) and the Action-Oriented E-Government Strategy for Countries o f the Caribbean Region 2004-2007. I t will benefit from the collective experiences o f The Network o f E-Government Leaders o f Lat in America and the Caribbean (RED GEALC), which was established as a broad partnership aimed at promoting horizontal cooperation. The project wil l be closely

The Note recommends improving the efficiency o f project implementation in the OECS countries by (i) 10

contributing to a more efficient use o f limited institutional and human resource capacity, (ii) lowering transactions costs, and (iii) optimizing the use o f public finds, while (iv) maintaining a robust control framework.

5

C.

coordinated with existing programs in the region led by the EU, CIDA, UNDP, OAS, CARICAD and CARTAC, among others, as described in Annex 1.

20. C I D A has already established i t s e l f as a leader in the area o f public finance and has successfully implemented several programs focused on public financial sector modernization and improvement in the Caribbean. I t is currently planning two new initiatives, which would encompass: (1) Continued support to CARTAC (approximately U S $ 7.5 million), and (2) A new project known as Supporting Economic Management in the Caribbean (SEMCAR) which will build on the successes o f Eastern Caribbean Economic Management Project (ECEMP) and Guyana Economic Management Program GEMP (approximately US$17.5 million). As such, i t i s expected that the EGRIP project and the CIDA-sponsored initiatives wil l engage in an active, continuous dialogue, looking for ways to maximize the overall efficiency and synergies o f the proposed activities and avoid potential duplication.

21. Other ongoing work in this area includes the World Bank-financed Dominica Growth and Social Protection Technical Assistance Credit, a similar project in Grenada (Grenada Technical Assistance Credit) and an OECS IDF grant o n regional capacity building. The Dominica credit was prepared in coordination with the EU, among others, and focused on the systemic improvements and capacity building in the areas o f tax and customs. I t was envisioned that some o f the outputs o f this project would be further utilized and relied upon by the EU in preparation o f a larger scale budgetary support operation. A similar project i s currently being prepared for Grenada, and areas o f potential complementarities with EGRIP include components on customs modernization (upgrade to A S Y C U D A World), and Tax Administration Modernization (including information systems upgrades and tax interface with ASYCUDA). The Grenada and Dominica projects both have components related to VAT introduction and Customs modernization, and the EGRIP project wil l improve some Tax and Customs issues not included in these projects, in particular with regards to web- based services and interfaces between systems, as wel l as regional information systems. The OECS IDF grant focuses on regional capacity building in the area o f procurement and auditing, which i s another related initiative that wil l be closely coordinated with EGRIP.

22. The EGRIP will closely coordinate i t s proposed activities with those already implemented by these projects and by others being planned by donors, and will look for opportunities to build upon and complement them whenever possible. To a large extent, focus will be on improving the front-end aspects o f government service delivery to citizens and businesses within a regional framework.

Higher level objectives to which the project contributes

23. The proposed EGRIP aims to contribute to the OECS governments’ strategic objectives o f modernizing the public sector, reducing costs, developing the private sector, enhancing social inclusion, facilitating regional integration, and increasing competitiveness in the OECS.

24. The proposed project, stemming from strong client demand as confirmed directly by the participating countries’ Prime Ministers, should be seen as a complementary and catalytic

6

initiative aimed at reinforcing the efforts on the ground in implementing various public sector reforms and e-government programs across the sub-region. By harvesting the “low hanging h i t ’ ’ in key priori ty areas, as identified by the client countries, and achieving early results, the project expects to create additional momentum to achieve fbrther benefits from highly desired reforms and more robust e-government implementation. I t i s therefore designed as the first stage o f what could become a wide e-government implementation program, ultimately impacting various sectors across the region. Bank experience in countries around the world has shown that developments in electronic government help to increase the use o f information and communication technology in areas other than the public sector, giving rise to positive externalities such as trade development and education, reduction o f the cost o f transactions, and improved country competitiveness in general.

25. In addition, while this project is not primarily directed at private sector development, i t does seek to strengthen the enabling environment for small business development through support for enhanced State-private sector collaboration and improved quality o f public sector services. I t will also provide governments with the tools necessary to “right-size” public sector functions. At the same time, the multi-phase approach utilized by this project wil l allow the OECS countries to reap the ‘ low hanging h i t s ’ o f the reform agenda, while establishing public confidence and demand for further public sector reform on the basis o f tangible, positive results.

26. The EGRIP is consistent with the strategies outlined in the Wor ld Bank OECS CAS, Doing Business 2007: OECS, and the OECS IOCR. I t harmonizes wel l with other Bank and donor activities in the region, i s designed after extensive client consultations to ensure ownership, and i s inspired by the previous success o f other e-government initiatives, such as the Cape Verde experience.

11. PROJECT DESCRIPTION A. Lending instrument

27. The proposed individual E-Government for Regional Integration Projects are designed to collectively constitute the first phase o f a regional OECS for Regional Integration Program. The program will be financed through IDA credits for the initial participating countries: Dominica, Grenada, and St. Lucia. St. Vincent and the Grenadines i s also eligible for IDA and is expected to j o i n the program shortly thereafter in early FY09. The two non-IDA eligible OECS countries, St. Ki t ts and Nevis, and Antigua and Barbuda, may in the future be eligible for IBRD loans, and the program allows for that, but they are l ikely to participate in the program initially on the basis o f donor grants. The program as a whole i s expected to eventually include donor parallel financing in the form o f grants andor concessional lending. However, the Wor ld Bank project design i s not reliant o n donor co-financing materializing, as the project activities have been selected to be self-contained and results achievable o n the basis o f the project activities alone.

28. The proposed instrument is an Adaptable Program Loan (APL), which was considered the most flexible instrument in terms o f facilitating a phased regional approach that can

7

accommodate the various borrowers’ needs in technical assistance, specialized advisory services and targeted catalytic investments.

29. The proposed APL i s at the same time horizontal and vertical”:

a. On the horizontal (country participation) axis, the project will start with a f i rst group o f three IDA-el igible countries (Dominica, Grenada, and St. Lucia) which are expected to be followed shortly thereafter by the fourth IDA-eligible country (St. Vincent and the Grenadines). The two IBRD countries would j o i n based on readiness, eligibility for IBRD lending and availability o f resources;

b. On the vertical (temporal) axis, the program i s structured in two phases. The f i rst phase corresponds to the project described in this document, with two main components focusing on cross-sectoral e-government issues as wel l as specific sector applications, mainly in the public finance area. The second hase i s expected to expand the regional e-government program into other sectors . R

30. Criteria for inclusion in the program o f additional countries include the following: a. Adequate readiness o f the legal framework for e-government, as evidenced,

among others, by legislation in force that facilitates interaction between citizens, businesses and government through electronic means.

b. Adequate readiness o f the institutional framework for e-government, as evidenced, among others, by existence o f a lead ministry or agency with the mandate and adequate staffing to lead the e-government agenda in the country.

c. In the case o f St. Vincent and the Grenadines, confirmation o f IDA lending requirements through an official letter indicating the proposed break-down by sub-components.,

d. In the case o f St. K i t t s and Nevis, and Antigua and Barbuda: (i) confirmation o f government demand to j o i n the program through off icial requests for IBRD lending; and (ii) eligibility triggers for IBRD lending as indicated in the CAS have been met.

3 1. Triggers for moving to a second phase will be the following: a. Satisfactory implementation o f at least 50% o f Phase 1 activities. b. Achievement o f the intermediate outcomes expected by project mid-term,

specifically 1.1, 1.2, 1.3 and 1.5b13 as indicated in the results framework, as verified during the mid-term review o f the project.

l1 Please note that the terms “horizontal” and “vertical” in t h i s paragraph refer to the geographic (country) and temporal (phasing) dimensions o f the program, respectively, whereas in the project description these terms refer to inter-sectoral (or cross-cutting) and sector-specific activities. l2 Additional phases could be agreed, and if so, the program would be amended with the appropriate internal reviews.

As indicated in Annex 3, these intermediate outcomes would be: a) Publication o f outcome-oriented regionally- focused e-government strategy implementation plans for OECS countries; b) Implementation o f key institutional and IT requirements for priority aspects o f a regionally harmonized e-government regulatory framework, as identified by a gap analysis; c) Definition and publication o f regional e-government standards and total cost o f ownership framework; d) Design and implementation o f interoperability framework.

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8

c. Confirmation o f demand by at least three participating countries through official requests for a second phase.

B. Program objective and Phases

32. The overall program development objective is the same as the project development objective, namely to promote the efficiency, quality, and transparency o f public services through the delivery o f regionally integrated e-government applications that take advantage o f economies o f scale.

33. Capacity constraints o f the national public sectors, high administrative costs and diseconomies o f small scale have, for long, prompted efforts in the Caribbean to seek integration and cooperation at the sub-regional and regional level. These efforts have taken three distinct forms: attempts to create a single State; endeavors to establish a common market and economy; and initiatives to pool resources and undertake various utilities jointly. In the context o f our project, regional integration refers to the second kind, namely the implementation o f a harmonized regional e-government framework and e-government applications that are interoperable and deployed to users across the region. Such applications take advantage o f economies o f scale, thus producing time- and cost-savings for governments, businesses and private citizens.

34. The program i s structured in phases, as indicated above. Phase 1 focuses on cross- sectoral e-government issues, as well as o n specific applications in the public finance area (including Public Financial Management or PFM, tax, customs and procurement), and also includes an e-government in health pi lot project (possibly together with preparatory and complementary activities in other social and productive sectors).

35. Phase 2 o f the program i s expected to deepen the assistance provided under Phase 1, while expanding the program to cover other sectors, in particular, health, education, agriculture, tourism, postal, among others that may emerge during the early stages o f implementation o f Phase 1.

36. The program has been structured in phases in order to (1) Ini t ia l ly focus on the most critical areas, and then the second level priorities; (2) To work in i t ia l ly on areas that cut across sectors; (3) To keep the scope l imited init ial ly and build on success in the areas considered to have a higher and more immediate return on investment (as opposed to a full scale public sector intervention).

37. The fol lowing table illustrates the breakdown by country for Phase 1 o f the ML. Countries are expected to j o i n the program in three groups or “waves”, the f i rs t two being IDA-eligible countries and the third group made up o f both IBRD countries. Given that Groups 1 and 2 are expected to j o i n the program with only a 2-3 months difference, the project costs indicated throughout the document refer to these four countries. The lending envelope for each participating country has been estimated at U S $ 2.4 million. The IDA lending for Phase 1 will be U S $ 7.2 million, and will reach U S $ 9.60 mi l l ion after St. Vincent and the Grenadines joins in early FY09. Out o f this total IDA envelope, one third i s

9

counted against the country allocations in the CAS and the remaining two thirds against the special IDA pi lot program for regional projects, as detailed below. The amounts indicated as IBRD are notional, and may be contributed by the countries themselves with own funds or f rom other sources.

- . -

38. The rationale for ut i l iz ing the special regional IDA envelope for this project hinges on the important economies o f scale that will be reaped through the regional approach envisaged by this project and i t s important impact on furthering regional integration, currently high on the political agenda o f the OECS. The positive externalities that wil l accrue to the participating countries by harmonizing policies and implementing common e-government services together, as opposed to “going i t alone” are expected to be substantial and l ie at the core o f the rationale for the project in the first place. In this context, the program f i t s the eligibility criteria o f the IDA1 4 regional program, by promoting regional economic integration, supporting the harmonization o f regional policies and regulations, while at the same time implementing regional programs that build implementation capacity and increase donor harmonization and coordination.

39. Two additional financing issues which will evolve throughout the implementation o f the program and wil l not be fully resolved prior to project launch are (i) the eventual expansion o f the program to cover the two IBRD countries, either through IBRD lending, when eligible, or through donor support (similarly for the non-independent OECS states); and (ii) potential donor parallel financing o f related but coordinated activities. Estimates for potential donor support to parallel programs are currently being discussed with donors and are l ikely to be made available throughout project implementation.

40. Care has been taken to design this project in such a way that i t i s complementary to expected future donor programs, thus avoiding any major overlaps. However, if during implementation it i s established that activities planned to be funded under this project wil l be funded through other donor programs, i t i s expected that the corresponding funds can be reallocated to other necessary activities within the original project objectives in l ine with the spirit o f the programmatic approach, or even cancelled if no longer required. For these cases, jo int outcome monitoring arrangements would be set up.

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41. Since the four IDA countries are expected to be joining the program almost at the same time (St. Vincent and the Grenadines just a few months later than the other three), detailed breakdowns o f project costs have been estimated o n the basis o f the four IDA-eligible countries, sharing the common regional costs o f each o f the project activities o n an equal basis. W h i l e this design implies equal participation by the four countries at the aggregate level, differentiated degrees o f participation within each sub-component and activity have been identified, as depicted in Section D, Project Components (Table 3). These have been estimated on the basis o f the respective priorities and stage o f development attained in that particular area by the participating countries, and wil l be reflected in the specific scope o f work or technical specifications under each o f the activities o f the project.

42. Once started, customization and extension o f specific activities to countries that j o i n at a later stage wil l be borne fully by the latter countries. Throughout project implementation, care will be taken to ensure that the total burden for common regional costs i s shared equally among the participating countries. This may mean that the contributions o f the participating countries towards common regional costs would need to be rebalanced if at any point in time a new country joins the program.

43. Once the triggers for Phase 2 have been reached, the second phase o f the program could be launched. While detailed cost calculations have not been fully established for Phase 2 and subsequent phases o f the program, init ial estimates are summarized in the fol lowing table.

illion)

C. Project development objective and key indicators

44. The overall development objective o f the project i s to promote the efficiency, quality, and transparency o f public services through the delivery o f regionally integrated e-government applications that take advantage o f economies o f scale. Regional integration refers to the implementation o f a harmonized regional e-government framework and e-government applications that are interoperable and deployed to users across the region. Such applications are expected to produce time- and cost-savings for governments, businesses and private citizens as wel l as greater quality o f service provision, including increased transparency for users and the public. The expected benefits would accrue in the areas o f public sector reform, empowerment o f citizens and businesses, and efficiency gains for institutions and end-users through automation and pooling resources at the regional level.

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45. Subsequent phases o f the program, while scaling up different vertical applications, are expected to have the same project development objective. The same type of outcome indicators wil l apply.

46. To measure the progress toward achieving the project development objective and outcomes, key indicators were defined along the categories o f the table below. Further details on determining specific variables, baselines and target values are included in Annex 3. Specific parameters o f indicators as wel l as baseline values will be determined and collected shortly after project effectiveness through a study funded by the project.

Theme of indicator

Efficiency: government cost-savings

Efficiency: user (citizenibusiness) cost and time-savings

Quality: Usage

Quality: Scope o f Services

Quality: Satisfaction

Transparency

Regionalization

Specific PDO Indicators Government financial savings in areas such as public financial management, tax administration, customs and procurement due to new e-government systems ($/country/yr) Estimated users’ time and cost-savings o f new e-government system (measured through standardized methodology for representative transactions) Increase in number o f electronic transactions processed by e-government services funded under the project (total # o f transactions, broken down by service and national/regional, where amlicable) Increase in e-government services offered or upgraded (#) Improvement o f ratings in areas o f functionality, accuracy and usability o f e-government services, as reported by users through satisfaction surveys Improvement o f ratings in areas o f openness responsiveness and access to relevant information, as reported by users through satisfaction surveys New regional institutional framework i s created with adequate capacity to provide regionally integrated e- government services, in accordance with regionally harmonized policies and regulations

47. The specific indicators per component and sub-component, as we l l as baseline and targets for these indicators, where available, are detailed in the Results Framework and Arrangements for Results Monitoring tables in Annex 3.

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D. Project components

2.5 E-Government in Health and Other Sectors 3. Project Management Unallocated 5% TOTAL

48. A number o f candidate areas for project support were evaluated during project preparation and prioritized o n the basis o f a number o f selection criteria, such as: (i) the expressed level o f priori ty and alignment with existing national policies; (ii) the l ikely developmental impact and contribution to the public sector modernization agenda; (iii) the extent o f contribution to, or impact o n pol icy harmonization and regional integration; (iv) likelihood o f achieving early results or “quick wins”; (v) cost o f implementation within the available budget; and (vi) local and regional capacity for I C T adoption and sustainable use.

0.28 0.25 0.15 0.68 0.15 0.83

0.16 0.16 0.16 0.49 0.16 0.65 0.12 0.12 0.12 0.36 0.12 0.48 2.40 2.40 2.40 7.20 2.40 9.60

49. The project has two main substantive components: Horizontal (Cross-Sectoral) E- Government Interventions and Vertical (Sectoral) E-Government. Bo th components were articulated and agreed o n through a regional consultation process involving substantial ongoing input from al l key stakeholders, considering specific client needs in the regional context, implementation capacity, and the challenges identified by I C T sector assessments. A third component for project management i s also included in both phases.

50. The break-down by components agreed with the participating countries i s indicated in the table below. The break-down for St. Vincent and the Grenadines is indicative pending confirmation. Amounts for the two IBRD countries are not included in the table, pending detailed discussions with the respective governments.

l4 Totals do not fully add up due to rounding.

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51. The components are structured along the same logic as an increasing number o f recent e- government strategies, whereby e-government initiatives are classified according to their cross-cutting (horizontal) or sectoral (vertical) nature, as described schematically in the framework diagram of Figure 1 below. Hence, component one i s devoted to horizontal initiatives, whereas component two focuses o n selected vertical applications.

Figure 1. Overall e-government conceptual framework.

52. In light o f the fact that the countries' top priorities are concentrated in the area o f public finance (both o n the expenditure and the revenue side), component two i s the largest o f the project and i s primarily dedicated to these priori ty areas. However, there was strong client demand for including a number o f initiatives outside o f the traditional public finance area, so as to explore e-government applications in social and productive sectors (e.g. health, education, agriculture, tourism, postal, among others). These three areas are considered for inclusion in subsequent phases o f the program. However, given the high priori ty o f health, a specific subcomponent 2.5 is included in Phase 1 o f the program, focused primarily around e- government in health. That same subcomponent may include additional preparatory or complementary e-government activities in other sectors, such as agriculture in Dominica and the postal sector in St. Vincent and the Grenadines. Furthermore, five percent o f total project costs are set aside as unallocated to allow for additional flexibility in complementing activities under the project.

COMPONENT 1 - Horizontal E-Government Interventions (US$3.54 million'5)

53. The objectives o f this component are to strengthen and harmonize national and regional e-government processes, operational ICT platforms and frameworks; to promote more

Al l the cost figures indicated here refer t o the four IDA countries together, given the expected short t ime lag 15

between the first three and the fourth one.

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efficient regionally-based I C T development and strengthen capacity, and to provide an enabling environment to achieve Public Administration objectives in a globally competitive context, and to better serve citizens, businesses and consumers in the region.

54. Emphasis will be given to capacity building o f Public Administration by providing stakeholders with assistance to implement and further improve already harmonized regional and national sector policy, strategy, legislation and related legal and regulatory frameworks, and to develop a structured sustainable means to move forward and improve coordination in e-government o n a regional basis.

55. Subcomponent 1.1 - Policy and Strategy Implementation (US$ 240,000): This subcomponent will build o n existing e-government pol icy and strategy development efforts, notably under EU-funded programs. The purpose o f this subcomponent is to provide assistance in specific aspects o f implementation o f the national e-government strategies, as wel l as provide support for updating and harmonizing e-government policies and strategies across the region through on-going consultation with key actors, as well as provide a framework for regional e-government cooperation activities. This will include assistance in defining the overall parameters o f an interoperability framework and enterprise architectures, which wil l be designed in detail under components 1.3 through 1.5. Within this broad theme, the subcomponent includes the fol lowing activities, among others: (a) Strategic review and assessment, including comparative analysis o f high-level regional e-government vision and goals, global lessons learned, update o f national and regional OECS e-government strategies, as wel l as definition o f detailed implementation action plan; (b) Monitoring and evaluation framework, including clearly defined timeframe, criteria and indicators, as well as detailed baseline and monitoring data collection.

56. Subcomponent 1.2 - Legal and Regulatory Framework Implementation (US$ 360,000): This subcomponent wil l provide complementary contributions to the EU-funded effort to harmonize legal and regulatory frameworks for electronic transactions, focusing on implementation aspects. The subcomponent includes the fol lowing activities, among others: (a) Gap analysis and overall assistance for harmonized legal and regulatory framework development and implementation, which may involve complementary regulatory drafting notably on electronic transactions and digital signatures; privacy and data protection; computer misuse; interception o f communications; and freedom o f information, among others; and (b) Equipment, software and training for implementation o f selected pieces o f legislation.

57. Subcomponent 1.3 - ICT Standards and Total Cost of Ownership Optimization (US$ 500,000): This subcomponent i s aimed at assisting countries in improving their e-government standards and architectures, as wel l as overall public sector I C T management and investment practices. The subcomponent will assist countries in identifying potential savings in I C T projects through such tools as pooled procurement o f software licenses, implementation o f Public-Private Partnerships, and developing frameworks for the assessment o f the total cost o f ownership o f a specific solution (including open source software), among others.. This includes analyzing and recommending common information system architectures and standards, viable mechanisms to support and maintain information systems, and establishing

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sustainable unified policy, strategy and implementing guidelines for on-going optimization. The subcomponent includes the following activities, among others: (a) Assessment o f current standards and architectures, definition o f harmonized e-government standards, interoperability framework and enterprise architecture (on the basis o f Service-Oriented Architectures); (b) Assessment o f I C T management and investment practices, development o f framework for total cost o f ownership analysis and optimization, identification o f potential savings and strategy for pooled procurement o f software licenses; (c) Assistance for pooled procurement o f software licenses on pi lot basis; and (d) Capacity building on standards, service architecture, open source software and Total Cost o f Ownership optimization.

58. Subcomponent 1.4 - Regional E-Government Institutional Framework Strengthening (US$ 1.4 million): This subcomponent will assess the current institutional framework for e- government project implementation and technical support in the participating countries, and wil l provide assistance in the strengthening o f the regional institutional framework for e- government. One option that will be explored through the project, among others, i s the creation o f a self- financing sustainable regional E-Government Center o f Excellence to provide participating countries with pol icy guidance, technical support and capacity building in the implementation o f I C T systems in government, while at the same time implementing key regional projects and e-government applications o n behalf o f the participating countries (such as the regional e-procurement platform), as wel l as focusing on internationally recognized certifications, mentoring and ‘train the trainer’ programs. I t wil l achieve self- financing and future sustainability by provision o f services to the participating governments and the private sector, such as: management o f hardware and software maintenance contracts, application development and hosting, management o f regional information systems (e.g. the e-procurement platform), as wel l as provision o f technical advisory, certification, training and capacity building services, among others. Alternative options for performing the functions o f a regional e-government center o f excellence, include a network o f national- level institutions (such as the existing e-government or I C T units), or integration into a CARICOM-wide e-government center o f excellence or network o f centers. The subcomponent includes the following activities, among others: (a) review o f regional e- government institutional framework, assess options and business plan, and strategic institutional design and implementation action plan, including governance structure, organizational and business model, implementation arrangements, staffing, action plan for the f i rst 18 months, etc.; (b) start-up implementation support for the new regional e- government institutional framework, including assistance in the establishment o f ini t ial service agreements with participating countries, partnership arrangements with international experts from academia, industry and governments; (c) equipment for start-up implementation; (d) Support to national e-government units, through country-based specialists, among others, and assistance to steering committees, including support for enhancing coordination with donors; and (e) Training and capacity building at the national level.

59. Subcomponent 1.5 - Automated Registries and Multi-Purpose Identijication Systems (US$ 1.04 million): This subcomponent will review the current status o f key government registries and support the creation o f harmonized National Identification Systems as a core shared service to be used throughout all e-government platforms, integrated with other key

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information systems at the national and regional level, where appropriate (Civ i l and Business Registries, Immigration Systems, and Election Systems). The subcomponent includes the following activities, among others: (a) Needs assessment for national ID system, evaluation and simplification o f processes as needed, and design o f Multi-Purpose Identification System as a core piece o f the overall interoperability framework; (b) Development and implementation o f system, including software development, modernization o f business and c iv i l registry, election card system, if required, and integration o f back end systems and databases; (c) Implementation assistance in core user agencies; (d) Pooled procurement o f necessary equipment and National ID cards; and (e) training and consensus building.

COMPONENT 2 - Vertical E-Government Interventions (US$4.93 million)

60. The objective o f this component i s to harmonize and improve key e-government systems by focusing on specific interventions in core areas o f public finance. This area was identified as a national and regional priori ty by al l stakeholders, due to regional commonalities that can be used as a pragmatic basis to begin to harmonize regional e-government systems, to modernize their Public Administrations, to evolve guidelines, and to catalyze further integration in regional processes.

61. In many aspects, the activities included in this component will build upon, and complement results achieved by the CIDA-sponsored ECEMP program, which is focused on the modernization and capacity-building o f the public finance sector. C I D A is currently in the process o f preparing its new SEMCAR program, which may include further support for the modernization o f core PFM systems, including tax and customs. To that end, C I D A has recently launched an IT diagnostic study through CARTAC, which wil l inform the design o f SEMCAR as wel l as prove a useful input to the detailed activities foreseen under EGRIP. If this type o f support is not forthcoming v ia SEMCAR, CIDA, in concert with other donors, wil l explore other means to address the modernization o f PFM systems. In light o f that, EGRP will focus o n web-based front-end systems, for service delivery as wel l as interfaces and interoperability among systems, thus minimizing the potential areas for overlap and maximizing the overall efficiency and synergies o f the proposed activities. EGRIP and SEMCAR wil l be closely coordinated throughout implementation.

62. This component wil l coordinate closely with Component 1 (Horizontal E-Government Interventions) to ensure that the desired vertical goals are supported by the newly developed horizontal tools, standards and regulations.

63. Subcomponent 2.1 - E-Government in Public Financial Management (US$1.28 million): This subcomponent will upgrade, integrate and bring to a full capacity existing public finance systems - budget, treasury and financial reporting, (in most cases, implemented o n the basis o f the “SmartStream” software solution), provide better services and information to government employees and the public in general, and avoid duplication o f work in a context o f scarce human resource capacity. This will involve, among others, the full implementation and integration o f budgeting, accounting and reporting modules; full implementation o f the HR module, if applicable; update o f the underlying processes and control framework; design o f interfaces to link budget, revenue (tax, customs), expenditure and reporting modules, as

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wel l as development o f a web-based public information system, aimed at providing information to the public at large on government finances in an easily understandable format. This subcomponent wil l include the fol lowing activities: (a) Overall assistance for PFM sub- component implementation; (b) Gap analysis between government financial management needs and the PFM systems capabilities; (c) Using the results o f (b) as an input, upgrade and integration o f the HR, budgeting, accounting and financial reporting modules and databases; development and implementation o f comprehensive, results-oriented budget classifications and standardized financial reporting formats; (d) Development o f user-friendly interfaces linking budget, revenue (tax, customs), expenditure and financial reporting modules into a single public finance system; (e) Development o f a web-based public information system, aimed at providing information to the public at large on government finances in an easily understandable format; (f) Development o f the PFM system operations manualhser guidelines, and personnel training; and (g) PFM system maintenance contract.

64. Subcomponent 2.2 - E-Government in Tax Administration (US$ 1.14 million): This subcomponent i s aimed at developing an on-line registration and electronic tax filing subsystem to interface with the tax management system. I t i s expected that the current core tax administration system, SIGTAS, will be upgraded or migrated with the support o f a parallel C I D A regional program. The on-line filing module wil l be designed so that i t can interface with any underlying core tax administration system, and will allow for integration with the banking system for payments and refunds, including through a future regional payments gateway. This subcomponent wil l also evaluate opportunities to share tax administration system support through the regional center o f excellence or other similar structure. The subcomponent includes the following activities: (a) Overall assistance for tax system sub-component implementation; (b) Design, development and implementation o f on- l ine registration and e-filing system; (c) Tax system personnel training and user manuals; and (d) Tax system maintenance contract.

65. Subcomponent 2.3 - E-Government in Customs (US$ 885,000): This subcomponent i s aimed at creating a regional customs information sharing network within the context o f the upcoming OECS Economic Union. This will allow for interoperability o f various customs systems over heterogeneous regional platforms, as wel l as sharing and crossing o f information among public agencies involved in the export and import processes. I t i s expected that a parallel C I D A regional program and existing Wor ld Bank programs in some o f the countries wil l support the migration to more modem versions o f ASYCUDA. This subcomponent i s therefore not expected to assist in that area, but will support any additional systems upgrades in particular the implementation o f an electronic filing module, where required, maintenance contracts, well-defined interfaces with PFM and tax administration systems, as wel l as training. The subcomponent includes the fol lowing activities: (a) Overall assistance for customs sub-component implementation; (b) Regional customs information network, including harmonization and aggregation o f trade data, and implementation o f the on-line electronic manifest interchange module, among others; (c) Customs system upgrades including electronic filing module and interface with PFM and tax systems; (d) Customs system personnel training and manuals; and (e) Customs system maintenance contract.

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66. Subcomponent 2.4 Electronic Government Procurement (US$ 800,000): This subcomponent will create a regional e-procurement platform, based o n the successful experience o f the OECS Pharmaceutical Procurement Service (PPS). This platform wil l ini t ial ly allow for the publication o f online notices and award o f contracts while eventually moving to a transactional system for competitive tendering. This subcomponent will explore alternative approaches including a Public-private partnership (PPP) for implementation o f the system. While a full-fledged outsourcing PPP may not be a viable option in this context, intermediate PPP models may be explored. The subcomponent includes the fol lowing activities: (a) Design and implementation o f an action plan for pooled procurement in the OECS, including assessment o f options for a PPP framework for e-procurement; (b) Development o f a regional e-procurement platform and transactional system for competitive tendering; (c) Upgrading and integrating to the regional e-procurement platform the systems o f the OECS PPS and related capacity enhancement; and (d) Application o f the regional e- procurement platform and the PPS experience to other types o f goods and services.

67. Subcomponent 2.5 E-Government in Health and Other Social and Productive Sectors (US$ 830,000): This subcomponent wil l provide assistance in the implementation o f a regional pi lot project in health management information systems, and may be complemented with small preparatory and/or complementary activities in other social and productive sectors, such as agriculture and tourism, as wel l as education, among others. The subcomponent includes the following activities: (a) Implementation o f a regional e- government pi lot project in the health sector, through, in particular the design and implementation o f a regional health management information system, which may include facilities management systems, electronic patient records, regional information network and on-line tools for Health Ministries; (b) Preparatory activities and/or complementary support to existing e-government initiatives in other social and productive sectors, notably agriculture and tourism, as we l l as education, postal sector, or others as may be identified in the early stages o f the project.

COMPONENT 3 - Project Management (US$650,000)

68. This component will support the establishment o f the Regional E-Government Unit (REGU) described below, under the direction o f an overall Project Manager. The REGU will also include specialized staff located in the agencies identified in each country as focal points for the project, thus assisting in project implementation at the local level. T o help manage the fiduciary aspects o f the project, there will be a Procurement Specialist, and a Project Accountant. There i s also a provision for office space and equipment, as wel l as other operating costs. Finally, there are resources devoted to community outreach and public awareness, as we l l as annual external audits.

UNALLOCATED (US$480,000)

69. Five percent o f total project costs are set aside as unallocated to allow for additional flexibility in complementing activities under the project.

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E. Lessons learned and reflected in the project design

70. The design o f the project reflects key lessons learned from previous operations in the OECS, including Grenada and Dominica, and elsewhere in the world, from the Doing Business report, and the C F M C P A R s done in the region.

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a.

b.

C.

d.

e.

f.

The following i s a summary o f the key lessons incorporated in the project design:

Work in the OECS states has shown the critical importance o f having a harmonized regional approach. The EGRIP project takes a strategic approach to assisting in sub- regional cooperation by uti l iz ing a regional approach in virtually al l its components, including the e-procurement component. The EGRIP project also demonstrates i t s regional commitment through the key roles o f regional organizations such as the OECS Secretariat, the ECCB, ECTEL, CARTAC and CARICAD, among others The need for reform to address areas that will show early, visible results to build strong ownership as the reform process moves forward to address more dif f icult issues. In this regard, the Bank i s quite experienced and has a r ich knowledge base in areas o f work related to modernization o f Tax, Customs, Finance, and Procurement - key areas for the EGRIP project. Hence the project i s well-placed to demonstrate early positive results in these areas. Small economies with severe capacity constraints in the public sector and faced with a relatively high vulnerability index, inclusive o f periodic natural disasters, may require longer adjustment periods and greater f lexibi l i ty on the part o f donors. This is reflected in the design o f the project which has two phases under the APL, and i s expected to benefit from coordinated donor assistance. The need for adequate private sector participation and commitment. Experience from previous similar Bank projects suggests that i t i s important to secure participation or input from the private sector through consultation, and to continue to devolve fbnctions from the relatively public sector to the private sector. The design o f this project has benefited f rom input from consultations processes and consultations with the private sector, e.g. under the auspices o f the e-procurement sub-component Projects that build institutional capacity and utilize existing Government systems and structures for implementations are more l ikely to succeed and be sustainable than projects that rely only on self-standing Project Implementation Units. At the same time i t i s important to have a clear delineation between the national and the regional implementation arrangement. Both lessons learned have been considered in the preparation o f this project. Even though OECS countries have performed well in Doing Business 2007 report, there are some o f regulatory and institutional areas for fbrther improvement. This project has been designed taking in consideration those recommendations o f improvement such as harmonization o f taxes and property registration where the OECS member countries continue to use different legislation. The component Legal and Regulatory Framework wil l provide complimentary contributions to the EU-funded effort to harmonize at the regional level, the regulatory framework for electronic transactions. The project also

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g.

h.

1.

addresses one o f the key recommendations made in this report, in relation to payment o f taxes i.e. the need to allow electronic filing and payment o f taxes. This project supports the institutional strengthening o f the public financial management function through addressing some weaknesses in public sector financial management that apply across a l l or most countries. In many areas the proposed regional nature o f the project wil l hopefully enhance the impact and cost effectiveness o f the proposed interventions. The ro l l out, training and systems development in the areas o f government budgeting, accounting and reporting, and increased functionality o f the systems are also in l ine with OECS Fiduciary Policy Note and C F A A recommendations. The CPAR of the OECS States (Dominica, Grenada, St. K i t t s and Nevis, and St. Vincent and the Grenadines) identified several instances that demonstrated the lack o f capacity and lack o f transparency in the area o f procurement. The more recent CPAR for Dominica (June 2003) had similar follow-up recommendations for the OECS states which included the need for a sound, harmonized regime for public sector procurement, appropriate pol icy oversight arrangements at the regional and national levels, better economies o f scale at the regional level, a comprehensive regional capacity-building strategy, and development o f an appropriate set o f tools to facilitate implementation o f the harmonized public sector procurement framework. The EGRIP project attempts to address the capacity issues as related to procurement. In addition, the e-procurement pi lot contributes to the increased transparency o f the procurement process. Final ly the regional nature o f the pi lot and the project overall, also addresses the regionalization issues that were brought up in the CPARs. Finally, the project is building o n some lessons learned from Public Sector Modernization efforts in Grenada that have shown the importance o f taking a strategic, incremental approach to public sector modernization versus a “big bang” approach which takes time to produce results and can easily tax the capacity o f oversight agencies to manage the process. E-government experiences from diverse locations, f rom the islands o f Cape Verde to the province o f Nova Scotia, are also brought to bear o n the design o f this project, both in terms o f institutional design and negotiations with vendors to achieve volume discounts. All th is i s reflected in the project design which takes an incremental approach by addressing primari ly the core public finance area first and by attempting to achieve economies o f scale through regional cooperation.

F. Alternatives considered and reasons for rejection

72. Alternative 1 : individual country approach instead of the proposed regional approach. Over the past five years the OECS region has actively organized workshops, conferences, and e-readiness studies to determine a way forward in regional e-government cooperation. Yet, only a few projects that would implement recommendations from these studies have been initiated o n the ground, notably in the public finance area, where a large degree o f regionalization has taken place. It remains conceivable for each country to continue to ‘go i t alone’ and only cooperate ad hoc. While upfront costs for that approach may be lower, every indication suggests that over time it would become increasingly expensive and strategically detrimental, if not socially and economically irresponsible to other countries in the region.

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73. E-Government, by definition, increases interdependence between ICT, policies, and the legal and regulatory framework. In an increasingly globally-connected world o f rapid-paced change, there i s continuing need for increased collaboration, as well as for an institutionalized framework to collaborate, to assess and to address increasingly complex areas. National and regional systems must be able to update compatibility with global developments, and address evolving global priorities such as security on an on-going basis in their technical, legal and physical dimensions. This project will contribute a framework for faster proactive learning for decision-makers to be better informed, more enfranchised in world developments and equipped for responsible action. I t also increases transparency and accountability. This platform should also contribute to greater regionally institutionalized robustness to help accelerate recovery, In view o f the region’s historic susceptibility to shocks, as wel l as concerns about border integrity while promoting tourism and trade, and climate change, a regional approach becomes even more important.

74. As mentioned in the World Bank CAS for the OECS, regional integration wil l play a significant role in increasing competitiveness in the region. N o t only wil l regional integration enhance growth, but it wil l also reduce the cost o f implementing projects o n a regional level. Donor activity in the region will be far more cost-effective if the OECS countries can work together on a regional initiative. A s small island developing states, progress i s hindered by diseconomies o f scale where each island is isolated and forced to initiate independent capital investment strategies. In the face o f an increasingly competitive global environment, the OECS must work together to develop a regional strategy that enhances cost-effectiveness through increased economies o f scale.

75. Alternative 2: invest in one single major application instead of in a number of smaller initiatives. The Member States deliberated on the form that the project should take and considered whether i t would be more advisable to invest in one large high-profile e- government project as opposed to seeding many smaller efforts. The diversity increases capacity building through shared experiences, and reduces risk that potential contingencies in any areas compromise achieving larger project objectives. The approach decided for the project is also consistent with the aim o f achieving “quick wins” through small catalytic investments, as opposed to a long drawn process covering one single area, which, if it fails, would compromise the project as a whole.

76. Alternative 3: develop e-government through Public Private Partnerships (PPP) exclusively. At an earlier conceptual phase some suggestions were put forward to consider exploring Public Private Partnerships (PPP) as a main vehicle for e-government implementation. Due attention i s being given to ensure e-government applications that are sustainable, including financial aspects. Whi le PPP’s may offer a source o f potential added- value over the longer-tern, i t was felt that the nascent regional e-government cooperation being developed does not yet have sufficiently robust governance capacity to deal with the added managerial challenges o f a full-fledged PPP e-government implementation approach on a regional level, at least in terms o f setting the init ial project scope. The project puts priori ty on operational catalytic quick wins, to prove capability and increase attractiveness to donors, investors, private sector, and put the Member States in a much stronger position to assess true growth requirements based on benchmarks and to negotiate PPP’s in subsequent

22

stages through follow-on projects. A small scale PPP is nonetheless under consideration, on a pi lot basis, for the e-procurement system.

77. Alternative 4: traditional public sector reform project with less emphasis on ICTs. The past year has seen increased broadband connectivity in the OECS and decreased overhead costs for broadband access, combined with spectacular increase worldwide in novel broadband applications providing a prol i f ic array o f new web-based and mobile communication and collaboration, including video. Given this background, the Member States recognize that they now have the potential to capitalize o n their regional achievements in telecommunications and on their e-government ‘lessons learned’. By leveraging ICTs towards public sector reform objectives, the Member States expect to achieve more impact than would otherwise be possible without ICTs.

111. IMPLEMENTATION A. Partnership arrangements

78. The project will be closely coordinated with donor activities in the region, notably the EU e-government programs and budget support assistance, CIDA’s new SEMCAR program, as we l l as other programs being supported by the CDB, OAS, UNDP, CARTAC and CARICAD, among others. Opportunities are being actively sought for tight coordination o f donor activity in this field, including the option o f co-financing o f project activities. Whi le exact arrangements for co-financing could not be concluded within the short space available for approval o f this IDA operation, discussions with donors are progressing and it is expected that specific arrangements wil l be made in the early stages o f project implementation, at which point a determination will be made as to any eventual reallocation or cancellation o f project funds.

B. Institutional and implementation arrangements

79. The project wil l be implemented by the OECS Secretariat, Regional E-Government Unit (REGU). For effective project implementation, the organizational structure wil l be defined at two levels: regional and national.

a. At the regional level, two new structures wil l be created, the Regional Technical Committee (RTC) for the project and the regional E-Government Unit (REGU), which wil l be a specialized unit within the OECS Secretariat, the implementing agency for the project.

b. At the national level, the project will be coordinated by the respective I C T or e- government units, which will be the national focal points for the project and wil l provide assistance to the REGU in implementing the relevant activities at the national level. The national focal point wil l be in charge o f the day-to-day management o f the technical and logistical aspects o f the project at the national level, including the work program, coordinating with the relevant ministries and departments, and the preparation o f terns o f reference and technical specifications. These units wil l coordinate their work and receive guidance from

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existing national e-government or I C T steering committees (NSCs). No new structures at the national level are being created for this project.

80. The R T C wil l be responsible for providing overall pol icy guidance to the REGU including monitoring and evaluation o f implementation progress and addressing implementation bottlenecks. Detailed description o f roles and responsibilities as well as composition o f the Steering Committees (RTC/NSCs), the implementing agency and the national focal point units will be included in the Project Operations Manual.

8 1. Given the multisectoral and regional nature o f the project, the R T C will be comprised of country representatives appointed by the participating governments at the level o f Permanent Secretary or higher, as wel l as the OECS Secretariat. I t wil l also include representatives from the other OECS states, CARICAD, CARTAC, ECCB and ECTEL, o n an advisory role. The R T C will be chaired on a rotating basis by the participating governments. The REGU will act as the executive secretariat o f the RTC. Any major pol icy decisions requiring the agreement o f the Heads o f State wil l be channeled through the OECS Secretariat to the relevant OECS Authority Meeting.

82. The REGU will be responsible for the day-to-day administration o f the project, in its technical, procurement and financial aspects (project hnd f low wil l be handled centrally). The REGU will report directly to the OECS Secretariat, wil l seek guidance from the RTC, and will be responsible for providing timely reports to the governments, the Bank and other donors. The REGU will be staffed with highly qualified technical staff selected from among the participating countries. Technical staff from CARICAD, CARTAC, ECCB and ECTEL may also act as advisors to this unit, as needed. This unit will consist o f a Project manager, as wel l as a procurement specialist and a project accountant. I t will be assisted by one fully paid local specialist per participating country, who wil l be staff o f the REGU located within existing I C T or e-government un i t s at the national level. Once alternative options are assessed, i t i s possible that during project implementation a new Regional Institutional Framework for E-Government (including the option o f a Regional Center o f Excellence) may emerge out o f the REGU, to support broad e-government implementation at the regional level, manage regional platforms and provide technical support.

83. At the national level, the project wil l take advantage o f existing structures and no new mechanisms will be created. The project wil l be implemented at the national level by and wil l provide support to existing national I C T or e-government units, and will be coordinated by existing national I C T or e-government steering committees or task forces. The country- specific details are provided in Annex 6.

84. The diagram below summarizes the key elements o f the overall implementation arrangements. More details o n the implementation arrangements are provided in Annex 6.

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Figure 2. Implementation arrangements.

OECS Secretariat

.............................................................................................................................................................

+ Institutional Framework

................... for E-Government

I

Committee E-g overn men t unit (REGU)

! Regional

b

Agency Agency Agency

! National

..............................................................................................................................................................

C. Monitoring and evaluation o f outcomes/results

85. Monitoring and Evaluation (M&E) o f project components and sub-components wil l be a streamlined, integrated aspect o f project implementation and management. The fol lowing arrangements are made for this project (more details can be found in Annex 3): . Some indicators may be selected as informal indicators, which wil l be useful for

fol lowing the results and successes o f each sub-component, but wil l not be considered binding to the project’s monitoring and evaluation framework. This may be the case with indicators for which data collection may be more ambitious or challenging, or where sustainability or reliability i s currently not known. An M&E training will be conducted by experts o f the Wor ld Bank for the REGU and their M&E delegates at the time o f project launch. The training wil l cover the basics o f (a) monitoring and evaluation frameworks, (b) different types o f indicators, including impact and outcome indicators, (c) collection efforts, (d) reporting requirements for the World Bank project. After the training, the national focal points wil l be asked to present their plans for data collection through the lifetime o f the project, and commit to supplying the REGU with (1) baseline data within a month o f project signing and (2) updates on the actuaVproj ected data during each World Bank supervision mission. Data collection and reporting wil l be the ultimate responsibility o f the REGU and national focal points.

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. Data collection and reporting should be automated where possible, and be written into the TORS where sub-components such as portals or applications are implemented by a vendor. For example, an application should be delivered such that i t counts, for example, i t s unique users, downloaded forms, and transactions, and i s able to create a simple report o f aggregated numbers at regular intervals, or on demand. Associated costs need to be written into the budgets for the sub-components. A budget for survey-based collection o f results data will be provided under the project. The mid-term project review may offer the opportunity to amend the indicator series, or target values based on evolving circumstances.

. . D. Sustainability

86. The results o f the project are expected to be sustainable given the strong emphasis o f the project o n institutional strengthening and capacity building, as well as o n identifying models for sustainable technology management, through total cost o f ownership analysis. In addition, as a result o f the project, i t is l ikely that a new regional institutional framework for e- government wil l emerge, on the basis o f a number o f alternative models that will be assessed. This new institutional framework for e-government sustainability will be strongly anchored in the institutional framework o f the OECS Economic Union, and will become the major guarantor o f the future sustainability o f the project as a whole. The exact financial model to ensure the sustainability o f this new framework will be defined in the early stages o f the project. I t i s expected that potential service revenue streams may involve maintenance contracts, technical advisory fees, application development and hosting, management fees for regional information systems (e.g. the e-procurement platform), as wel l as revenues derived from consulting, training and capacity building activities, among others.

E. Critical risks and possible controversial aspects

87. The potential risks and efforts to mitigate them are included below:

Critical R i s k s

Project Complexity and Institutional Capacity o f participating institutions to project manage and coordinate across Min is t r ies I agencies involved; possible competition between Ministr ies; and involvement o f multiple countries

Governments readiness to engage at the regional level in pooled procurement o f software licenses and IT support services

Risk Assessment S

S

Mitigation Measures

The proposed project will include substantial support for capacity building, following international good practices in e- government, project management and monitoring and evaluation. The project team w i l l strive to reduce complexity by applying existing working models, and coordinate between countries by keeping the project aligned on clear measurable outcomes, full stakeholder involvement, a communication strategy, and by learning from experiences and sharing knowledge in roll-out throughout the sub-region. The proposed project’s key design parameters w i l l include (i) emphasis o n cost savings thanks to regional cooperation, through identification o f best practice “quick wins” with good likelihood for success; (ii)

Residual Rating S

M

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Resistance of public sector employees to support transition to regional e-government applications

High turnover or attrition of public sector employees

Non-aligned expectations and inefficiency among donors arising from lack o f coordination

Limited enabling environment for electronic and mobile transactions

National political priorities not aligned with the regional integration agenda in the field o f e-government could hamper decision-making, and outcomes FM Risk Rating

Procurement Risk Rating

Overall Risk Rating ow; M = Medium; S = Substantial

M

M

M

M

M

S

H

S H = High.

F. L o a d c r e d i t conditions and covenants

building on existing models o f regional cooperation, e.g. through the OECS Secretariat and ECTEL; (iii) flexibility, to allow counties to j o in the program on a readiness basis. While the current attitude towards e-government appears to be positive, the project w i l l strive to identify Change Management Champions to lead the implementation. Capacity building and communications will be designed to promote public sector employees’ alignment wi th the e-government program’s goals, policies, and procedures. Staff o f the REGU wi l l be selected based on qualifications and recruited on the basis o f competitive salaries under consulting contracts, so turnover i s expected to be limited. With regards to broader public sector, capacity building and communications under the project will provide public sector employees’ with opportunities for professional growth. Project scope i s contained to a robust group o f key directly involved stakeholders. Longer-term the project aspires to create a platform to progressively improve donor coordination in the region. The project goal i s not to deploy the most recent experimental ICT, but to consolidate existing efforts and build on proven solutions and “quick wins”. The project will be designed as a tool to support and implement already ongoing public sector modernization efforts. Existing models o f regional cooperation w i l l be built upon, such as the successful ECTEL. The project has incorporated selected lessons learned from the CFAA to protect against the more obvious FM risks. See Annex 7, for a detailed FM action plan. The project has incorporated selected lessons learned from the CPAR to protect against the more obvious procurement r isks. See Annex 8 for a detailed Procurement action vlan.

L

L

M

L

M

S

S

M

88. During Negotiations: the Governments presented to IDA: 1) a draft subsidiary agreement to be signed between the participating Governments and the OECS Secretariat; 2) a draft procurement plan for the f i rst 18 months o f the project.

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89. By Effectiveness: 1) the Governments wil l sign the subsidiary agreements with the OECS Secretariat; 2) the Governments and the OECS Secretariat will adopt the Project Operational Manual; 3) the Regional E-Government Unit (REGU) will be established, through the recruitment o f i ts core staff, including Project Manager, Procurement Specialist and Project Accountant; 4) the Regional Technical Committee (RTC) wil l be created, through appointment o f the respective representatives by the participating governments and institutions.

IV. APPRAISAL SUMMARY A. Economic and financial analyses

90. The Economic and financial analysis o f Technical Assistance Operations such as the proposed OECS EGRIP, traditionally focus o n the broader economic impact o f the activity rather than attempting to calculate a rate o f return. The key impact o f the activity wil l be through indirect effects. These effects, however, are o f great importance for the higher-level objective to create a political and economic union within the OECS. The project wil l create necessary conditions for this union. However, the project will also support a small number o f investment activities with a high rate o f return, sufficient to provide an expected positive rate o f return within a few years o f implementation.

91. The necessary conditions achieved through the project will include steps towards a (i) Fiscal consolidation, (ii) Expenditure Management, (iii) a common labor market, (iv) Private Sector Development, (v) VAT harmonization, (vi) improved customs procedures and (vii) tax collection.

92. One particular investment component was analyzed in depth, the Regional E- Procurement platform, and it is estimated that i t will create savings in the amount o f U S $ 8.9 mil l ion to US$ 26.9 million, within the first few years o f operation. Compared to a total cost o f the project in the range o f under US$ 10 million, a break even can be expected within the f i rs t three years o f operation.

B. Technical

93. The main areas o f potential concern f rom a technical perspective relate to the design, implementation, operation and maintenance o f complex I C T systems to be implemented through the project. To minimize the risks o f potential delays, cost overruns or performance mismatch in the implementation o f the systems, the project will implement the fol lowing measures:

a. Place special emphasis in the utilization o f modem I C T systems design, security, standards and interoperability methodologies and frameworks, including the use o f a total cost o f ownership approach, modular design, and web-based service- oriented architecture, among others.

b. Adopt standardized I C T systems procurement methods, bidding documents, and contracts, with embedded service-level agreements.

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c. Build capacity on a constant basis throughout the project in the participating agencies as well as through the eventual creation o f a new regional E-Government Institutional Framework.

C. Fiduciary

94. Financial Management. Financial Management responsibilities wil l be assumed by the Regional E-Government Unit (REGU), established under the auspices o f the OECS Secretariat. An effort would be made to utilize to the maximum extent possible capacity already existing within the OECS Secretariat, however, to meet the financial management requirements defined by the Wor ld Bank policies and guidelines a set o f additional actions will need to be implemented prior to project effectiveness. Details pertaining to the project financial management arrangements are provided in Annex 7. The overall project financial management risk i s determined to be Substantial.

95. Procurement. As mentioned in section B o f Annex 8, the overall project r isk for procurement i s considered “high”. The procurement risk pertains to the fact that the REGU will be established and staffed after the project becomes effective. To mitigate the associated risks, i t was agreed that the fol lowing measures should be observed: (i) submission to the Bank o f a procurement plan for the f i rst 18 months o f the project (by negotiations); (ii) establishment o f the REGU and recruitment o f a qualified Procurement Specialist; (iii) training o f key project staff within the REGU in World Bank procurement procedures; (iv) preparation o f a project operational manual; and (v) establishment o f a procurement filing system satisfactory to the Bank.

96. The general description o f various items under different expenditure categories i s described in Annex 8. The Borrower will develop a Procurement Plan for project implementation which provides the basis for the procurement methods. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

D. Social

97. The project i s expected to have only positive social impacts. By reducing the cost o f interacting with governments and improving the efficiency o f government operations, the citizens o f the OECS wil l see indirect improvements in overall public sector service delivery.

E. Environment

98. The project will not finance the construction o f any physical infrastructure or other facilities, apart f rom minor works that may be required within existing buildings for internal refurbishing o f facilities, such as server rooms, to accommodate I C T equipment and any ancillary electrical or air conditioning installations. Hence, there are no adverse environmental impacts expected from the project. Indirect positive impacts may be derived

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from a small reduction in use o f transportation services in response to improved electronic delivery o f public services.

F. Safeguard policies

99. The proposed project i s considered Category C and hence no safeguard policies are expected to apply.

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP 4.01) [ I [XI Natural Habitats (OP/BP 4.04) [ I [XI Pest Management (OP 4.09) [ I [XI Physical Cultural Resources (OPBP 4.1 1) [ I [XI Involuntary Resettlement (OPBP 4.12) [ I [XI Indigenous Peoples (OPBP 4.10) [ I [XI Forests (OP/BP 4.36) [ I [XI Safety o f Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OPBP 7.60)* 11 [XI Projects on International Waterways (OPBP 7.50) [ I [XI

G. Policy Exceptions and Readiness

100. There are no policy exceptions and the project i s ready to be implemented.

* By supporting the proposedproject, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

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Annex 1: Country and Sector or Program Background

OECS COUNTRIES: OECS E-Government for Regional Integration Program

Regional Background and CAS Linkage

1. The OECS countries are at a critical juncture in their development. Three decades after gaining independence, they are struggling to find new sources o f growth and to reduce vulnerability against a backdrop o f an increasingly competitive global environment, the looming end o f trade preferences, and dwindling or log-jammed donor resources. These challenges are further compounded by fiscal imbalances, high debt ratios, and their inherent vulnerability as small island developing states (SIDS). Within the past decade, the countries o f the Eastern Caribbean have been faced with difficulties stemming from (i) globalization and trade liberalization, (ii) declining revenues from the agricultural sector, (iii) overcoming natural disasters and the elements with their effects on productive resources and capacity, and (iv) blocking the adverse effects o f external shocks to the economy. In addition, governments have become increasingly concerned with improving labor productivity, increasing national competitiveness, and alleviating poverty.

2. As small states, a l l OECS countries face a vulnerability to external shocks, including natural disasters, limited economic diversification opportunities, high dependence on external trade, high cost o f public service provision due to diseconomies o f scale, and l imited capacity in the public and private sectors. In a few areas, these diseconomies o f scale and capacity constraints have been successfully overcome through regional initiatives and projects. Going forward, leveraging regional approaches more aggressively will be critical to the sub-region’s efforts to revive growth, improve competitiveness and reduce vulnerabilities. However, a coordinated regional approach by the OECS governments i s often thwarted by differences in their electoral cycles and national priorities.

3. These multi-faceted challenges have prompted the Wor ld Bank Group to design i t s assistance strategy in a way that reflects both the national and the regional development needs o f these countries. In order to address the pressing developmental concerns o f the region, the Wor ld Bank’s CAS for the OECS approved in September 2005 for the period FY06-FY09 proposes a new way o f doing business to help these small states meet the challenges facing them at this critical stage o f their development. I ts guiding principles are: (a) supporting regional integration and coordination efforts; (b) partnering and harmonizing in both lending and analytical work with other development partners; and (c) the active pursuit o f simplification and capacity building initiatives tailored to small states. The CAS uses these principles and supports the sub-region’s development agenda through two main pillars: (i) supporting growth and improving competitiveness; and (ii) reducing vulnerability. l6 The OECS E-Government for Regional Integration Program (EGRIP) i s consistent with the guiding principles o f the CAS and directly tackles elements contributing to both o f the main pillars on both the regional and national levels by facilitating public sector modernization and greater social inclusion.

l6 World Bank Group Country Assistance Strategy for the OECS for the period FY06-FY09, September 6, 2005, page v.

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Public Sector Reform

4. In order to better understand perceptions in the Eastern Caribbean regarding various aspects o f public sector reform, a public opinion survey17 was conducted in several o f the OECS countries in mid-2004. The survey probed a number o f interlinked issues - including what concerns people in their daily lives, their current level o f satisfaction with public services, which players were the most trusted in the pol icy arena, their awareness o f public debt, and how they viewed the benefits and r i sks o f regionalization. The poll found, among other things:

0 When asked, respondents felt the public sector is inefficient and poorly managed and they perceived national debt to be a serious problem. However, most people did not believe that downsizing the public sector wil l reduce the public debt. That is, they thought public sector reform is not about making government smaller but, rather, making i t more efficient. Many were receptive to current regional approaches and integration, with 85% indicating that regionalization o f public services and functions would help make the region more economically competitive and, by implication, create more employment opportunities.

0

5. The po l l suggests that public sector reform initiatives that lead to a better managed and more efficient public service wil l have a strong likelihood o f being supported. Specifically, actions that would result in visible and concrete improvements for citizens should be given priori ty while building the capacity o f the government to define and implement fol low up public sector reform efforts.

6. These sentiments were echoed in the OECS Institutional and Organizational Capacity Review o f the Core Public Sector (IOCR)18, which states that “the institutions relating to public sector management need a major overhaul.” Presently, “the public sector i s working in the old, traditional, pre-independence mode,” and i s over-emphasizing control o f inputs and compliance with rules and regulations rather than with effectively and quickly delivering expected outputs. If it i s to reduce costs and improve efficiency, the public sector must become more concerned with the cost-effectiveness, quality, and timeliness o f outputs. Furthermore, in light o f increasing global competition and vulnerability to exogenous shocks, the public sector must be able to quickly adapt to changing demands if it i s hoping to become a contender in the global economy. In order to address these public sector deficiencies, reform efforts should include measures to speed-up decision-making, increase f lexibi l i ty in resource allocation, align the incentives o f public sector managers and staff with organizational objectives, strengthen internal and external accountability mechanisms, and make government operations transparent to the public.

The survey was conducted by Market Research Surveys, Ltd., and managed by the World Bank. A representative 17

sample was recruited f rom four countries, achieving margins o f error between 4.5% and 5.5.%. Research was conducted between February and April, 2005. Countries included were St. Kit ts (n=477), St. Lucia (n=395); St. Vincent (n=4 13) and Antigua and Barbuda (n=338).

In particular, statements in t h i s paragraph are from OECS IOCR, pages 48-49, 90.

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7. Greater economic regionalization and integration in electronic delivery of public services has been prioritized in order to exploit economies o f scale and reduce costs while improving service delivery and increasing efficiency. While this agenda i s already in pursuit in the OECS, i t s potential remains to be fully exploited, and it is widely acknowledged that OECS member states could indeed benefit from “more concerted action.” Thus, the potential o f regional integration o f public services by leveraging investments in ICTs i s a building block to promote future regional and country-specific public sector reforms. The OECS IOCR states that overly centralized personnel management and poor human resources planning have contributed to “major deficiencies in policy formulation, planning, economic analysis, project management, and general management.”’g The public sector lacks systematic analysis o f skill requirements and workload patterns to be utilized for staff transfers, recruitment, and training. When training i s provided, personnel often ut i l ize these newly- found sk i l ls to acquire positions in the private sector or abroad, thus, the public sector bears the costs o f training without receiving the benefits. When trained staff remains in the public sector, they are often wrongly utilized - soon transferred to unrelated positions or assigned tasks that do not utilize the sk i l ls they have acquired. More extensive HR management information systems containing dates, promotions/ transfers, movement between salary scales, training received, performance reports, and date o f retirement would allow for improved monitoring and evaluation, training, as wel l as human resources planning. With regard to disciplinary matters, there i s no organizational unit responsible for exercising continued vigilance against corruption, and there are n o mechanisms for collecting information on possible conflicts o f interest or wrongdoing.

8. The objective o f the project within the context o f the broader public sector strategy in the OECS states i s to improve the delivery o f public sector services, improve internal efficiency (including lower costs o f public service delivery), improve coordination between agencies, and increase transparency through the use o f ICTs with the overall objective o f contributing to regional integration. This strategy i s consistent with the lessons learned from the Cape Verde experience.

9. Modernizing the public sector and the delivery o f public sector services through the use o f ICTs could potentially be done in a number o f ways. In order to target the sectors where interventions are most needed, and are also in l ine with country priorities, specific areas for e-government interventions were selected during a stakeholder workshop held in M a y 2007. In anticipation o f the workshop, the country representatives had submitted their country priorities, and during the workshop, these country priorities were discussed and then matched across countries. Input o n regional priorities was also obtained from the OECS Secretariat, as well as from the ECCB. In selecting the specific interventions to be included in the project, in addition to the perceived priori ty by the participating countries, a number o f additional criteria were utilized, in particular the following: (i) i t s l ikely developmental impact and contribution to the public sector modernization agenda; (ii) the extent o f contribution to or impact on pol icy harmonization and regional integration; (iii) likelihood o f achieving early results or “Quick Wins”. Further prioritization took place on the basis o f (iv) cost o f implementation within available budget; and (v) local capacity for adoption and sustainable use.

l9 OECS IOCR, pages 93-4

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10. Ultimately the key public sector areas selected using the above framework were Legal and Regulatory Environment, and Registries and Multi-Purpose Identification Systems in Component 1 , and Public Financial Management, Customs Administration, Tax Administration, and Procurement in Component 2. A performance or results-based approach has been integrated into the project, and in particular, Component 2. The proposed systems upgrades and activities under this component incorporate potential support for results based management. For instance the SMARTSTREAM, Standard Integrated Tax Administration System (SIGTAS), and Automatic System for Customs Data (ASYCUDA) al l support application o f a results focus through management and decision making tools for operational and strategic management reporting*’. The integrated e-government project will provide the backbone for implementing the proposed reforms.

Enabling Environment for the Private Sector as an Engine for Growth

11. According to Doing Business 2007: Organization o f Eastern Caribbean States, “The OECS countries perform wel l o n the ease o f starting a business, dealing with licenses, and the strength o f investor protections. OECS countries fa l l behind on the ease o f getting credit, enforcing contracts, and closing a business. Results are mixed for trading across borders, registering property and paying taxes.” 21 In order for the OECS to enhance the ease o f doing business in the region, public sector modernization i s required. This project would directly contribute to the ease o f doing business in the OECS by digitizing records, enhancing online access, and facilitating data exchange and processing. These improvements would enhance the ease o f enforcing contracts, filing and paying taxes, and trading across borders.

12. One o f the key pillars o f Bank support in the OECS region i s supporting growth and competitiveness, for which public sector reform and the regional integration o f services have been identified as focus areas. Strengthening institutional capacity and modernizing the public sector are integral to the broader economic restructuring (at both the domestic and regional levels) that the Bank is supporting throughout the sub-region.

13. The nature o f OECS economies necessitates diversification if the economy i s to grow at a sustainable pace; both the agriculture and tourism industries are understandably vulnerable to natural disasters and external shocks. Against this backdrop, OECS countries need to shift their growth strategies from a public to a more stable private-sector led policy. In this respect, a focus o n enhancing backward linkages between tourism, the leading economic activity, and other sectors (e.g., agriculture, handicraft, etc.) will be critical. The public sector must be prepared to create an enabling environment for private sector development, including reducing barriers to foreign direct investment and promoting indigenous investment, reducing the costs o f doing business, and providing more efficient and timely service delivery. This project supports the achievement o f these broader objectives by enhancing the effectiveness and efficiency o f the systems supporting the functionalities o f the public finance sector, improving the quality and timeliness o f the internal and external

*’ http:Nwww.fiscalrefo~.net/usaid-egat_fiscal_workshop/proceedings~ar%206-06/0smond- Kamel%20(SIGTAS)_March%206%202006.pdf

Doing Business 2007: OECS, p. 1

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information flows within the public sector, and thus fostering a transparent and functional cross-sectoral business environment.

Policy & Strategy

E-government progress to-date and donor activity in this area

EU EU EU

14. The project is formulated with due consideration o f the CARICOM Connectivity Agenda (2003) and the Action-Oriented E-Government Strategy for Countries o f the Caribbean Region 2004-2007. During the Ministerial Consultation prior to the adoption o f the Regional E-Government Strategy (Point Salines, Grenada, January 2003), “the participants confirmed the need for developing a regional e-government strategy for the Caribbean in order to benefit from economies o f scale, harmonize individual country efforts, foster regional integration and cooperation and build upon progress already made in a number o f countries.”22 The project i s based on the political consensus that has been built by the consecutive Caribbean Ministerial Consultations on E-Government, in which al l o f the member states o f the OECS were wel l represented. This consensus focused on the need o f capacity building for thoughtful public sector reform; on using I C T to take advantage o f new development opportunities in general and to improve the quality o f public services in particular; on the need to make e-government programs part not only o f I C T strategies, but also o f national plans on economic growth and social development.

Development Legal and Regulatory

Total Cost of Ownership (SW licenses)

15. The Country Donor Matr ix below illustrates the broad range o f activities in the region that have been completed or are in progress. With a significant amount o f help from the EU, C I D A and other donor agencies, the OECS already has a significant head start in the direction o f public sector reforms. Dominica, St. Lucia, and St. Vincent have a few e- government related projects that are planned or currently underway, which are in some cases supplemented by the technical assistance focused on the underlying pol icy reforms. Grenada recently negotiated a Technical Assistance Project that will assist the Government to begin the process o f modernizing its public sector. In general, across the entire region, much attention i s being directed towards public sector reforms, including the revision and update o f the Legal and Regulatory environment, modernization o f the Budget and Treasury systems, introduction o f new Taxation mechanisms, and restructuring o f the C iv i l Registry. W h i l e significant progress was already achieved in some countries and sectors, much st i l l remains to be done in the OECS both in the context o f the overall systems’ introductiodupgrade, and the revision o f the underlying policies and processes.

(SFA 2005) (SBX 1996) (SFA 2005) EU EU EU EU

(SFA 2005) (SFA 2005) (SBX 1996) (SFA 2005)

Table A-1.1Country Donor Matrix I Area I Antigua I Dominica I Grenada I St.Kitts I St.Lucia I St.Vincent I

22 Final Report, Fourth Caribbean Regional Ministerial Consultation and High-Level Workshop on Public Sector Management: Strategies for E-government”, Point Salines, Grenada, 14-1 5 January 2003

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Area Center of Excellence (Tech Support, Security, Standards) ID Systems

Web Dortals

Antigua Dominica Grenada St.Kitts St. Lucia St. Vincent EU WB (CIUN) EU

(SFA 2005) (SFA 2005)

Gov. Italy/ UNDESA

USAID Taiwan Taiwan Gov. Italv/

Public Financial Management HR Management

CIDA (ECEMP)

DFID

Tax Administration I CIDA

Rationale for Bank Involvement

Customs

Procurement

Agriculture: Linkage with Tourism Health: H M I S

16. The proposed project seeks to enhance economic and social development, and increase the competitiveness o f the islands as services-oriented (i.e. information and knowledge- based) economies with modernized public sectors, through the effective use o f ICTs in the Public Administration. This e-government project wil l serve as a catalyst for e-commerce and e-business initiatives, supporting the shift towards knowledge-based economies and information societies in the region. As a major employer, service provider and consumer, Governments in the OECS are in the best position to initiate and sustain the spread o f I C T applications in the other sectors and the subsequent growth o f I C T industries. The success o f any initiative is dependent o n the government sector's own efforts toward an effective deployment and use o f these technologies.

(ECEMP) ICNIDRC EU ICNIDRC

(SFA 2005) WB

WB EU (SFA 2005)

EU SFA 99/0 1 (AIMS) PAHO PAHO

(Hospital (Universal

17. The project emerges from increasingly strongly articulated pol i t ical wil l and determination for sub-regional cooperation and in particular the realization that sub-regional

I Records) I

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I Health Care) I Education: EMIS EU EU/WB EU

Civil Registry Land Registry

Business Registry

Judicial Enforcement Environment & GIS

(SFA2005) I (CKLN) (SBX 96) I OAS OAS

WB / EU EU (MTPSR) (SFA 2005) WB / EU EU

(SFA 2005) (SFA 2005) CIDA

cooperation in the area o f e-government, understood broadly as the application o f I C T for public sector modernization, can produce important outcomes in reducing the cost o f doing business, improving public sector efficiency, transparency and accountability, as wel l as lead to more sub-regional harmonization and integration. The project wishes to follow in the footsteps o f the widely successful sub-regional cooperation in the area o f telecommunications, and aims at expanding that cooperation to the broader I C T field.

18. This initiative i s critical in light o f the scarcity o f financial resources for e-government development across the region. I t also acknowledges the need to balance the I C T development-related and other developmental needs o f the Caribbean countries. Therefore, i t will treat opportunity cost as an important factor in choosing and implementing the e- government options. The project wil l entail a regional approach to promote integration, competitiveness, public sector efficiency and transparency, and avail the countries o f the region o f the benefits o f economies o f scale and related synergies, as identified in a recent infoDev study o n the

19. The proposed initiative should be seen as a complementary initiative aimed at reinforcing the efforts on the ground in implementing various public sector reform and e-government initiatives across the sub-region and aspiring to achieve “quick wins,” which will provide momentum to achieve additional benefits f rom highly desired reforms and more robust e- government implementation. I t can therefore be considered as a first stage o f what could become a wider e-government implementation program across the sub-region.

Rationale for the Project Components

20. The process used to develop the project components was based on the f i rs t Bank mission in February 2007 to meet with over 70 decision-makers in al l Member States and stakeholder organizations. The consultation involved key representatives considered by the relevant Ministries as high-level stakeholders in the information society sector, a l l having national e- government implementation experience to address national, regional, institutional and technological realities.

21. Their inputs formed the basis o f a list o f options that was then circulated back to key contacts in each country to rank according to national priorities. This was consolidated and presented at the follow-up Stakeholder Workshop in M a y 2007 as a decision-making support tool, to deliberate merits and refine priorities in real-time. The Member States chaired these M a y workshop sessions to ensure ownership, inclusive discussion and ultimately consensus. During this workshop, the priorities o f the participating countries were discussed and the key areas for inclusion in the project were agreed in principle, o n the basis o f a number o f formal selection criteria, such as: (i) the expressed level o f priori ty and alignment with existing national policies; (ii) the likely developmental impact and contribution to the public sector modernization agenda; (iii) the extent o f contribution to or impact on pol icy harmonization and regional integration; (iv) likelihood o f achieving early results or “quick wins”; (v) cost o f implementation within available budget; and (vi) local capacity for adoption and sustainable

23 Improving competitiveness and increasing economic diversification in the Caribbean: the role o f ICT, infoDev, 2005.

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use. This decision-making exercise and process in itself represents a foundation for positive future project dynamics.

22. The project components were further refined during an appraisal and technical discussions workshop in March 2008. One o f the key results o f these discussions was the decision to incorporate a regional p i lot project in health management information systems into Phase 1. This subcomponent may be complemented with small preparatory and/or complementary activities in other social and productive sectors, such as education, agriculture, tourism, postal, among others. None o f the proposals were rejected from future consideration: a l l remain viable follow-on projects for consideration in subsequent phases o f the program as regional e-government cooperation begins to materialize.

Rationale and Background for Component 1 : Horizontal E-Governmen

23. Horizontal e-government work dates back to at least 2003. The promote Horizontal Cooperation, including pooled purchasing o f economies o f scale and negotiated volume agreements with suppliers

Interventions

OAS took steps to software to obtain The OAS took the

view that taking advantage o f successful solutions and progress made by some o f the region's more developed countries enables many others to save resources and shorten implementation times. In addition, the increasing interdependence between countries makes a fluid dialogue on electronic government necessary among those responsible, so as to address regional issues such as database and application interoperability as well as legal aspects.

24. The Network o f E-Government Leaders o f Lat in America and the Caribbean (RED GEALC) i s aimed at promoting horizontal cooperation. Originally created by the Institute for Connectivity in the Americas ( ICNIDRC) Red GEALC also has the support o f the Inter- American Development Bank (IDB), the OAS, the World Bank, as well as numerous other donors, and more than 60 members from 32 o f the region's countries. This virtual forum has enabled representatives o f almost al l the countries in Latin America and the Caribbean to get in touch with the leaders o f the most successful electronic government initiatives in the region.

25. While the OECS Member States are at varied stages o f I C T and e-government development, a Strategy and Act ion Plan is essential to set the scene for improved co- ordination in Caribbean e-government pol icy and project implementation. M u c h e- government pol icy and project implementation takes place at the national level and i s not a regional issue as such. Therefore a regional Strategy and Action Plan will advance political consensus, provide broad guidelines for harmonization o f efforts in the context o f this project as wel l as on-going national projects, assess readiness o f opportunities for further regional programming, develop partnerships, create avenues for collaboration and mechanisms for resource mobilization, and pave the way for implementation. This wil l also facilitate and expedite alignment with larger regional initiatives by CARICOM, CARICAD and other organizations, and increase the capacity o f pol icy and decision makers, public administrators, private sector and the civil-society to share at the regional level.

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26. As outlined in the country donor matrix above, the EU is assisting several OECS member countries in developing national e-government strategies and harmonizing the legal and regulatory frameworks for electronic transactions. The intricacies o f effectively implementing such a broad range o f legal and regulatory texts calls for additional support to be included in the current operation, particularly with regards to the implementation o f digital signatures, which i s l ikely to require assistance in the establishment o f the digital signatures certification authorities.

27. Given the small size o f the national governments, regional cooperation through pooled procurement and joint maintenance o f hardware and software will no doubt lead to important economies o f scale in the area o f I C T procurement. However, in order to correctly extract these potential benefits OECS countries must ensure that al l forms o f regional e-government cooperation have the capacity and necessary tools to assess and manage the Total Cost o f Ownership o f a particular solution, so that cooperation focuses on optimizing positive outcomes.

28. The availability o f skilled manpower is one o f the most important factors needed in the OECS states for attracting investments and developing the information technology products and services industry, which includes the e-government sector. Development o f skills for the IT industry requires strong linkages between academia, companies, associations, standards organizations, private sector training institutions and the government. In an increasingly globalized and networked world, it is important that ski l l development initiatives linkup with best-in-class sk i l ls providers across the globe. For example, the Customer Operations Performance Center Inc. (COPC) i s the world’s leading authority on operations management and performance improvement for contact centers. Carnegie Mellon’s Software Engineering Institute i s a wor ld leader in standards l ike C M M I and has developed a range o f programs including those relating to improvement o f Personal and Team Software Processes. The Project Management Institute’s, PMP professional certification i s recognized globally. Accenture has recently tied up with the MIT’s professional education program to develop the Accenture Solutions Delivery Academy, a new training and certification program based o n the company’s application delivery curriculum. These examples illustrate attempts by different governments, organizations and associations to forge partnerships in order to make educationalhraining programs more responsive to the needs o f the IT industry.

29. In light o f this discussion, together with the need for achieving some economies o f scale, i t can be clearly understood why it is important for the governments o f the OECS to strengthen institutional structures for providing cross-cutting oversight and support in the design and deployment o f e-government applications to prevent waste and avoid duplication. A Regional E-Government Center o f Excellence could prove extremely useful in dealing with such issues, by helping national government agencies and private sector players to adopt a flexible, agile and highly modular approach to e-government services. Such a Center would moreover facilitate the adoption o f the latest technologies and approaches in e-government so as to position the OECS at the cutting edge, and establish a leadership position for the region’s e-government initiatives. As an IT organization, the Center would be very different from traditional IT organizations in government. IT is not a back-office utility and is fast becoming indistinguishable from the business processes that i t enables. The IT organization

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o f the future will therefore most l ikely have a greater focus on business processes, enterprise architecture and sourcing strategies. The Center would accordingly aim at melding domain expertise with technology in each aspect o f i t s functioning. Some o f the important functions that could be provided by such a Center, together with their rationale f rom the perspective o f the Government and o f the IT sector, can be seen in the table below:

ble A-1.2 Rationale fo, Function Enterprise architecture

Interoperability and standards

IT Security

Application testing and quality assurance

Technology tracking

Business Process Management

Contract and Intellectual Property management

an E-Government Center of Excellenc Rationale for Government e-government applications can be designed in a modular fashion so as to allow reuse o f services avoiding waste and duplication

Important for ensuring that different e- government applications can talk to each other, thereby avoiding waste and duplication

Government data can be secured and compliance ensured with privacy requirements

Integration and application development risks can be reduced for Government agencies

e-government applications can benefit from the latest technologies

Deployment o f technology can be accompanied by process changes to have greater impact

Government interests are secured through better contract management and safeguarding o f Government I P

Rationale for IT industry Smaller companies will find it easier to participate in the development o f e-government applications, through access to reusable components and services Levels the playing field and allows smaller companies to bid for projects using open standards Creates synergies across disparate projects allowing different IT players to collaborate Adherence to security requirements builds capability o f the private sector to deliver secure products and services

Solutions and applications developed by smaller companies can be more credible Application deficiencies can be tackled early-on reducing subsequent costs Smaller companies get an opportunity to work on cutting edge technologies Companies need to deal wi th simpler processes, reducing cost and time for application development Brings greater clarity and transparency to government procurement Levels the playing field for IT companies

30. Finally, another core area o f effective e-government involves adequate identification systems and interoperability. There is a need for a National Identification number for information and security reasons. As o f today, the Member States have developed Electoral Systems to register those people able to vote. Unfortunately, the voter registration system does not have control o f other c iv i l acts such as birth and death certificates, nor i s the process to obtain and manage such information wel l optimized. Hospitals and C iv i l Registries lack this capacity. Initiatives to digitize registries have stagnated because responsible resources have been assigned to other ministry functions. L i f e events o f individuals are not systematically registered and there are many related data management and reconciliation

40

issues. However, the OAS has been assisting the OECS countries in computerizing their c iv i l registries with a simple application which, while adequate to their needs, may need updating.

31. There i s increasing national priority and global consensus on the need to move from Election ID to a National Identification number for information and security reasons. The National ID system, with the ID card as i t s visible component, would allow among others to integrate back end systems and databases, as wel l as the front-end web interfaces for receipt o f government services.

32. An interoperability framework would therefore be a crucial element o f the ID System, since at present the OECS does not have such a framework in place to guide the development o f e-government applications. This has meant a silo approach to e-government, which could progressively become a serious bottleneck in integrating disparate applications, across various government agencies and across the region.

Rationale for Component 2: Horizontal E-Government Interventions (main focus on Public Finance)24

33. OECS countries share many common characteristics-very open economies, limited diversity in production and dependence on tourism and/or a few export commodities which are sold, in many cases, in protected markets. Most o f the economies are vulnerable to changes in external markets and severe shifts in trade, and are prone to natural disasters such as hurricanes.

34. Since 2003, some economic recovery took place in the region, as tourism rebounded and the global economy began to strengthen. Some benefits also accrued to the region from the depreciation o f the U S dollar. Nevertheless, fiscal imbalances have persisted in a number o f countries, leading to mounting public sector debt. In a number o f countries, total debt to GDP ratios exceed 100 percent, and external debt to GDP ratios are very high. In addition, OECS countries have been facing a difficult structural transformation as they move away from traditional agricultural crops to new sectors, typically the service sector. The changing structure o f these economies has created a need for new approaches to macro- and microeconomic management and i t s institutional structure.

35. At the regional level, OECS countries are seeking to enhance interaction through the establishment o f the Caribbean Single Market and Economy (CSME) and the OECS Economic Union, which calls for greater harmonization o f institutional structures and the regulatory framework. This harmonization wil l affect many aspects o f the financial and fiscal sectors. Some examples are the introduction o f the Common External Tar i f f (CET), which requires countries to increase revenues from non-tariff sources, and the expansion and inter- linkage o f banks across the region.

36. The pressing need to ensure that adequate support i s provided to these developments at both the regional and country level have highlighted the importance o f CARTAC’s assistance

24 Some elements from t h i s section were adapted from the CARTAC Action Plan.

41

in providing technical advice that contributes toward improved fiscal and public financial management and helps countries to design and implement home-grown adjustment programs.

Tax I SIGTAS I SIGTAS I SIGTAS I SIGTAS I SIGTAS

37. Implementation o f the financial management, tax administration and customs sub- components are expected to be fully coordinated with CARTAC and CIDA. So far, CARTAC has provided technical advice in the area o f macroeconomic pol icy analysis and management. Looking ahead, OECS countries are expecting technical assistance from CARTAC to harmonize efforts in a variety o f areas including: (i) regional harmonization particularly with respect to laws, codes and practices as the region moves towards the single market economy; (ii) review o f the regulation and o f pension arrangements; (iii) training designed to help supervisors deal with troubled banks and insurance companies; (iv) training to best address capacity-building in public financial institutions, and strengthening o f their operations; (v) improvement o f public finance management, including budgeting, treasury operations, and debt management; (vi) improvement o f revenue pol icy and more effective revenue administration, including issues related to the introduction o f VAT and the challenges faced by accession to the Free Trade Area o f the Americas (FTAA); and (vii) improvement o f financial sector regulations and supervision, with increasing emphasis on the supervision o f non-bank financial institutions including insurance, and assistance in enhancing the region’s capital markets.

SIGTAS

Table A-1.3 Information Systems in Use for Public Finance Area I Anti g ua I Dominica I Grenada I St.Kitts I St.Lucia I St. Vincent Public Financial I Free I Smartstream I Smartstream I FITRIX I Smartstream I Smartstream

Administration Customs C A S E ASYCUDA++ A S Y C U D A 2.6 TRIPS ASYCUDA++ ASyCUDA++

38. Financial Management. The Ministries o f Finance in al l states are the rector institutions and therefore administer the public financial management systems. The core software platform being used in four out o f six countries i s Smartstream (SS),25 an off-the-shelf solution implemented in the following main modules: funds, payables and cashiering (accounting and treasury). The SS system has other functionalities such as budgeting, payroll, financial reporting and HR control which are partially or not implemented. Some o f the countries also make substantial use o f off-line tools such as Excel and Access, for exercises such as budgeting, reporting, printing, etc.26

39. While the treasury and accounting functions in the OECS countries have improved considerably with the introduction o f SS, Free Balance and FITRIX, the capabilities offered by the systems remain under-utilized. One example o f such oversight i s the underutilization o f the expenditure classification possibilities embedded in the system. Although Smartstream

25 Antigua and Barbuda i s implementing Free Balance and St. K i t ts and Nevis has chosen FITRIX. The budget preparation process in most countries is s t i l l a very time-consuming and effort intensive exercise

because there i s n o two-way communication between the Financial Systems and offl ine Budget Planning tools currently being used, such as Microsoft Access, Excel as we l l as other products for printing. Improved integration and consolidation o f planning and execution functions would a l low to expedite, modernize and improve the quality o f the budgeting, as w e l l as to increase outputs that make the budget i tself more accessible to a l l citizens.

26

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offers three coding levels, (program, sub-program, activity), only the f i rs t coding level (program) i s currently being used, thus significantly undermining quality and usefulness o f the produced reports. The situation where only some o f the available system functions are being used not only impedes efficiency and quality o f the ongoing financial monitoring and reporting, but also leads to a situation where the majority o f donor-financed activities, representing a significant share o f the OECS countries budget, are channeled through separate arrangements set outside o f the government systems that negatively affect the budget comprehensiveness and add an extra burden to an already scarce human resource capacity.

40. As such, there is a clear need to carefully evaluate functionalities present in the systems, compare them to the existing needs o f the government, and eventually bring them to full use, gradually evolving existing applications to a friendlier web-based e n ~ i r o n r n e n t . ~ ~ In the medium to long run, existing PFM systems need to be upgraded and/or expanded to resolve basic capacity and performance issues such as: (i) integration o f budget formulation and execution; (ii) incorporation o f estimates, monitoring and evaluation (M&E) and multiyear financial planning functions; (iii) improvement o f financial reporting capabilities;28 (iv) registering o f a reliable audit trail e.g. warrants; and (v) linkage o f the various applications by a user-friendly, easy to navigate interface.

41. The technical inputs which would significantly improve efficiency o f the existing financial management systems are relatively modest. To maximize the outcomes, purely technical adjustments have to be complemented by the update o f the existing budget classifications and charts o f accounts, design and programming o f the standardized reports, and development o f comprehensive operations manuals, summarizing the underlying governments' financial management policies and defining clear procedures for the systems use. This would help put in place more efficient internal controls, enhanced quality o f ongoing monitoring, and improved timeliness and quality o f periodical accounts. With the implementation o f the proposed changes, the number o f system users will rapidly expand, and a comprehensive training program should be conducted in order to build much needed capacity in the public sector.

42. Since four out o f the six OECS countries already use the same accounting system, there is a strong potential for further collaboration and harmonization in this area. Optimization o f the technical support arrangements and reduction o f the future acquisition and maintenance costs are just some o f the prospective benefits that should be explored in the immediate future.

43. Once these tasks are accomplished, a fully functional PFM system would help make the best use o f l imited qualified resources, and significantly lower transactions costs, by simplifying day-to-day processing activity, and freeing staff time to focus o n tasks that are

27 Ideally, such evaluation should be accompanied by the evaluation o f the underlying government's policies and rocesses, which in the h t u r e would allow for enhanced ICT-focused improvements wi th the parallel policy reform. '' At the moment in-house solutions are complementing the P F M systems in this area. For example, Microsoft

Access i s used to monitor recurrent expenditures and Excel spreadsheets are used to monitor capital expenditures, revenues, debt schedules, estimates and classifications o f works reporting.

43

value added. At the same time, as high-quality, real-time data would significantly enhance capabilities for the performance monitoring o f the government-led programs and initiatives, i t would ultimately contribute to the improved quality o f public spending and public services. As a side-effect, the system adjustments that would enable automation o f financial reporting would make it easier for the donors to harmonize their reporting requirements.

44. Human Resources. Smartstream has a payroll sub-system that i s used by al l project countries. Additionally, the SS system has a module with basic functionalities for Human Resources management. Unfortunately, such fhct ional i t ies have not been implemented yet. The countries are manually handling and recording HR processes in the stages o f hiring, evaluating, promoting, and retiring or firing personnel. It i s recommended that Smartstream be evaluated in order to explore possibilities for improvement o f the human resources management module, particularly leave requests. Additionally, i t i s recommended that the capacity o f Public Service Offices and HR units located in each Ministry be enhanced.

45. Tax and Inland Revenue Systems. The Standardized Integrated Government Tax Administration Systems (SIGTAS), which was developed by SOGEMA, a Canadian-based firm, i s a system that specializes in management and information systems for developing countries, under the Eastern Caribbean Economic Management Program (ECEMP), and is used to manage the collection o f taxes. Members o f SOGEMA worked with the Inland Revenue Departments in the OECS to implement the required legislative and business process changes. Additionally, staff members were trained to operate and manage the SIGTAS application.

46. The system enables the Inland Revenue department staff to operate more efficiently as the software has the ability to assess tax payers on time, remind taxpayers that their taxes are due, identify and record potential taxpayers, retrieve tax information quickly, and reduce the time taken to make payments to the cashiers. This ensures maximum revenue collection.

47. The most advanced website o f the Inland Revenue Departments in the OECS i s used to provide relevant information to tax-payers, and includes a message board, downloadable forms, FAQs, Press Releases, the Departments Newsletter, and Publications, such as ‘A to Z o f Taxation’, ‘Know your Taxes’ and ‘Tax Guide’. There are plans to integrate the SIGTAS application and the Website, and using a phased approach, moving from a simple facility that allows citizens to login to inquire into their tax status to online filing and payments over the next two years.

48. In addition, i t i s l ikely that upgrades to the SIGTAS platform i t s e l f may be required, given that the countries received the source code and have implemented changes individually, without regional coordination, creating in effect one different version per country. One possible strategy would be to upgrade al l the SIGTAS implementations to the newest version o f the SIGTAS international edition. Alternatively, a new platform could be implemented.

49. The upgrade o f the tax administration systems to allow for online filing and payments would represent a significant benefit to the private sector given that the preparation and

44

payment o f corporate taxes i s an integral aspect o f operations. Building upon an established, robust technical platform used by almost every member state in the OECS also represents a distinct advantage. The synergies and collaboration inherent in the project design o f the implementation o f this upgrade is consistent with the regional integration thrust o f this program. Efforts towards the implementation o f the OECS Economic Union and the Rights o f Establishment for businesses under the provisions o f the CARICOM Single Market and Economy (CSME) for example, would make the streamlining o f processes, procedures and systems for tax preparation and payment most useful.

50. Customs. The Customs and Excise Departments o f the Region began using information systems from the early 199O’s, when as part o f a regional initiative, the A S Y C U D A software was adopted. ASYCUDA or Automated Systems for Customs Data was developed by U N C T A D in 1981 and has been installed or i s being implemented in over 80 countries and regions around the world. ASYCUDA is a computerized customs management system which covers most foreign trade operations and procedures. ASYCUDA++ allows the management o f perceived risk by use o f its selectivity controls and the introduction o f r i s k analysis and r i s k assessment measures.

51. Revenues derived from customs are o f significant economic importance to Member States and reportedly account for on the order o f ha l f o f government annual income. Project stakeholders with Customs expertise have remarked o n the need for globally increasing competitive pressures to ensure prompt, reliable processing o f goods. Member States currently use a diverse heterogeneous array o f Customs solutions (e.g., ASYCUDA 2.6, 2.7, A S Y C U D A ++, A S Y C U D A World, TRIPS, CASE), which differ in terms o f their inter- connectivity with related Public Administration functions and interoperability o f data with end-users. There i s a need for a mapping exercise to identify commonalities and gaps in order to highlight the most beneficial areas to intervene. That wil l l ikely identify opportunities to initiate small, yet potentially beneficial controlled interventions to achieve data sharing. Conversely, objective analysis could indicate on a regional level that i t i s far more cost effective to migrate to one common platform, and conceivably to implement a single solution and harmonized platform for all, or a subset o f OECS countries, while ensuring interoperability with other existing platforms.

52. OECS countries require assistance in the implementation o f A S Y C U D A World as a standard, harmonized platform throughout the region, possibly including e-filing modules, as wel l as in the development and implementation o f interfaces to share data over heterogeneous regional Customs solutions (e.g., ASYCUDA, TRIPS, CASE). A shared maintenance contract would allow the countries to lower the cost o f support and upgrades.

53. ASYCUDA++ can support the complete automation o f the cargo manifest. All manifests’ bills o f lading wil l be electronically transmitted by shipping agents. Importers and exporters will lodge their declarations from their offices. Risk management procedures will determine which goods require physical examination andor documentary checks. Post-audit controls will be established to ensure compliance. The elimination o f unnecessary bureaucracy and tedious manual procedures will allow the Customs and Excise Department

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to re-allocate and re-deploy its personnel to areas o f greater r isk and more relevant Customs work.

54. The primary aim o f such a project would be to enhance the imports/exports processing system, which maximizes efficiency within the Customs clearance process, provides an efficient service to the trading community, and ensures an effective control and collection o f revenue. This system wil l also make available quality information for decision-making and more concise statistical data o n trade. The system would be conducive to the successful attainment o f streamlined, simplified and harmonized Customs procedures and processes, expediting the movement o f legitimate goods and legitimate travelers across the borders o f the OECS member states.

55. Public Procurement. None o f the OECS countries has a fully functioning electronic public procurement system in place. Nevertheless, a l l the countries are in the process o f improving their procurement legal framework and building institutional capacity, before they consider implementing a sub-regional e-procurement system for ICB, local N C B and shopping. Both the public financial management and the public procurement draft laws are under discussion regionally. The new legislation should be accompanied by new processes, training and an I C T solution.

56. World Bank assistance in this area could help facilitate the revision o f such draft laws, showing the international best practices and helping build the institutional and technical capacity needed. This i s also an area where regional integration can be done by building on the successful history o f the OECS Pharmaceutical Procurement Service, a regional procurement system used for buying pharmaceuticals, dental products, x-ray, and medical supplies for the public health sector o f the OECS countries. One could replicate this existing platform for international tendering and contracting with suppliers. For example, the system could be automated and expanded to other areas such as education, purchasing o f books, and basic commodities such as rice, wheat and milk.

57. A pooled procurement mechanism and improved supply management practices wil l result in a reduction in unit costs and optimize any services to the OECS. For example, IT procurement could lead to the standardization o f hardware, software and other peripherals. Currently the EU under the Information and Communication Technology Development ProgradSFA 2005 will help establish an electronic procurement system which wil l achieve savings in government expenditure while facilitating participation by local businesses. World Bank assistance could further enhance upon this electronic procurement system by making public transactions information available on-line and readily accessible which would increase the transparency and efficiency o f government procurement. Such a system could be developed and installed for a l l OECS nations, allowing national access and authorization codes so that each country can handle independently through their Tender Board regionally different purchases classified by mutually agreed thresholds.

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E-procurement examples '' Empirical studies over the last few years in Germany have shown that public online procurement would reduce purchasing prices by 10-30 % and transaction costs by 25-75%. Other studies showed that the average transaction costs for suppliers dropped by 30 -90%. For example, by using the national education portal in Great Britain, some 500 schools achieve price reductions o f up to 100 mil l ion British Pounds per year and time reduction o f about 90% in order processing.

The costs for moving online the European electronic procurement SIMAP system amounted to some €10 million. I t s distribution in paper has been cancelled saving an estimated €70 mil l ion each year. In addition, the time between advertising and contract awarding can be reduced from 52 days to some 10-15 days. With the phased introduction o f the Government electronic Procurement System (GePS), Korea i s able to save some US$2.7 bi l l ion o f al l government procurement (US$ 17.1 billion) as compared to US$26 mil l ion investment. Between 1998 and 2002, staff o f the Public Procurement Service PPS were reduced from 1,058 to 935, while the total government procurement volume increased by some 30% (from US$ 12.8 bi l l ion to US$ 17.1 billion). Payments to suppliers are electronically transferred which usually takes no longer than 4 hours. Romania uses a government-wide e-Procurement system bringing together about 1,000 public agencies and 8,000 suppliers. During the f i r s t 4 months o f 2003, more than 60,000 transactions were completed. According to the Ministry o f Communications and Information Technology, the savings through this platform amount to some 22% (US$35.5 million) o f the volume o f purchased goods and services (US$ 161.4 million). During the first three years o f the procurement portal COMPRASNET's, the Federal Government o f Brazil spent about US$ 7million on system development and maintenance. During the f i r s t two years o f on-line reverse auction use, the Federal Government i s estimated to have saved up to US$ 1.5 million. Besides this positive return on investment, the system enables better and more transparent procurement, as well as reducing the red tape in the process. For example, a normal procurement process takes more that two months. The on-line reverse auction may be completed in less than 15 working days. The use o f on-line procurement has also increased the participation o f small businesses in government supplies.

" From the ELECTRONIC GOVERNMENT PROCUREMENT (e-GP) World Bank Strategy

58. Given that the OECS countries have relied o n procurement agents since well before independence, very few public sector officials have received procurement training and consequently there i s an urgent need to build human capacity in procurement. I t i s anticipated that this project wil l improve procurement capacity within the OECS secretariat.

59. Health and Other Social and Productive Sectors. Many governments in the OECS have embarked on reform initiatives in the health sector. Some have acknowledged, over the past several years, the importance o f Information Technology (IT) to the health sector given the persistence o f problems in data management and analysis. An integrated health management information system can enable the improved management o f data, information and knowledge, effective communication and decision making, improved resource allocation and a long-term sustainable environment for achieving the enhanced delivery o f healthcare services.

60. The system should also be able to facilitate health services delivery at the regional level through patient and disease information, and generate reports o n areas such as morbidity and mortality, disease surveillance and disease prevention, and service utilization in order to determine priority health areas and resource gaps, and maximize the use o f health resources

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to create a more efficient health system. The H IV /A IDS pandemic in the OECS serves to highlight the need for priori ty regional e-government cooperation in healthcare.

Rationale for E-Government in Other Sectors (mostly for Phase 2)

61. The OECS states are facing similar challenges regarding issues related to public sector modernization. They al l have scarce human resource capacities and weak institutional frameworks. The common E-government initiatives under Phase 1 would enable governments to speed up integration and improve basic institutional needs. Under Phase 2, countries could deepen their E-government program, tailor i t to the specific characteristics o f each country o n the national level, and expand it to other sectors beyond public finance, such as Agriculture, Tourism, and Education sectors, among others.

62. Agriculture and Tourism. Viable linkages between agriculture and tourism can be strengthened by enhancing or increasing the access o f small-scale producers as suppliers to the local hospitality industry, including hotels and restaurants, with the support o f enabling I C T applications, so as to enhance the competitiveness o f local producers, facilitate export activities, realizing a more equitable distribution o f the economic benefits o f tourism related activities and improve the supply chain o f the tourism industry. An essential requirement i s the establishment o f the size and characteristics o f the market for fresh produce in this market segment (demand profile).

63. Education. Significant improvements can also be made in the Education sector by enhancing the e-government program in Phase 2. This tool would allow governments to improve the quality o f the teaching and learning process, with more direct interventions and provision o f resources at the school level. I t would also provide various mechanisms to provide student support, strengthened management o f the sector and governance o f schools, and coordinated activities and services at the regional level. Governments would be able to rationalize the use o f resources and more effectively monitor programs and their progress.

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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies OECS COUNTRIES: OECS E-Government for Regional Integration Program

World Bank:

1. OECS B A C K W A R D L INKAGES IN TOURISM STUDY P106740: The OECS Backward Linkages in Tourism report will analyze the demand for local products by the tourism industry in the OECS; identify obstacles to better linkages to local farmers and producers, including quality, transport and logistics bottlenecks, and propose concrete pol icy actions. The OECS EGRIP Phase I1 pi lot on agriculture/tourism expects to benefit from the results o f this study. The EGRIP task team wil l coordinate with the TTL and his team before commencing Phase I1 operations.

2. PRIVATE SECTOR F INANCING FOR OECS COUNTRIES P101320: This ESW analyzed the major obstacles that private sector companies face in order to access finance, especially the SME sector, and reviewed the current role o f development banks in the region and how these institutions can play a better role in enhancing access to finance by the private sector. This ESW, which has already been completed (11/07), influenced the task team to extensively involve ECCB in project consultations, as wel l as define a key role for them in the EGRIP project.

3. OECS: STRENGTHENING INSTITUTIONAL CAPACITY FOR PROJECT IMPLEMENTATION P104531: The IDF grant would provide financing for technical assistance to assist the Governments o f the OECS sub-region in implementing specific action plans to build institutional capacity in the key areas discussed above. The EGRIP project also aims to strengthen institutional capacity in the OECS, particularly in the areas o f financial management and procurement, and wil l keep abreast o f the results o f this IDF/TA. The IDF grant's completion memo i s planned for 9/08.

4. OECS-CATASTROPHE INSURANCE P094539: The development objective o f the project is to reduce the participating country's financial vulnerability to natural disasters through the provision o f financing to allow these countries to j o i n the Caribbean Catastrophe Risk Insurance Facility and the purchase o f financial protection against catastrophic hurricane and/or earthquake losses. This project i s currently already effective and wil l close in 12/10. Although not directly connected with EGRIP, this project informed the design o f the EGRIP project.

5. OECS F IDUCIARY REVIEW - F I N A N C I A L MANAGEMENT PROCUREMENT (JOINT) P098953: The OECS Fiduciary Review, completed on 1/08, was conducted jo int ly between financial management and procurement and consisted o f a detailed review o f government financial management and procurement system in the OECS in the context o f projects' implementation. As financial management and procurement capacity building are important aspects o f EGRIP as well, the EGRIP task team coordinated their work with the results o f this review.

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6. OECS COUNTRY F I N A N C I A L ACCOUNTABIL ITY ASSESSMENT (CFAA) P076727: Although this was completed in 2003, some o f the lessons learned for EGRIP in the area o f financial management were drawn from this CFAA.

7. OECS (GRENADA) S K I L L FOR INCLUSIVE GROWTH P095681: The broad objectives o f the project are two-fold, namely, to increase the employability and career mobil i ty o f unemployed youth and to strengthen the pol icy framework for the delivery o f training. Results o f this project wil l impact Phase 11 o f OECS EGRIP, which will potentially include an Education pilot. The task team wil l also review the operational manual and the regional and national implementation arrangements in this project for possible lessons learned.

8. TELECOMMUNICATIONS & I C T DEVELOPMENT PROJECT PO88448 as well as OECS: TELECOMMUNICATION REFORM P035730: Both projects related to improving the access, quality, and use o f telecommunications and ICT services to achieve socio- economic development in the Organization o f Eastern Caribbean States (OECS). Both projects deal with telecommunications, which is a needed backbone for the EGRIP project. In the case o f OECS Telecom, the structure o f ECTEL and the associated implementation arrangements influenced the implementation plans for the EGRIP project.

9. GRENADA TECHNICAL ASSISTANCE PROJECT P101322: This project, which i s ongoing (board date 2/08), deals with some o f the issues EGRIP deals with, namely Customs Modernization, and Tax Administration. The T A C also includes work on Export strategy, and. Modernization o f Investment Promotion, which are not related to EGRIP.

10. Dominica GROWTH AND SOCIAL PROTECTION TECHNICAL ASSISTANCE CREDIT P094869: The project aims at making the public sector more efficient and effective, improving the investment climate, regulatory framework for the energy sector, and improving social protection. The EGRIP project also deals with the issue o f making the public sector more efficient and effective, and hence we wil l be coordinating with this project, which became effective last year and will close in 2010.

Other donors:

1 1. Multi-donor Caribbean Technical Assistance Centre (CARTAC). The CARTAC” initiative supports the capacity development needs o f countries by providing support to new and emerging economic sectors, which include offshore and financial services. CARTAC i s IMF-executed and operates as a UNDP project, funded primarily by CIDA, with important contributions from the IMF, IADB, DFID, UNDP, USAID, the EU, the World Bank, and the C D B . 12.Under a UNDP Subregional Project, UNDP funded technical inputs to support the establishment o f a Human and Social Development Unit in the OECS Secretariat and to facilitate the coordination and analysis o f social statistics. The Unit created systems and programmes to assess currently available social data and identify areas where data necessary

29 http://www.bb.undp.org/index.php?page=about-undp

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for social planning are required on an ongoing basis. It designed and implemented a system for the collection o f new classifications o f data, including a permanent household survey capability which was established and upgraded in the national statistical offices o f Member States. The formulation and publication o f an OECS Human Development Report was one o f the main outputs o f this project, which received funding support o f around US$600,000.

13. UNDP in collaboration with C I D A provided US$1.5 mi l l ion to improve the capacity o f microfinance institutions in selected OECS Member States. The project wil l also strengthen the sustainable delivery o f financial services to low-income entrepreneurs by enhancing the institutional and technical capacity o f the subregional and national level organizations.

14. EU: Special Framework o f Assistance (SFA) 2005: Under SFA 2005, the European Commission has provided funding to Dominica, Grenada and St. Vincent and the Grenadines for the development o f the I C T sector. Under project number Europe Aid 122848/C/SEIUBB, Dominica wil l receive €4.51M, Grenada €0.5 M and St. Vincent and the Grenadines €4.53 M respectively3'.

15. Canada: IT SUPPORT OF THE ECONOMIC MANAGEMENT IN THE CARIBBEAN (SEMCAR), Eastern Caribbean Economic Management Program (ECEMP), and Guyana Economic Management Program (GEMP) are some o f the programs initiated by CIDA3'.

http://www.idisc.net/en/Article.3 8 5 50 .html See h~:llwww.acdi-cida.gc.calcidaweblcpo.nsf/vWebCCEn?O~enView&RestrictToCate~or~=4434 for complete

l ist o f CIDA funded projects in the Caribbean

30

31

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Annex 3: Results Framework and Monitoring OECS COUNTRIES: OECS E-Government for Regional Integration Program

Results Framework

1. To measure the progress toward achieving the project development objective and outcomes, key indicators were defined as per the table below. Specific parameters o f indicators as well as baseline values will be determined and collected shortly after project effectiveness through a study funded by the project.

The overall development objective o f the project i s to promote the efficiency, quality, and transparency o f public services through the delivery o f regionally integrated e- government applications that apply economies o f scale

Government financial savings in areas such as public financial management, tax administration, customs and procurement due to new e-government systems ($/country/year)

Estimated users’ time and cost- savings (measured through standardized methodology for representative transactions)

Increase in number o f electronic transactions processed by regional e- government applications (total # o f transactions wi th breakdown)

Increase in e-government services offered or upgraded (#)

Improvement o f ratings in areas o f functionality, accuracy and usability o f e-government services, as reported by users through satisfaction surveys

Improvement o f ratings in areas o f openness and access to relevant information, as reported by users through satisfaction surveys.

New regional institutional framework i s created with adequate capacity to provide new regionally integrated e-government services, in accordance with regionally harmonized policies and regulations

Use of Project Outcome Information

Measures efficiency through financial savings and increased revenues.

Measures efficiency through users’ (citizenshusinesses) time and cost savings (both direct and indirect).

Measures coverage o f service delivery

Measures quality through increased scope o f services

Measures quality through end-user satisfaction

Measures transparency

Measures regionalization

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Intermediate Outcome Indicators

1.1 Publication o f outcome-oriented regionally-focused e-government strategy implementation plans for OECS countries

1.2 Implementation o f key institutional and IT requirements for priority aspects o f a regionally harmonized e-government regulatory framework, as identified by a gap analysis

1.3 Definition and publication o f regional e-government standards and total cost o f ownership framework

1.4 Regional agreement for new institutional framework i s reached, financing i s provided, staff i s hired and trained

1.5a Detailed design and implementation o f ID system in core user agencies, including issuance o f ID numbers and cards.

1.5b Design and implementation o f interoperability framework.

1 Sc Percentage o f regional population covered in e-ID system

2.la Completion o f e-government service upgrades to the Public Financial Management system, as well as interfaces with other systems and web-based public information system

2.1 b Increase in volume o f transactions o f the Public Financial Management systems (internal and external users)

2. IC Time savings o f new system (reduction in time needed to complete representative transactions)

Show progress on the policy-making side o f reform.

Show progress on implementing regulatory reform

Show progress on implementing reforms with strategic considerations

Show the creation o f sustainable local capacity

Shows the successful delivery o f an e-government application

Level o f demand for e-government services indicating successful implementation o f e-government

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2. I d Financial savings due to new svstem 6)

2.2a Completion o f e-government service upgrades to the e-Taxation system as we l l as interfaces with other systems and web-based tax filing system

2.2b Increase in volume o f transactions o f e-Taxation system (total o f # o f transactions per country)

2 . 2 ~ T ime savings o f n e w system (reduction in time needed to complete representative transactions)

2.2d User financial savings and increased revenues due to n e w system ($)

2.3a Implementation o f a regional e- Customs system as w e l l as interfaces with other systems and web-based customs filing system

2.3b Increase in volume o f transactions o f regional e-Customs system (total # o f transactions)

2 . 3 ~ T ime savings o f new system (reduction in time needed to complete representative transactions)

2.3d User financial savings and increased revenues due to n e w system ($)

2.4a Implementation o f an e- Procurement system in a l l OECS countries as we l l as interfaces with other systems

2.4b Increase in volume o f transactions o f regional e- Procurement system (# o f transactions)

Leve l o f demand for e-government services indicating successful implementation o f e-government

Level o f demand for e-government services indicating successful implementation o f e-government

Level o f demand for e-government services indicating successful implementation o f e-government

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2 . 4 ~ Time savings o f new system (reduction in time needed to complete representative transactions)

2.4d Financial savings due to new system ($) for (i) private sector and (ii) public sector.

2.5a. Implementation o f a regional Health Management Information System

2.5b. Increase in volume o f transactions o f a regional health management information system (# o f transactions)

2 . 5 ~ Time savings o f new system (percent reduction o f time needed to complete representative transactions)

2.5d Users’ financial savings due to new system ($)

Level o f demand for e-government services indicating successful implementation o f e-government

2. In addition to the indicators above, the performance o f client countries in the following international indices wi l l also be monitored and included in reporting, however not in a manner binding to the project’s monitoring and evaluation framework. The indicators are the (a) ranking and (b) change o f ranking from the previous year in the fol lowing indices:

0

0

0

Economist Intelligence Unit’s e-Readiness rankings United Nations Public Administration Network’s e-Government Readiness rankings World Economic Forum’s Networked Readiness Index

Arranpements for results monitoring

3. Monitoring and Evaluation o f project components and sub-components wil l be a streamlined, integrated aspect o f project implementation and management. The fol lowing arrangements are made for this project: . Some indicators may be selected as informal indicators, which will be useful for

fol lowing the results and successes o f each sub-component, but wil l not be considered binding to the project’s monitoring and evaluation framework. This may be the case with indicators for which data collection may be more ambitious or challenging, or where sustainability or reliability is currently not known. An M&E training will be conducted for the Regional E-Government Unit (REGU), and their M&E delegates at the time o f project launch. The training will cover the basics o f (a) monitoring and evaluation frameworks, (b) different types o f indicators, including

.

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impact and outcome indicators, (c) collection efforts, (d) reporting requirements for the World Bank project. AAer the training, the national focal points will be asked to present their plans for data collection through the lifetime o f the project, and commit to supplying the REGU with (1) baseline data and (2) updates o n the actuaVprojected data during each World Bank supervision mission. Data collection and reporting wil l be the ultimate responsibility o f the REGU and national focal points. Data collection and reporting should be automated where possible, and be written into the TORS where sub-components such as portals or applications are implemented by a vendor. For example, an application should be delivered such that i t counts, for example, its unique users, downloaded forms, and transactions, and i s able to create a simple report o f aggregated numbers at regular intervals, or on demand. Associated costs need to be written into the budgets for the sub-components. A budget for survey-based collection o f results data wil l be provided under the project. The mid-term project review may offer the opportunity to amend the indicator series, or target values based on evolving circumstances.

.

.

. .

56

3 0

3 0

3 0

2 2 B B 2 2 3 0

I

3 3

M 3 3 M

3 3 3 0

0 0 3 3

0 0 0 0

.5 0 0 0

a

0 ... 3 d

0 ... 3 N

0 3 0

0 3 0

0 0 0

0 0 0

.5

3

...

0

0

3

0

0

3

d

i

0

0

0

2

Annex 4: Detailed Project Description

OECS COUNTRIES: OECS E-Government for Regional Integration Program

COMPONENT 1 Horizontal E-Government Interventions: US$3.54 million33 (37% of total cost of the project)

1. The objectives o f this subcomponent are to (a) strengthen and harmonize national and regional e-government processes, I C T platforms and frameworks, (b) promote more efficient regionally-based I C T development and strengthen capacity, (c) provide a better-enabled environment to achieve the objectives o f the public administration in a globally competitive context, and (d) to better serve citizens, businesses and consumers in the region.

2. Emphasis wil l be given to capacity building o f Public Administration by providing stakeholders with assistance to harmonize and revise regional and national sector policy, strategy, legislation and related legal and regulatory frameworks, and to develop a structured sustainable means to move forward and improve regional coordination in e-government.

Subcomponent 1.1. Policy and Strategy Implementation -- US$240,000

3. This subcomponent wil l build o n existing e-government pol icy and strategy development efforts, notably under EU-funded programs. The purpose o f this subcomponent is to provide assistance in specific aspects o f implementation o f the national e-government strategies, provide support for updating and harmonizing e-government policies and strategies across the region through on-going consultation with key actors, as well as provide a framework for regional e-government cooperation activities. This will include assistance in defining the overall parameters o f an interoperability framework and enterprise architectures, which will be designed in detail under components 1.3 through 1.5. Within this broad theme, the subcomponent includes the following activities, among others: (a) Strategic review and assessment, including comparative analysis o f high-level regional e-government vision and goals, global lessons learned, update o f national and regional OECS e-government strategies, as well as definition o f detailed implementation action plan; (b) Monitoring and evaluation framework, including clearly defined timeframe, criteria and indicators, as well as detailed baseline and monitoring data collection.

Subcomponent 1.2. Legal and Regulatory Framework Implementation -- US$360,000

4. This subcomponent will provide complementary contributions to the EU-funded effort to harmonize legal and regulatory frameworks for electronic transactions, focusing o n implementation aspects. The subcomponent includes the fol lowing activities: (a) Gap analysis and overall assistance for harmonized legal and regulatory framework development and implementation, which may involve complementary regulatory drafting, notably on electronic transactions and digital signatures; privacy and data protection; computer misuse;

33 All the cost figures indicated here refer t o the four IDA countries together, g iven the expected short time lag between the first three and the fourth one.

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interception o f communications; and freedom o f information, among others; and (b) Equipment, software and training for implementation o f selected pieces o f legislation.

Subcomponent 1.3. ICT Standards and Total Cost of Ownership Optimization -- US$ 500,000

5. This subcomponent i s aimed at assisting countries in improving their e-government standards and architectures, as wel l as overall public sector I C T management and investment practices. The subcomponent wil l assist countries in identifying potential savings in I C T projects through such tools as pooled procurement o f software licenses, implementation o f Public-Private Partnerships, and developing frameworks for the assessment o f the total cost o f ownership o f a specific solution (including open source software), among others.. This includes analyzing and recommending common information system architectures and standards, viable mechanisms to support and maintain information systems, and establishing sustainable unified policy, strategy and implementing guidelines for on-going optimization. The subcomponent includes the following activities, among others: (a) Assessment o f current standards and architectures, definition o f harmonized e-government standards, interoperability framework and enterprise architectures (on the basis o f Service-Oriented Architectures); (b) Assessment o f I C T management and investment practices, development o f framework for total cost o f ownership analysis and optimization, identification o f potential savings and strategy for pooled procurement o f software licenses; (c) Assistance for pooled procurement o f software licenses on pi lot basis; and (d) Capacity building o n standards, service architecture, open source software and Total Cost o f Ownership optimization.

Subcomponent 1.4. Regional E-Government Institutional Framework Strengthening -- US$ 1.4 million

6. This subcomponent will assess the current institutional framework for e-government project implementation and technical support in the participating countries, and will provide assistance in the strengthening o f the regional institutional framework for e-government. One option that will be explored through the project is the creation o f a self-financing sustainable regional E-Government Center o f Excellence to provide participating countries with pol icy guidance, technical support and capacity building in the implementation o f I C T systems in government, while at the same time implementing key regional projects and e-government applications on behalf o f the participating countries (such as the regional e-procurement platform), as wel l as focusing on internationally recognized certifications, mentoring and ‘train the trainer’ programs. I t will achieve self-financing and future sustainability by provision o f services to the participating governments and the private sector, such as: management o f hardware and software maintenance contracts, application development and hosting, management o f regional information systems (e.g. the e-procurement platform), as wel l as provision o f technical advisory, certification, training and capacity building services, among others.

7. The exact institutional and business model for the proposed OECS Regional E- Government Center o f Excellence wil l be decided in the init ial phases o f project implementation. Alternative options for performing the functions o f a regional e-government center o f excellence, include a network o f national-level institutions (such as the existing e-

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government or I C T units), or integration into a CARICOM-wide e-government center o f excellence or network o f centers. I t i s expected that partnerships wil l need to be established with leading private sector companies, training institutions, academic institutions, standards setting bodies, regional institutions (such as ECCB , CARICAD and ECTEL), industry associations and the participating governments.

8. The subcomponent includes the fol lowing activities, among others: (a) review o f regional e-government institutional framework, assess options and business plan for a regional center o f excellence, and strategic institutional design and implementation action plan, including governance structure, organizational and business model, implementation arrangements, staffing, action plan for the f i rst 18 months, etc.; (b) start-up implementation support for the new regional e-government institutional framework, including assistance in the establishment o f ini t ial service agreements with participating countries, partnership arrangements with international experts from academia, industry and governments; (c) equipment for start-up implementation; (d) Support to national e-government units, through country-based specialists, among others, and assistance to steering committees, including support for enhancing coordination with donors; and (e) Training and capacity building at the national level.

Subcomponent 1.5. Automated Registries and Multi-Purpose Identification Systems -- US$ 1.04 million

9. This subcomponent will review the current status o f key government registries and support the creation o f harmonized National Identification Systems as a core shared service to be used throughout a l l e-government platforms, integrated with other key information systems at the national and regional level, where appropriate (Civ i l and Business Registries, Immigration Systems, and Election Systems). The subcomponent includes the fol lowing activities, among others: (a) Needs assessment for national ID system, evaluation and simplification o f processes as needed, and design o f Multi-Purpose Identification System as a core piece o f the overall interoperability framework; (b) Development and implementation o f system, including software development, modernization o f business and c iv i l registry, election card system, if required, and integration o f back end systems and databases; (c) Implementation assistance in core user agencies; (d) Pooled procurement o f necessary equipment and National ID cards; and (e) training and consensus building.

COMPONENT 2 Vertical E-Government Interventions: US$4.93 million (51% o f total cost of the project)

10. The objective o f this component i s to harmonize and improve key e-government systems by focusing on specific interventions in core areas o f public finance. This area was identified as a national and regional priority by al l stakeholders, due to regional commonalities that can be used on a pragmatic basis to begin to harmonize regional e-government systems, to modernize their Public Administrations, to develop guidelines, and to catalyze further integration in regional processes. This component wil l build upon, and coordinate closely with Component 1 (Horizontal E-Government Interventions) to ensure that the desired

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vertical goals are supported by the newly developed horizontal tools, standards and regulations.

11. In many aspects, the activities included in this component wil l build upon, and complement results achieved by the CIDA-sponsored ECEMP program, which i s focused on the modernization and capacity-building o f the public finance sector. C I D A is currently in the process o f conducting the preparation o f its new SEMCAR program, which may include further support for the modernization o f the core PFM systems, including tax and customs. To that end, C I D A has recently launched an IT diagnostic study through CARTAC, which wil l inform the design o f SEMCAR as well as prove a useful input to the detailed activities foreseen under EGRIP. If this type o f support i s not forthcoming v ia SEMCAR, CIDA, in concert with other donors, wil l explore other means to address the modernization o f PFM systems. In light o f that, EGRIP will focus on web-based front-end systems, for service delivery as well as interfaces and interoperability among systems, thus minimizing the potential areas for overlap and maximizing the overall efficiency o f the proposed activities. EGRIP and SEMCAR wil l be closely coordinated throughout implementation.

Subcomponent 2.1. E-Government in Public Financial Management (PFM) -- US$1.28 million

12. As a result o f CIDA’s ECEMP program implementation, four out o f six OECS countries (Dominica, Grenada, St. Lucia and St. Vincent and the Grenadines) installed and are currently using the same accounting software - Smart Stream. However, the installation and customization processes have not been fully completed. A s a result, the degree o f Smart Stream utilization significantly varies from country to country, depending on the availability and skills o f local resources. In addition, al l country-clients face problems associated with the lack o f supporting operational processes, insufficient user training and, in some cases, technical maintenance. Two remaining countries, Antigua and Barbuda and St. K i t t s and Nevis, are currently ut i l iz ing different accounting software, (Free Balance and FITRIX accordingly), nevertheless they face very similar problems, which, in their case, might eventually become even more perilous due to the lack o f the peer support.

13. To address the issues described in the previous paragraph, this subcomponent wil l focus on upgrading and bringing the existing core public financial management systems (in most cases, , implemented on the basis o f the “SmartStream” software solution) to full capacity, to provide better services and information to government employees and the public in general, and to avoid duplication o f work in a context o f scarce human resource capacity. This will involve, among others, the full implementation and integration o f budgeting, accounting and reporting modules; full implementation o f the HR module, if applicable; update o f the underlying processes and control framework; design o f interfaces to link budget, revenue (tax, customs), expenditure and reporting modules into a single public finance system, as well as possible development o f a web-based public information system, aimed at providing information to the public at large on government finances in an easily understandable format.

14. More specifically, this subcomponent will include the fol lowing activities, among others:

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a. Overall assistance for PFM sub-component implementation. This activity will involve the services o f specialized short-term local and international consultants, who will be brought in at key junctures during the implementation o f this sub-component, to provide long-term assistance to the implementation o f a l l the activities included in this sub- component. I t will provide an action plan, milestones, indicators, and provide on-going advice to the project teams and beneficiary agencies in the participating countries with regards to implementation issues and results-monitoring.

b. Gap analysis between the governments’ financial management needs and the PFM systems ~apabilities.~~ This analysis will be done at the individual country level, so that the proposed actions can be adequately tailored to meet the country-specific needs. I t will focus o n both IT as well as operational processes and requirements, and, as a by-product, might identify additional capacity-building activities, which, while falling outside of the scope o f this project, wil l need to be eventually addressed to achieve the high-quality, lasting results in the area o f the public sector financial management. C I D A has recently launched an IT diagnostic through CARTAC, designed as a stock-taking exercise to assess the current situation and gather materials for the newly proposed SEMCAR project. I t i s expected that i t s results would be a major input to the proposed gap analysis as wel l as to other activities under this sub-component.

c. Upgrade and integration of the HR, budgeting, accounting and financial reporting modules and databases; development and implementation of comprehensive, results-oriented budget classifications and design of standardized financial reporting formats. Currently, the treasury module i s the most widely used module in al l four countries implementing Smart Stream. Utilization o f the budgeting and reporting modules continues to lag behind. Depending on the capacity existing within each individual country, attempts have been made to find alternative solutions, including in- house development o f budgetingheporting modules/databases and/or acquisition o f additional software. Based on the conducted gap analysis, this activity wil l focus on choosing the best-suiting, and hopefully, uniform, solution which would meet the countries’ budgeting and financial reporting requirements and one that would allow the integration o f budgeting, accounting and reporting cycles into a continuous process. In addition to a potential acquisition and installation o f hardware and software, this wil l also include development o f standard processes, formats, budget classification and charts o f accounts, linking al l three major components o f the public financial management: budgeting, accounting and reporting. Finally, settings o f already existing and/or newly acquired modules will then be adjustedfine-tuned to enable production o f needed information and designed reports, and to ensure the full utilization o f the potentially available capacity. The HR module within Smartstream wil l be critically assessed for adequacy to meet the governments’ HR management needs. Based on this assessment, the project would assist on either fully implementing this module or acquiring an alternative solution for the participating countries.

Ideally, t h i s analysis should be accompanies by the evaluation o f the underlying government’s policies and processes, which in the future would allow to enhance the ICT-focused improvements wi th the parallel policy reform.

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d. Development of a user-friendly, easy to use interface linking the PFM system with the tax and customs systems. Implementation o f such interface would produce an integrated public finance system. This, in turn, would allow to ensure accuracy, timeliness and completeness o f the information recorded in al l the inter-linked systems, and would allow to conduct comprehensive performance monitoring and produce a variety o f consolidated financial reports, fulfilling the Governments and public’s needs.

e. Development of a user-friendly, easy to use web-based public information system, aimed at providing information to the public at large on government finances in an easily understandable format. This tool could include not only areas open to the general public, but also provide for differentiated levels o f access to financial reports by different types o f users, including secure areas for use by authorized officials, f rom national agencies, regional authorities (e.g. the ECCB) and international finance institutions (e.g. the IMF).

f. Development of the PFM system operations manuaYuser guidelines and training of the involved personnel. To achieve lasting, high-quality, sustainable results, supporting modernization o f the public sector financial management, a PFM operations manual will be developed, leveraging on the results o f the conducted gap analysis and any other projects focused o n the public financial management pol icy reforms, and clearly defining underlying operational processes, roles and responsibilities. A comprehensive training program wil l be offered to the involved personnel, focusing not only on the IT aspects, but also clearly explaining operational procedures, and roles assigned to different ministries/department and coordination models.

g. PFM system maintenance contract. Since four out o f the six OECS countries already use the same accounting system, further harmonization would enable mutual technical support, and would allow reduce system acquisition and maintenance costs by negotiating a joinedshared acquisition and maintenance contracts.

Subcomponent 2.2. E-Government in Tax Administration -- US$1.14 million

15. This subcomponent is aimed at developing an on-line registration and electronic tax filing subsystem to interface with the tax management system. I t i s expected that the current core tax administration system, SIGTAS, wil l be upgraded or migrated with the support o f a parallel C I D A program. The on-line filing module wil l be designed so that i t can interface with any underlying core tax administration system, and wil l allow for integration with the banking system for payments and refunds, including through a future regional payments gateway. This subcomponent will also evaluate opportunities to share tax administration system support through the regional center o f excellence or similar structure.

16. More specifically, this subcomponent will include the fol lowing activities, among others:

a. Overall assistance for tax system sub-component implementation. This activity wil l involve the services o f specialized short-term local and international consultants, who wil l be brought in at key junctures during the implementation o f this sub- component, to provide long-term assistance to the implementation o f a l l the activities

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included in this sub-component. I t wil l provide an action plan, milestones, indicators, and provide on-going advice to the project teams and beneficiary agencies in the participating countries with regards to implementation issues and results-monitoring.

b. Design and implementation of on-line registration and e-filing system. This wil l be the core activity o f this sub-component. I t will involve the design and implementation o f a web-based tool to allow for taxpayer registration (closely linked to the ID Systems sub-component), as wel l as electronic filing o f tax declarations and returns. As indicated earlier, i t i s expected that the e-filing module will be developed with an open platform in mind, in l ine with the regional service-oriented e- government architecture to be defined as part o f Component l , so that i t can easily be made to interface with any underlying core tax administration system in place, and will be designed in an evolutionary fashion ut i l iz ing the concept o f software as a service, allowing for incremental updates to the system as it matures. This approach will allow for eventual integration with the banking system for processing o f payments and r e h d s , through a future regional payments gateway.

c. Tax system personnel training and user manuals. T o achieve lasting, high-quality, sustainable results, a tax system user manual will be developed, clearly defining underlying operational processes, roles and responsibilities. A comprehensive training program will be offered to the involved personnel, focusing not only on the IT aspects, but also clearly explaining operational procedures, and roles assigned to different ministrieddepartment and coordination models.

d. Tax system maintenance contract. Given the level o f harmonization that already exists in the systems for tax administration across the OECS countries, jo int procurement o f a shared support and maintenance contract with the software vendor would enable a reduction in the cost o f technical support, system upgrade acquisition and maintenance.

Subcomponent 2.3. E-Government in Customs -- US$885,000

17. This subcomponent i s aimed at creating a regional customs information sharing network within the context o f the upcoming OECS Economic Union. This will allow for interoperability o f various customs systems over heterogeneous regional platforms, as well as sharing and crossing o f information among public agencies involved in the export and import processes. I t i s expected that a parallel C I D A regional program and existing World Bank programs in some o f the countries will support the migration to more modem versions o f ASYCUDA. This subcomponent is therefore not expected to assist in that area, but will support any additional systems upgrades in particular the implementation o f an electronic filing module, where required, maintenance contracts, well-defined interfaces with PFM and tax administration systems, as wel l as training.

18. More specifically, this subcomponent wil l include the fol lowing activities, among others:

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a. Overall assistance for customs sub-component implementation. This activity will involve the services o f specialized short-term local and international consultants, who will be brought in at key junctures during the implementation o f this sub-component, to provide long-term assistance to the implementation o f a l l the activities included in this sub-component. I t will provide an action plan, milestones, indicators, and provide on-going advice to the project teams and beneficiary agencies in the participating countries with regards to implementation issues and results-monitoring.

b. Regional customs information network, including the online manifest interchange. This activity wil l involve the implementation o f special modules in the customs systems to allow for the exchange o f cargo manifests. I t wil l also include the development o f a regional information system on customs data, focused mostly on harmonizing the collection and aggregation o f trade data.

c. Customs system upgrades including electronic filing module and interface with PFM and tax systems. This activity will be mostly dedicated to the development and implementation o f an e-filing module to interface with al l the existing customs systems, as well as any necessary linkages from the customs systems to the PFM and tax administration systems.

d. Customs system personnel training and manuals. To achieve lasting, high-quality, sustainable results, a tax system user manual wil l be developed, clearly defining underlying operational processes, roles and responsibilities. A comprehensive training program wil l be offered to the involved personnel, focusing not only on the IT aspects, but also clearly explaining operational procedures, and roles assigned to different ministries/department and coordination models.

e. Customs system maintenance contract. Given the level o f harmonization that already exists in the customs systems across the OECS countries, jo int procurement o f a shared support and maintenance contract with the software vendor would enable a reduction in the cost o f technical support, system upgrade acquisition and maintenance.

Subcomponent 2.4 Electronic Government Procurement -- US$ 800,000

19. The public procurement systems in the OECS require further development. The countries need to review, harmonize and improve their procurement legal frameworks, build institutional capacity and implement a regional procurement system for International Competitive Bidding (ICB), local National Competitive Bidding (NCB) and smaller value purchasing. Relevant financial and procurement draft laws are under currently under discussion at a regional level. New legislation should be combined with new processes, training and an I C T solution. The project will help facilitate the revision o f draft proposals by showing international good practices and helping build institutional and technical capacity. A more robust procurement platform is needed and this area can build on PPS success to accelerate regional integration. A regional system could be developed and installed for a l l OECS nations to participate. National access and authorizations codes could

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be implemented to also allow each country to trade independently through their Tender Board with different procurement methods classified by mutually agreed thresholds.

20. The regionalization o f procurement activities through the OECS Pharmaceutical Procurement Services Unit (PPS) has proven to be a sound and effective initiative. In addition to cost savings, i t provides a wide range o f related services, such as training and technical assistance, a common drug formulary manual, drug utilization studies, quality assurance, medical education seminars, and a tailor-made database program that alerts users to expired items and blocks expensive emergency orders. OECS PPS has been successful in handling an estimated 80 percent o f pharmaceutical purchases. However, i t s sustainability is threatened by late country payments for subscriptions and pharmaceutical purchases, which undermine i t s financial viability and creditworthiness with suppliers. T o date, OECS PPS has been able to sustain its operations and pre-finance some countries’ participation, by retaining part o f its surplus and earning income on i t s investments. It is anticipated that private sector involvement will build on the OECS PPS success and address some o f the issues currently faced by OECS PPS.

21. This subcomponent will therefore create, on a pi lot basis, a regional e-procurement platfonn, to which the OECS Pharmaceutical Procurement Service (PPS) will connect. This platform will initially allow for the publication o f online notices and award o f contracts (this i s a CARICOM requirement), while eventually moving to a transactional system for competitive tendering. I t i s expected that this subcomponent wil l implement the above using a Public-Private partnership (PPP). A PPP describes a government service or private business venture which is fbnded and operated through a partnership o f government and one or more private sector companies.

22. Given that the OECS countries have relied o n procurement agents since well before independence, very few public sector officials have received procurement training. There i s an urgent need to build human capacity in procurement. Consequently, most country-level issues are related to limited procurement capacity: lack o f procurement planning, inappropriate qualification and evaluation criteria, l imited capacity for contract administration, late payments to suppliers and contractors. As the OECS Secretariat wil l act as the implementing agency for the project and the task team recognizes that the OECS Secretariat i s also lacking in procurement capacity, the project will support capacity strengthening within the secretariat, particularly in the area o f procurement and to some extent in the area o f financial management.

23. The Project wil l support the final design and implementation o f an action plan for pooled procurement in the OECS. Countries that have expressed interest in joint ly procuring certain goods and services require an action plan focused on: (i) improving the economy and efficiency o f the procured goods and services selected for jo int procurement; (ii) identifying the necessary documents and procedures for such joint procurement; (iii) increasing transparency in joint procurement efforts; and (iv) enhancing accountability in joint procurement.

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24. The subcomponent includes the following activities: (a) Design and implementation o f an action plan for pooled procurement in the OECS, including assessment o f options for a PPP framework for e-procurement; (b) Development o f a regional e-procurement platform and transactional system for competitive tendering; (c) Upgrading and integrating to the regional e-procurement platform the systems o f the OECS PPS and related capacity enhancement; and (d) Application o f the regional e-procurement platform and the PPS experience to other types o f goods and services.

Subcomponent 2.5 E-Government in Health and Other Social and Productive Sectors -- US$830,000

25. This subcomponent wil l provide assistance in the implementation o f a regional pi lot project in health management information systems, and may be complemented with small preparatory and/or complementary activities in other social and productive sectors, such as agriculture and tourism, as well as education, among others. The core health elements o f this subcomponent wil l explore options, in synergy with existing efforts, for implementation o f standardized hospital facilities management systems and electronic patient records, including key linkages with national identification systems and c iv i l registries, as well as regional epidemiological monitoring programs. The subcomponent includes the following activities: (a) Implementation o f a regional e-government pi lot project in the health sector, through, in particular the design and implementation o f a regional health management information system, which may include facilities management systems, electronic patient records, regional information network and on-line tools for Health Ministries; (b) Preparatory activities and/or complementary support to existing e-government initiatives in other social and productive sectors, notably agriculture and tourism, as wel l as education, postal sector, or others as may be identified in the early stages o f the project.

COMPONENT 3 Project Management: US$650,000 (7% of total cost of the project)

26. This component wil l support the establishment o f the Regional E-Government Unit (REGU) described below, under the direction o f an overall Project Manager. The REGU will also include specialized staff located in the agencies identified in each country as focal points for the project, thus assisting in project implementation at the local level. To help manage the fiduciary aspects o f the project, there wil l be a Procurement Specialist, and a Project Accountant. There is also a provision for office space and equipment, as well as other operating costs. Finally, there are resources devoted to community outreach and public awareness, as well as annual external audits.

UNALLOCATED: US$480,000 (5% of total cost of the project)

27. Five percent o f total project costs are set aside as unallocated to allow for additional flexibility in complementing activities under the project.

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Annex 5: Project Costs OECS COUNTRIES: OECS E-Government for Regional Integration Program

Local Foreign Total US$ mi l l ion US$ mi l l ion US$ mi l l ion Project Cost By Component and/or Act iv i ty

1. Horizontal E-Government Interventions 1.08 1.58 2.66 2. Vertical E-Government Interventions 3. Project Management

1 .oo 2.70 3.70 0.45 0.04 0.49

Total Baseline Cost 2.53 4.3 1 6.84 Physical Contingencies (Unallocated) 0.09 0.09 0.18 Price Contingencies (Unallocated) 0.09 0.09 0.18

Total Project Costs' 2.71 4.49 7.20 Interest during construction

Front-end Fee Total Financing Required for Dominica, Grenada

and St. Lucia (FYOS) 2.71 4.49 7.20 Expected financing for St. Vincent and the Grenadines (FY09) 0.90 1.50 2.40

Total IDA Financing Required 3.61 5.99 9.60

Identifiable taxes and duties have been estimated at US$ 0.72 mi l l ion and the total project cost, net o f taxes, i s US$ 6.48 million. Therefore, the share o f project cost net o f taxes i s 90%. Please also note, that the project costs indicated in this table correspond to the amounts required for the f i rs t three IDA countries.

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Annex 6: Implementation Arrangements OECS COUNTRIES: OECS E-Government for Regional Integration Program

1. The project wil l be implemented by the OECS Secretariat, Regional E-Government Unit (REGU). For effective project implementation, the organizational structure will be defined at two levels: regional and national:

a. At the regional level, two new structures wil l be created, the Regional Technical Committee (RTC) for the project and the regional E-Government Unit (REGU), which wil l be a specialized unit within the OECS Secretariat, the implementing agency for the project.

b. At the national level, the project wil l be coordinated by the respective I C T or e- govenunent units, which wil l be the national focal points for the project and will provide assistance to the REGU in implementing the relevant activities at the national level. The national focal point wil l be in charge o f the day-to-day management o f the technical and logistical aspects o f the project at the national level, including the work program, coordinating with the relevant ministries and departments, and the preparation o f terms o f reference and technical specifications. These units will coordinate their work and receive guidance from existing national e-government or I C T steering committees (NSCs). N o new structures at the national level are being created for this project.

2. The R T C wil l be responsible for providing overall pol icy guidance to the REGU including monitoring and evaluation o f implementation progress and addressing implementation bottlenecks. Detailed description o f roles and responsibilities as well as composition o f the Steering Committees (RTCLNSCs), the implementing agency and the national focal point units will be included in the Project Operations Manual.

3. Given the multisectoral and regional nature o f the project, the R T C will be comprised o f country representatives appointed by the participating governments at the level o f Permanent Secretary or higher, as well as the OECS Secretariat. It will also include representatives from the other OECS states, CARICAD, CARTAC, ECCB and ECTEL, on an advisory role. The RTC wil l be chaired o n a rotating basis by the participating governments. The REGU will act as the executive secretariat o f the RTC. Any major pol icy decisions requiring the agreement o f the Heads o f State will be channeled through the OECS Secretariat to the relevant OECS Authority Meeting.

4. The REGU will report directly to the OECS Secretariat, will seek guidance from the RTC, and will be responsible for providing timely reports to the governments, the Bank and other donors. The REGU will be staffed with highly qualified technical staff selected from among the participating countries. Technical staff from CARICAD, CARTAC, ECCB and ECTEL may also act as advisors to this unit, as needed. This unit will consist o f a Project Manager, as wel l as a Procurement Specialist and a Project Accountant. I t will be assisted by one fully paid local specialist per participating country, who wil l be staff o f the REGU

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located within existing I C T or e-government units at the national level. Once alternative options are assessed, i t i s possible that during project implementation a Regional Center o f Excellence may emerge out o f the REGU, to support broad e-government implementation at the regional level, manage regional platforms and provide technical support.

5. At the national level, the project wil l provide assistance to strengthening existing national e-government/ICT steering committees as wel l as to national e-government/ICT units. This fbnction will be carried out in close consultation with the REGU. The national arrangements for each country are discussed in the paragraphs that follow.

6. In Grenada, the national focal point for this project will be the Central Information Management Agency (CIMA) located in the Prime Minister’s Office, in close coordination with the PS o f Human Resources and the Financial Secretary. This unit is headed by a Senior Advisor. This unit will be further strengthened with at least two additional persons at a senior level (Director, Manager or Senior Systems Analyst) from the commencement o f the Project. Allocations for such resources wil l be provided for under this project as necessary. A National I C T Steering Committee is in place which could also function as the steering committee for this project. This committee comprises the Permanent Secretary in the Office o f the Prime Minister; Permanent Secretary, Ministry o f Education; Permanent Secretary, Ministry o f Agriculture and the Minister o f National Security.

7. In St. Lucia, the eGovernment unit, within the Ministry o f Public Service, will be the national focal point for the project, in close coordination with the Permanent Secretary o f Finance. This unit i s headed by a Director o f E-Government and i s mandated to coordinate I C T initiatives across the Public Service and to implement several I C T related components under a European Union funded project, including capacity buildinghraining, I C T legislative and regulatory framework, process analysis and reengineering, systems integration and the community technology programme. The staff o f this unit also includes a: Project Coordinator, Business Systems Analyst, Website and Database Specialist and Research and Administrative Assistant. An E-Government Taskforce has been established, chaired by the Director o f E-Government and comprising the following: Project Coordinator and WebsiteLDatabase Specialist, E-Government Unit, General Manager, Computer Center Limited; MIS Manager, National Insurance Corporation; IT Manager, Universal Health Care; I T Officer, Police Department; Data and Records Officer, Ministry o f the Public Service and I T Managers o f the fol lowing MinistriesLDepartments: Finance; Education, Customs and Electoral. This Taskforce wil l serve as the steering committee for this project.

8. In Dominica, the national focal point for the project wil l be the Reform Management Unit (RMU) under the Establishment Department, in close coordination with the Financial Secretary. The staffing o f the RMU is expected to be strengthened through the EU SFA 2005 I C T Project, to include the following positions: Director/Coordinator o f E-Government; Systems Management Specialist; Process and Change Management Specialist and Database Specialist. Dominica has already established a national steering committee which could also function as the steering committee for this project. This existing steering committee consists of a representative from each Ministry with an IT department or IT related project.

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9. National implementation arrangements for St. Vincent and the Grenadines will be confirmed in the respective credit documents, however, the Ministry o f Telecommunications, Science, Technology and Industry is l ikely to act as the national focal point for the project, in close coordination with the Financial Secretary. The Information Technology Services Div is ion (ITSD), located in the Ministry o f Telecommunications, Science, Technology, focuses on training, development and maintenance, software evaluation, and coordination o f Government IT operations and projects. The principal objectives are the on-going development, operation and maintenance o f Computer Systems for ministries, departments and quasi government Organisations and to support a l l other government departments in terms o f planning, implementing, diagnosing IT Systems. The Unit i s we l l staffed, with a Director, responsible for the overall operations, an I C T Officer, responsible primarily for E- Government, as wel l as: a Web Designer, Web Editor, Database Administrator and Network Administrator, Operations Manager, Systems Analyst/Programmer, Computer Programmer, Senior Technical Assistant, Computer Operator and Technician. A National E-Government Steering Committee i s in the process o f being created under the EU SFA 2005 project, and could also act as the national steering committee for this project.

10. The REGU will be located within the OECS Secretariat. However, given that heavy demands have been made o f the OECS Secretariat by a variety o f donor-funded projects, without simultaneous building o f its capacity, through the creation o f the REGU, the project wil l place a particular emphasis on significant capacity strengthening within the Secretariat, particularly in the area o f procurement and to some extent in the area o f financial management.

IMPLEMENTATION ARRANGEMENTS - I OECS Secretariat I 1 1 OECS Authority

u

Committee E-government unit New Regional (REGU) Institutional Framework

for E-Government

E-govemmenWlCT unit

7 National

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Annex 7: Financial Management and Disbursement Arrangements

OECS COUNTRIES: OECS E-Government for Regional Integration Program

Risk Assessment

INHERENT RISKS

1. An assessment o f the proposed financial management arrangements for the EGRIP project was undertaken in December 2007 - January 2008. These arrangements include systems o f budgeting, accounting, financial reporting, auditing, and internal controls and to a certain extent are building upon already existing structures o f the OECS Secretariat. While the OECS Secretariat has experience o f implementing donor-financed projects, the magnitude and complexity of the proposed initiative will require significant capacity building measures to be put in place prior to the project’s effectiveness.

Risk Mitigating Measures Residua Risk

2. Based on the conducted assessment, the OECS Secretariat wil l have the adequate financial management arrangements in place, once the Actions Plan proposed at the end o f this annex is fully implemented.

Country level

REGU will have to deal with the challenge o f coordinating activities taking place in the 4 participating countries.

Since this i s a regional project, the

Entity level Whi le the OECS Secretariat has certain experience in implementation o f donor-financed projects, the complexity and magnitude o f the proposed project present a number o f n e w

Financial ManaPement Implementation Arrangements

S Whi le each country wil l have to sign an S individual creditlgrant agreement, f iduciary management wil l b e centralized in the REGU opened under the auspices o f the OECS Secretariat. The REGU will handle accounting, f inancial reporting and disbursements for a l l o f the individual ly signed agreements.

S A specially designated qualif ied Project S Accountant wil l b e hired to serve the project.

3, Annex 6 details the project’s implementation arrangements. The Regional E-Government Unit (REGU) wil l be created as a specialized unit o f the OECS Secretariat and will be responsible for the project’s implementation, fiduciary management and disbursements. W h i l e individual credit agreements will be signed with the participating countries, the project implementation, fiduciary management and disbursements will be centralized at the regional level.

Risk assessment

4. Table 7.1 summarizes the financial management assessment and risk ratings:

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challenges and will require significant capacity building. Project level

Risk 4ssessment

OVERALL INHERENT RISK CONTROL R I S K S Budget: project activities w i l l need to be reflected in the budgets o f participating countries as well as in the OECS Secretariat budget.

Risk Mitigating Measures Residual Risk

Accounting: project accountant w i l l be responsible for registering transactions for each credit agreement and consolidating them into a single project reports. Internal Controls

S

Fundsflow: individual contributions received from each credit agreements, w i l l then be combined distributed to pay for the shared activities.

w i l l be agreed during the project preparation. Project accountant will be trained to prepare these reports.

Qualified private sector audit fm w i l l be hired to audit consolidated financial statements o f the project, including activities pertaining to each o f the signed

M

Financial Reporting: single consolidated report will be prepared for the project. I t will include al l bank accounts opened for each credit agreement. Auditing

S OVERALL CONTROL RISK I s RESIDUAL R I S K RATING

Staffing

ountant. Install accounting softwar to support project operations.

ect account prior to being paid t bupplier.

S bormat o f the periodical financial report4 S

5. A designated Accountant will be hired to assist the project. This Accountant wil l have sufficient previous experience and adequate accounting qualification, and wil l report to the OECS Secretariat Financial Controller and to the Project Manager. In addition, a team assistant wil l be hired to work with both the Accountant and the Procurement Specialist.

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Budpeting

6. The project design does not require contribution o f counterpart funds. Project annual budgeting will be based o n the init ial cost allocation and procurement plan, and wil l be updated according to the latest information as the implementation wil l roll-out. The annual budgets will be prepared by the REGU. It then will be entered into the project accounting system and used for periodic comparison with actual results as part o f the interim reporting.

7. The project budget wil l be also added to the overall OECS Secretariat budget for monitoring purposes. In addition, prior to the beginning o f the fiscal year, the project accountant will communicate with the participating countries’ budget departments to provide them with al l the necessary information.

Accountinp System and Records

8. The project wil l use the Peachtree accounting software to maintain the project accounts. The software will allow for the tracking o f inf lows by funding source, and outflows by: (i) project component; (ii) funding source; (iii) disbursement category. Based o n this information relevant financial reports can be prepared. The accounting system will be adequately installed, and the Chart o f Accounts will be finalized by project effectiveness. Accounting transactions wil l be recorded as incurred, and al l primary supporting documentation wil l be maintained to facilitate ex post reviews and the external annual audits. Such documents should be maintained for a minimum period o f five years.

9. In addition, the project expenditures wil l be recorded in the main OECS Secretariat accounting system. While in the beginning this might be done as a one-line entry, i t i s expected that as the OECS accounting system will improve, the project expenditures will fol low a full-scale classification.

Internal Controls and Safepuard of Assets

10. The detailed accounting policies and procedures wil l be set forth in the project-specific Operational Manual. The Financial Management part o f the Manual wil l reflect the structure o f the implementing unit, administrative arrangements, internal control procedures, including procedures for authorization o f expenditures, maintenance o f records, safeguard o f assets (including cash), segregation o f duties to avoid conflict o f interest, regular reconciliation o f bank account statements, bank signing mandate (to include at least two signatories), regular reporting to ensure close monitoring o f project activities, as wel l as the f low o f funds to support project activities. The project specific information, i.e. the Chart o f Accounts, the formats o f the Reports, etc. wil l be added as part o f the Annexes to the Manual.

11. Assets acquired by the project wil l be in the custody o f the respective institutional departments in the respective countries, which wil l also keep copies o f the supporting documentation. The REGU will maintain supporting records and balances. At least one annual physical inspection wil l be undertaken by the REGU staff, preferably with the participation o f the external auditors.

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Interim and Annual Reporting

12. The REGU will be responsible for producing the consolidated Interim Unaudited Financial Reports (IFRs). The IFRs wil l be submitted to the Wor ld Bank on a quarterly basis, no later than 45 days after the end o f each reporting period. The IFRs will provide consolidated information pertaining to the project. As such, i t will include each o f the individually signed credit/loan/grant agreements, financing the project implementation. At a minimum, the IFRs wil l include a narrative outlining the major project achievements for the quarter, a statement o f the project’s sources and uses o f funds, a detailed analysis o f incurred expenditures, and reconciliations o f a l l project accounts (including the Designated Accounts).

13. Consolidated annualfinancial statements will include a statement o f the project’s sources and uses o f funds, a detailed analysis o f expenditures, a schedule o f withdrawal applications presented during the year, reconciliations o f Designated Accounts, Notes to the financial statements and a management representation letter. These reports wil l be prepared by the implementing unit and made available to the auditors after the end o f each fiscal year.

External Audit Arrangements

14. Consolidated project financial statements wil l be audited annually. For that purpose, a private sector audit firm will be hired on a competitive basis. The annual project financial statements will be audited in accordance with International Standards o n Auditing and the World Bank’s guidelines on auditing as stated in the guidelines: Financial Management Practices in World Bank-financed Investment Operations (November 2005). The auditors’ terms o f reference (TORS) wil l be prepared by the project and cleared by the World Bank before the engagement o f the auditor. The TORS will require the audit o f financial transactions as well as a review o f the internal control mechanisms and project’s compliance with the requirements o f the credit agreement.

15. The annual audit report will be prepared in a format in accordance with I S A and World Bank guidelines, and wil l include an opinion on the project’s consolidated financial statements, including Designated Accounts Reconciliations, review o f the internal controls, opinion on the project’s compliance with the terms o f the credit/loan agreements, and a management letter. The project’s annual audit report wil l be required to be submitted to the World Bank for review n o later than four months fol lowing the end o f the fiscal year.

Disbursement Arrangements and Flow of Funds

16. Designated Accounts. World Bank funds wil l be channeled to the project through Designated Accounts denominated in U S Dollars, which will be opened by the REGU in commercial banks. Since each participating country wil l have to s i g n a separate credit agreement, individual Designated Accounts wil l be opened to serve each o f these agreements. Separate withdrawal applications will have to be prepared to draw h d s from each o f the participating credits/loans. The Init ial Advance to the U S Dollar denominated Designated Accounts managed by the REGU, wil l be made fol lowing the project effectiveness and submission o f the init ial withdrawal application. After that, disbursements

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will be made according to the Requesting and Reporting o n the use o f Advance method (as described in the World Bank Disbursements Handbook), and will be based on withdrawal applications, SOEsRecords and, whenever necessary, other supporting documentation prepared and submitted by the REGU. Detailed instructions pertaining to the management o f the Designated Accounts wil l be specified in the Disbursement Letter.

Disbursement

17. Counterpart funds. N o counterpart funds will be required for project implementation.

I IDA

18. Project accounts. The REGU will open and operate local currency (XCD) and US$ project accounts, to finance project expenditures and facilitate payments to suppliers and service providers. The f inds received in the U S Dollar Designated Accounts will be periodically transferred (hnds sufficient to cover no more than 30 days worth o f expenditures) to the project accounts. These accounts will be operated in accordance with the procedures and guidelines set forth in the World Bank’s Disbursement Handbook.

category Project: Goods, works,

19. Payments to the suppliers/consultants. As eligible expenditures are incurred, the REGU will withdraw the amount to be financed by IDA from the U S Dollar Designated Accounts in accordance with the financing percentage specified in the schedule below and agreed in the credit agreements, and, if the regional activities/contracts are being financed, in accordance with the individual country’s share o f expenditures as defined in the TORS specifically prepared for such activities/contracts. These amounts will then be combined in the X C D or US$ Project account, f rom which payments wil l then be made to suppliers/consultants.

Grenada Dominica St.Lucia TOTAL share%

20. Direct Payments and Special Commitments. Project expenditures can also be financed by Direct Payments f rom the World Bank to service/goods providers. The Wor ld Bank can also issue Special Commitments if required and make payments under these Special commitments. The Minimum Application Size for Direct Payments and Special Commitments issuances will be communicated to the REGU in the Disbursement Letter. All withdrawal applications for Direct Payments and Special Commitment payments will be supported by hll documentation.

2.4 mi l l ion

2 1. Disbursements to the countries recipients by disbursement category (US$):

2.4 mi l l ion 2.4 m i l l i on 7.2 mi l l ion 100

consultants’ services, training, operating costs and audit services for the implementation o f the project. Total cost I 2.4 million I 2.4 million I 2.4 million I 7.2 million I 100 I

22. Retroactivepnancing. Retroactive financing will be provided under the project for up to 10% (Le.’ US$720,000) o f the project amount to finance eligible expenditures for project

80

activities incurred after June 2, 2008. The services, c iv i l works, and goods to be eligible for retroactive financing should be contracted following World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated M a y 2004, revised October 2006; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated M a y 2004, revised October 2006, and the provisions stipulated in the Legal Agreements. All procurement contracts proposed under retroactive financing wil l be subject to the Bank's prior review.

2

Supervision arranpements

Install accounting software and prepare a project-specific chart o f accounts

23. As part o f its project supervision missions, IDA will conduct risk-based financial management supervisions, at appropriate intervals. These will pay particular attention to: (i) project accounting and internal control systems; (ii) budgeting and financial planning arrangements; (iii) review o f the Financial Monitoring Reports; (iv) review o f audit reports, including financial statements and remedial actions recommended in the auditor's Management Letters; (v) disbursement management and financial flows, including counterpart funds, as applicable; and (vi) any incidences o f corrupt practices involving project resources. I t is recommended that during the f i rst year o f the project implementation the FM supervision wil l be undertaken every six months. This frequency wil l then be adjusted based on the ongoing project performance.

3

Financial Management Action Plan

Develop a project-specific Operations manual, including financial management section

24. The following table reflects actions which need to be fulfilled for project financial management arrangements to be considered acceptable to the Bank.

5 6

# I ProDosed Action

Draft the external auditors TORS Open designated and project accounts

Hi re a designated project accountant and team assistant

4 Prepare a sample IFR

Responsible Party OECS Secretariat

OECS Secretariat

OECS Secretariat

OECS Secretariat/ Wor ld Bank OECS Secretariat OECS Secretariat

Date of ComDletion Project effectiveness

Project effectiveness

Project effectiveness

Project effectiveness

Project effectiveness Project effectiveness

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Annex 8: Procurement Arrangements OECS COUNTRIES: OECS E-Government for Regional Integration Program

A. General

1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated M a y 2004, revised October 2006, and "Guidelines: Selection and Employment o f Consultants by Wor ld Bank Borrowers" dated M a y 2004, revised October 2006, and the provisions stipulated in the Legal Agreements. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loans/Credits, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

2. Procurement of Works: Although not expected, works procured under this project could include: minor refurbishing o f existing server rooms to accommodate I C T equipment and any ancillary electrical or air conditioning installation. Should need be, the procurement wil l be done using the Bank's standard bidding documents (SBD) for al l international competitive bidding (ICB) and national SBD agreed with the Bank for other procurement methods.

3. Procurement of Goods: Goods procured under this project would include information and communications technology hardware and software, office furniture and equipment. The procurement wil l be carried out using the Bank's standard bidding documents (SBD) for al l I C B and national SBD agreed with the Bank for other procurement methods.

4. Procurement under BOO/BOT/BOOT, concessions and similar private sector arrangements and performance-based procurement: Although this type o f involvement by the private sector i s not expected, PPPs in e-government may be executed in accordance with the relevant private sector provisions o f the Procurement Guidelines. Since the Bank has no standard bidding documents for this type o f procurement, the bidding documents will be prepared by the borrower in consultation with and agreed with the Bank.

5. Procurement of non-consulting services will include publication and dissemination services as wel l as communication and internet services. These services are expected to be procured using shopping procedures. As needed, national SBD agreed with the Bank wil l be used for procurement o f non-consulting services.

6. Selection of Consultants: Consulting services will be required, inter alia, for technical assistance, financial and technical audits, specialized advisory services, including software development, and capacity building. Where teams o f consultants are not required, individual consultants wi l l be hired to provide specialized advisory services to support project implementation and monitoring

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7. Operating Costs: Costs o f project management and monitoring, including related expenditures for the regional project technical committee, regional travel, office supplies, office rental, utilities, communication costs etc. wil l be financed by the project and procured using the OECS administrative procedures which were reviewed and found acceptable to the Bank.

8. Training: The project wil l finance al l costs associated with training, study tours, and workshops required for the implementation o f the project.

9. Project Operational Manual. The procurement procedures and SBDs to be used for each procurement method, as wel l as model contracts for works and goods procured, wil l be presented in the Project Operational Manual.

B. Assessment of the agency’s capacity to implement procurement

10. Procurement activities will be carried out by the Regional E-Government Unit (REGU) to be created within the OECS Secretariat. This unit wil l consist o f a Project Manager, a Procurement Specialist and a Project Accountant, as we l l as one local specialist per participating country who wil l be located within existing I C T or e-government units at the national level. The Procurement Specialist to be hired will have prior experience in managing and/or implementing World Bank financed projects or other donor funded projects.

11. An assessment o f the capacity o f the Implementing Agency (OECS Secretariat) to implement procurement actions for the project was carried out during pre-appraisal and appraisal missions by a Bank Sr. Procurement Specialist. The assessment reviewed the organizational structure for implementing the project and the interaction between the project staff responsible for procurement and the OECS Secretariat’s administration and finance staff.

12. The key issues and risks concerning procurement for implementation o f the project have been identified as follows: (a) the REGU within the OECS Secretariat will only be established and staffed after the project becomes effective; (b) the only procurement staff within the OECS Secretariat are located in the highly specialized Pharmaceutical Procurement Services (PPS) office, and are not available to implement this project; (c) the PPS, as a specialized agency responsible for the procurement o f 700 medical products, normally follows a restricted international tendering process and its staff are not familiar with World Bank procurement procedures; (d) the minimal prior experience o f I C T related projects and e-government PPPs within the OECS Secretariat, participating OECS countries and key stakeholders may result in slow project implementation due to the complexity o f I C T projects and PPP contracts, in particular with regard to preparation o f bidding documents, evaluation o f bids and contract negotiations; and (e) several issues related to the l imited procurement capacity throughout the OECS countries generate risks for Bank-financed projects in the OECS. These issues include, among others, a lack o f procurement planning, inappropriate qualification and evaluation criteria, l imited capacity for contract administration, and late payments to suppliers and contractors. In consideration o f the present capabilities within the implementing agency, and the fact that the REGU has not yet

83

been established and staffed, the overall project risk for procurement i s HIGH. Corrective measures to be agreed upon are identified in the Action Plan below.

18 months o f the project. 2. Establishment o f a Regional E-Government Unit (REGU) and recruitment o f a qualified Procurement Specialist with prior experience in implementing World Bank financed projects andor other donor b d e d projects. 3. Key project staff within the REGU to be trained in World Bank procurement procedures. 4. Prepare a project operational manual. The manual should contain a section on procurement arrangements under the project. 5. Establish o f a procurement f i l ing system satisfactory to the Bank.

OECS Secretariat By Effectiveness

World Bank Project Launch and

OECS Secretariat By Effectiveness Supervision Missions

OECS Secretariat During Implementation

C. Procurement Plan

1

Ref. No.

1.4c-G/2010

13. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on April 25, 2008 and i s available at the OECS Secretariat’s offices. I t wil l also be available in the project’s database and on the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

2 3 4 5 6 7 8

Contract Est. Proc. P-Q Domestic Review Expected

mUS$ (yedno) (Prior / Opening (Description) Cost Method Preference by Bank Bid-

Post) Date Equipment and software for 0.200 I C B N o N o Prior 04-22- 10

E. Frequency of Procurement Supervision

14. In addition to the prior review supervision to be carried out f rom Bank offices, the capacity assessment o f the Implementing Agency has recommended a project launch workshop and two supervision missions per year to visit the field to carry out post review o f procurement actions.

E. Details o f the Procurement Arrangements Involving International Competition

1. Goods, Works, and Non Consulting Services

(a) List o f contract packages to be procured fol lowing I C B and direct contracting:

84

1.4d-G/2009

1.5b-G/2009

2.1 a-G/20 10

2.1 ~-G/2009

2.2b-G/2009

2.2d-G/20 10 2.3b-G/2009

2.4b-G/2009

implementation support Office equipment and operating cost assistance to national e-Gov un i t s Development and Implementation o f svstem Hardware and sofhare for sub- comDonent imdementation Upgrade o f HR, budget, development o f interfaces and web-based public information svstems Design, development and implementation o f e-filing system Tax system maintenance contract Regional Customs Information Network and Customs system upgrades including electronic filing module and interface with budget and tax Development o f regional e- procurement platform and transactional system for competitive tendering

0.200

0.400

1 .ooo

0.538

0.500

0.200 0.330

0.280

I I

ICB INo I N o

Prior

Prior

Prior

Prior

Prior

Prior Prior

Prior

(b) All ICB contracts and all direct contracting will be subject to prior review by the Bank.

2. Consulting Services

(a) List o f consulting assignments with short-list o f international firms.

06- 1 1-09

08-28-09

04-08-10

03-26-09

04-05-09

04-09- 10 03-19-09

03-29-09

Description of Assignment

1.5a-C/2008 I Needs assessment and design for national ID system I 0.140 I QCBS I Prior I 12-02-08 3.lg-C/2008 I Audit Firm I 0.090 I LCS I Prior I 10-02-09

85

(b) Consultancy services estimated to cost above US$lOO,OOO per contract and al l single source selection o f consultants (firms) wil l be subject to prior review by the Bank.

Description

(c) Short lists composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

Contract Value Procurement Contracts Subject to

US$ thousands (Threshold) Method Prior Review

F. Thresholds for Procurement Methods and Prior Review

1. Works

2. Goods

15. Recommended thresholds for use o f the procurement methods specified in the legal agreement, and for Bank prior review o f procurement actions, are identified in the table below. Specific contracts which are subject to prior review are detailed in the Procurement Plan agreed at negotiations.

>1,500 ICB All 150-1,500 NCB All

4 5 0 Shopping None >150 ICB All

Note: I C B = International Competitive Bidding QCBS = Quality- and Cost-Based Selection FBS = Fixed Budget Selection CQS = Selection Based on Consultants' Qualifications SSS = Single Source Selection TOR = Terms o f Reference

N C B = National Competitive Bidding QBS = Quality-Based Selection LCS = Least-Cost Selection

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Annex 9: Economic and Financial Analysis

OECS COUNTRIES: OECS E-Government for Regional Integration Program

1. A calculation o f the NPV = US$ million; ERR = %; FRR = % for the program as a whole i s not pertinent. The Economic and Financial Analysis wil l focus on the overall economic relevance o f the program for the region as wel l as a selected cost benefit analysis.

General Analysis

2. Economic and financial analyses o f Technical Assistance Operations focus o n the broader economic impact o f the activity rather than attempting to calculate a rate o f return. The causality o f the technical assistance on economic indicators though strong, is subject to many externalities that can positively and negatively impact the outcome. However, in this particular case in addition to the economic impact, the activity i s creating necessary conditions for broader economic reforms.

3. The proposed first phase o f the program will have a wide range o f regional implications and benefits. While they are not being directly attributable to the program, would not be possible to achieve without it. The majority o f the program i s providing financing for technical assistance in selected OECS member countries. Such technical assistance primarily has an indirect effect and creates only l imited economic savings. The program focuses o n two areas: (i) creating an enabling environment for major reforms and regional cohesion (technical assistance), and (ii) one activity with direct economic savings (investment).

4. In addition the OECS EGRIP Program i s a two- phased Regional activity. Thus, in addition to the time dimension o f traditional programmatic operations, the economic analysis has to take into consideration the spatial dimension as well.

5. This analysis wil l focus on the first phase o f the operation and only o n the countries participating in the init ial phase: Dominica, Grenada, St. Lucia, and St. Vincent. St. Vincent was included since it i s expected to j o i n the program shortly afier the other three.

6. The economic effect o f the proposed operation will be analyzed in two separate categories: The overall Regional implications, the E-Procurement Component with its related savings.

Regional Impact (Technical Assistance)

7. The overall Economic and Financial impact i s far greater than the economic analysis o f the investment component wil l be able to show. Both, the Wor ld Bank CAS, as well as the IMF during the Article 4 Consultations reiterated that a common OECS Economy with free labor, goods and service migration, would be key to economic stability, growth and employment in the region. The OECS has agreed to take steps to create a joint political and economic union.

87

8. The creation o f such a single economic and financial space, with joint diplomatic representation, provision o f security services, tax and customs administration, utilities, transport, health and education, requires a large number o f supporting activities to realize it.

9. The IMF supports an Economic Union, and has urged the authorities to accelerate the simplification and harmonization o f legislative and regulatory framework and the regional level.

10. The Economic and Fiscal Union will have an impact on a number o f areas which are supported through this Program:

Fiscal consolidation 11. A combination o f a series o f uncoordinated income tax reforms and a surge in capital spending have created a deteriorating fiscal imbalance in the ECCU. The implementation o f a jo int VAT requires a jo int system to monitor and collect the VAT across the E C C U and redistribute the revenues. Component 2.2 Tax Administration System will facilitate this process in a centralized and thus cost-effective way. A regional system wil l prevent a multiplication o f cost to establish local systems.

Expenditure Management and Inflation Targeting 12. The Public Financial Management System of Component 2.1 i s the backbone for information sharing o f public revenues and expenditures. The creation o f a uniform standards and systems wil l allow for a more accurate reporting, and wil l limit unexpected expenditures. This wil l have a positive effect on inflation management and overall deficits.

Common Labor Market 13. The project i s supporting a National IdentiJication System in Component 1.5. This system i s key for an open labor market, and will improve the business-enabling environment due to the simplified processes. It i s a f i rst and major step to regional political integration, and will advance economic integration. Overall this wil l increase investment, and reduce transaction costs.

Customs and Free Trade Area 14. The introduction o f a Regional Customs Information System of Component 2.3 will reduce transactions cost, increase revenues, and reduce operational costs. A centralized database for customs will allow for unified guidelines and simplify imports and exports o f goods.

Employment 15. Though the Regional Center of Excellence or similar structure of Component 1.4 i tself wil l not employ a large number o f people, i t its capacity building mandate wil l have a positive effect both in governments and in the private sector. In training the trainers, the center will reach out and create local capacity in the member countries. This activity has a great potential to become a growth engine, if the center wil l include private sector training.

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Private Sector Development 16. Unified Legal and Regulatory Standards of Component 1.2 reduce transaction cost within the private sector across countries. With a common legal environment, the private sector can more easily take advantage o f economies o f scale as compliance i s consolidated.

17. Market entry costs are not artificially increased due to different rules and procedures, and thus the market base i s larger.

VAT and Customs Synergies 18. The inter-regional trade accounts to around 30 percent o f total OECS trade. With the establishment o f an OECS common market and the introduction o f a common VAT, the relevance o f an integrated VAT / Customs system i s essential to assess, collect and distribute the appropriate revenues resulting form the VAT. The main risk to VAT fraud i s the misdeclaration o f imports and exports and the subsequently unjustified r e h d s . Thus, an integrated Customs system will greatly improve the VAT assessment.

E-Procurement Component (Investment)

19. None o f the countries visited has a fully functioning electronic public procurement system in place. All the countries are in the process o f improving their procurement legal framework. World Bank assistance in this area would facilitate the enhancement o f this framework and would ultimately use international best practices to help build the institutional and technical capacity needed.

20. One example o f the benefits to the E-procurement systems o f the OECS that the EGRlP would provide i s in the area o f pharmaceutical procurement services. An e-government program would optimize the healthcare services to the OECS through facilitating the pooled procurement and management o f pharmaceuticals and medical products.

21, In 2006, over 12 mi l l ion X C D (US$4.4 million) was spent o n the annual purchase o f 700 different kinds o f products including pharmaceuticals, medical supplies, contraceptives, x-ray supplies and more. A study prepared for a recent WHO Expert meeting o n Regional Pooled Procurement in the OECS concluded that there was average cost-savings o f 37% from the pooled procurement for 25 Class “A” items between 1998 and 2002.

22. Pooled procurement provides coordinated informed buying, and centralized tendering and procurement. Annual spending on goods and services in the participating countries i s about 480 mi l l ion X C D in 2007 (US$ 178 million). Considering the substantial average savings o f 37% through the Pharmaceutical Procurement, i t i s safe to assume that the overall savings wil l be lower but substantial. Experience from Germany, Korea, and Romania show a common savings potential o f 10% to 30%, and a reduction in transaction cost o f 25% to 90%. Certainly, not a l l procurement can be done through the new system as the majority o f services would be provided locally, however if only 50% o f the expenditures would be eligible this st i l l would amount to savings between US$ 8.9 mi l l ion and US$26.9 mi l l ion per year. At a total cost o f US$ 1 million, i t can be expected that the investment will be

89

amortized in the first year. With respect to the whole project, the total costs are expected to be U S $ 10 million, and it can be expected that the amortization would be between one and two years.

23. This project would facilitate this and provide the following elements that would be critical for success:

Credible Procurement Agency 0

0

0 Admin and Political Commitment 0 Harmonization o f Drug Policy 0 Quality Assurance

Monitoring and Evaluation

K e y Common Elements such as Culture, language, ethnicity, and Political systems Gradual process o f country membership

24. Pooled procurement mechanisms and improved supply management practices wil l result in the reduction in unit cost and optimize and services to the OECS. The EGRIP would create an electronic procurement system and make public transactions information available on-line and readily accessible which would increase the transparency and efficiency o f government procurement. Such a system could be developed and installed for al l OECS countries, allowing national access and authorization codes so that each country can handle independently through their Tender Board regionally different purchases classified by mutually agreed thresholds.

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Annex 10: Safeguard Policy Issues

OECS COUNTRIES: OECS E-Government for Regional Integration Program

Social

1. The Project will have many positive social impacts; n o negative impacts are expected. The Project will have many positive social impacts, as indicated in other parts of this document, mostly related to improved delivery o f government services and i s not expected to have any negative social impacts.

Environment

2. No environmental impacts are expected f rom this Project. No major works are included in the project design. The increased use o f ICT in the delivery o f government services on-line i s l ikely to reduce the need for citizens to interact with government offices face to face, hence reducing the use o f transportation services, which wil l n o doubt have a positive environmental impact.

Safeguard policies

3. The proposed category i s C. Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP/GP 4.01) [I [XI

Natural Habitats (OP/BP 4.04) [I [XI

Pest Management (OP 4.09) [I [XI Cultural Property (OPN 1 1.03, being revised as OP 4.11) [X I

Involuntary Resettlement (OPBP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [X I

Forests (OP/BP 4.36) [I [XI

Safety o f Dams (OP/BP 4.37) [I [XI

Projects in Disputed Areas (OPBP/GP 7.60)* 11 [X I

Projects on International Waterways (OP/BP/GP 7.50) [I [XI

[I

[I

4. The physical components o f this Project will be l imi ted to the installation o f ICT hardware in existing buildings, and are not expected to require any major works. M ino r works may be required within existing buildings for internal ref i rb ishing o f facilities, such as server rooms, to accommodate ICT equipment and any ancillary electrical or air conditioning installations. The project i s therefore assigned to environmental category C under OP 4.01.

Policy Exceptions and Readiness

5. The Program does not require any exception to the Bank policies.

' By supporting theproposedproject, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas.

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Annex 11: Project Preparation and Supervision

OECS COUNTRIES: OECS E-Government for Regional Integration Program

1. The table below summarizes the project preparation and implementation schedule.

PCN review May 2,2007 Init ial PID to PIC May 2,2007 Ini t ia l ISDS to PIC May 2,2007 QER Dec. 10,2007 Appraisal Mar. 17,2008 Mar. 17, 2008 Negotiations Apr. 14,2008 Apr. 14,2008 BoardRVP approval May 27,2008 Planned date o f effectiveness Sep. 1,2008 Planned date o f mid-term review July 1,2010 Planned closing date June 30,2012

Planned Actual

2. Key institutions responsible for preparation o f the project include: OECS Secretariat

0 Dominica: Reform Management Unit, Establishment Department 0 Grenada: C IMA and HR Department, Prime Minister’s Office 0 St. Lucia: E-Government Unit, Ministry o f Public Service 0 St. Vincent: Ministry o f Telecommunications, Technology and I T

3. Bank staff and consultants who worked on the project include: Name TitleRole Unit Juan Navas-S abat er Roberto Panzardi Kashmira Daruwalla Tanya Gupta Svetlana Klimenko Wolfgang Koehling Enrique Fanta Anat Lewin Daniel Cooper Badrul Haque Rachel McColgan Rolande Pryce Miguel-Santiago Oliveira Randeep Sudan Snezana Mitrovic Patricia Macgowan Cletus Bertin Theodore Gering Samia Melhem David Gray

Task Team Leader Co-Task Team Leader Sr. Procurement Specialist RM Officer FM Specialist Economist Sr. Public Sector Specialist Operations Analyst Junior Professional Associate Sr. Country Officer Communications Officer Country Lawyer Finance Officer E-Government Practice Leader Lead Procurement Specialist Sr. Procurement Specialist Consultant Consultant Peer Reviewer Peer Reviewer

CITPO LCSPS CITPO LCSPS LCSFM LCSPS LCSPS CITPO LCC3C LCC3C LCC3C LEGLA LOAFC CITPO LCSPT LCSPT CITPO CITPO CITPO LCSDE

92

Jiro Tominaga Peer Reviewer ECSPE Jannina Flores Program Assistant CITPO

4.

a

a

5.

Bank funds expended to date on project preparation:

Bank resources: US$330,000 Trust funds: US$ 70,000 (Netherlands) Total: US$400,000

Estimated Approval and Supervision costs:

Remaining costs to approval: US$20,000 Estimated annual supervision cost: US$ 120,000

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Annex 12: Documents in the Project Fi le OECS COUNTRIES: OECS E-Government for Regional Integration Program

1. OECS: Towards a New Agenda for Growth, World Bank 2. Doing Business 2007: OECS, World Bank 3. OECS Fiduciary Policy Note, World Bank, 2007 4. OECS Institutional and Organizational Capacity Review o f the Core Public Sector (IOCR) 5. Market Research Surveys, Ltd., OECS Citizen Survey, 2005 6. Improving competitiveness and increasing economic diversification in the Caribbean: the

role o f ICT, infoDev, 2005 7. CARICOM Connectivity Agenda, 2003 8. Action-Oriented E-Government Strategy for Countries o f the Caribbean Region 2004-2007 9. Assessment o f Current Operation o f SIGTAS and a Diagnosis o f Short-term Needs, Philippe

Dadour, September 2007 10. Advisory Services for Diagnostic Study and Action Plan - e-government in the OECS

Region, Theodore Gering, June 2007 1 1. Consultant reports by Cletus Bertin 12. Letters from Prime Ministers o f Grenada (June 28, 2007), St. Lucia (Dec. 24, 2007),

13. Minutes: Project Concept Note Meeting, May 2,2007; Quality Enhancement Review, Dec. Dominica (Jan. 10,2008) and St. Vincent (Jan. 29 2008)

1 1 , 2007; Decision Meeting, Mar. 10, 2008; Negotiations, April 16, 2008.

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Annex 13: Statement of Loans and Credits

OECS COUNTRIES: OECS E-Government for Regional Integration Program

Difference between expected and actual

disbursements Original Amount in US$ Mil l ion

Proiect ID F Y Purpose IBRD IDA SF GEF Cancel. Undisb. Oria. Frm. Rev’d

PO94539 2007 OECS-Catastrophe Insurance 0.00 14.20 0.00 0.00 0.00 7.19 -7.15 0.00

PO88448 2005 OECS-Telecomm & ICT Development Pro 1.35 1.35 0.00 0.00 0.00 2.05 0.91 0.00

PO73267 2004 OECS Protected Areas and Associated Live 0.00 0.00 0.00 3.70 0.00 3.08 1.85 0.00

Total: 1.35 15.55 0.00 3.70 0.00 12.32 - 4.39 0.00

OECS COUNTRIES STATEMENT OF IFC’s

Held and Disbursed Portfolio In Millions o f U S Dollars

Committed Disbursed

F Y Approval Company

IFC IFC

Loan Equity Quasi Partic. Loan Equity Quasi Partic.

Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment

F Y Approval Company Loan Equity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

95

Annex 14: Country at a Glance OECS COUNTRIES: OECS E-Government for Regional Integration Program

World Bank in at a Glance

Antigua and Barbuda

2005

Urban wpuiewn (% of total popuianrn) Poverly (% of population below U S 1 per day) GNI per capita, AHaa method (current USS) GDP gmwm, 1995-2000 and 2000-5 (%) Adult ilteracy rate (% 8ges (5 and wer) Pnmary, secondary, Lenhsry school enrollmml (% gross)

1,011 70

35,264 2.2 49 92

IC1 sector structure Separate telecommunications reguIstM Status of main fuCd-Ime operator Level of competibon. ntemational long dtrtsnce Level of compettbon mob& Lev6 of compefitm: htemet sewice provlder Government pnontlzathn of ICT (scale 1-7)

Access Telephone man Bnes (per 1.00 people) Internibonel voice tretrc (minules per person). Mobile subscnbers (w 1,000 wpk) Populabon covered by mobile telephony (%) Internet users (per 1,WO peqple) Personal computers (pep 1,000 perrpte) Households wdh television (%)

Quality Telephone fault8 (per 100 main Im8 per year) Bmadbnnd subsdbm (per 1,000 p p k ) lntemabonal lntemet bandwidth (irtr per penon)

Afflwda&lf!y Pnce basket fw fixed line ( U S per month. residenenhall Pnce basket for moble CUSS per month, 2006) Price basket for hternel (US$ per nwnth) Pnce of call to United StBtes iUSS per 3 mmules)

lnsbtubonai efficiency and susfainabrlity T ~ t a l tefemmunicamn revenue (% of GDP) Total telephone rubscn$ers per employee Total telecommunicaims inveiiunent (% of revenue)

IC:Tsppiicpt?ms ICT expenditure I% of GDP) Eqwernment nadlneas mdex (scale 0-1) Secure internet servers (per 1 millton people, 2006) Schools connected to the Internet (X)

503 171 035 99

527 579 97

9 8 163.2 4,557

27.8 17.8 19.9 0 76

4 5 586 15 1

7.2 0 77

444.4 99

96

Dominica at a glance 9 m 7

POVERTY and SOCIAL Dominica

0.07 3.960 0.29

0.2

73 77 13

97

92 93 92

1996

0.24 27.5 51.3 17.4 13.8

-13.7 0.9

M. 1 5.2

Mo5

3.4 2.6

Latin AmsriC8 & C&.

556 4,767 2,650

1.3 2.1

76 73 26

91 90

118 120 116

2005

0.26 25.1 45.0

1.1 1.2

-23.5 1.9

88.7

76.7

2006

4.1 3.5

uppr- middle- income

810 5,913 4,790

0.8 1.3

75 70 26

93 93

t l 2 to6 104

2006

0.30

200640

Development diamond'

Life expectancy

I T

Economic ratios'

Trade

STRUCTURE d the ECONOMY

(s( of GDP} Agriculture h h w

Mwwfschlrlng Services

Household finad ccnwrnpm expendttun General govYfinai mumphon expenditure Impacts Of goods and senices

1986 1996

30.2 19.9 145 21.7 6 7 7.3

552 58.4

63.1 62.4 205 20.2 592 61.4

1986-96 199646

-0.9 -2.2 5 8 4.9 3 2 -2.0 3 8 0.4

2 4 5.4 2 7 03 3 4 -9.6 2 1 0.0

2005

68.6

2005

Growth of u p i u and GDP (%) w

0

40

-in0

V C F -GDP

I I Growth of exports and imports I%)

Note: 2006 data are prelimmafyebtmalas Thls table WBS pmduced fmm the Development Economics L M database * The dianronds show fair hey mdtcatm In b e country on bold) canpared wil~ its lncmns-grca@ ever* If data are mimng, the dtasnofd wli

be incomplete

97

1988

2 3 6 2

'19.86

1986

m 66 -?

-3 7

-2

'j -13

3 2 -

198s

57 0 5

5 0 0

4 1 0 5 0

0 0 0 0 n 0

I

2006

1 tt

tn

L t

C

Curropt ac5~unt balance ta GOP 4 % )

BE! ^ -

98

World Bank ICT at a Glance

Dominica

Access Telephone mam lines (per 1,000 people) tntemebonal vom traffic (minutes per person)' Mobile fabscrwrs (w 1,000 pscrpie) Populam covered by mobile telephony (%) Internet users (per 1 ,Ow people) Personal emputera (per 1,000 paopb) Households wth tedevlmn (%)

Qualm Telephone hub (per 100 main Ims per year) Broadband suhscnben (per 1,000 w p l e ) lntcmational internet Iranhndth (bb per person)

Afor$abfldy Pace basket for fixed line (US0 per month, rcsdcntaal) Prrce W e t for mble (US5 per monm. 2006) Pnce h k e t for lnternet (USS per month) Prrce 04 cell to United Staler (US$ per 3 mnuter)

InJblldJVMl u?nIency @MI suSlc?rMbrfi@ Tom1 talecmunicabna revenue (% of GDP) Total telephone subscnbera p4r employe Total telecwnmunicatm investment (Ox d revenue)

ICT spplkahons ICT cxwnditure [%of ODP) E-govmmnt readiness miex (scale @-I) Secure Internet DGIVWS (per 1 milbn peopk, 2006) Schoclr connected to the Internet (So

230 46

671

195 113 91

21 2 21 0 218

12.1 9 5

17 0 106

3 6 583 24 3

5.2 0 54 16.9 60

177

439 90

156 88 87

18.5 76f

10.0 9.4

2s 8 I80

4 3 390

5.9 0.48 12.0

of t0t.l populam) bon bekwr US01 per day) memal (current USS) 000 end 2000-5 (%)

8 8

Separate telecommunicahons regulator status of main wed-lrne operator Leva1 of wmpeWDn tntarnabonal long distance Level of competition. mbile Level of CompeWm lntemtaerdicc wv&r Government pnofttization of ICT (scale 1-73

'7

99

Grenada at a glance 9 m 7

POVERTY aml SOCIAL Grenada

0.11 4tr20 0.48

1.1

31 73 17

95

93 94 91

1996 0.29 35.2 44.7 14.3 15.6

-19.6 0.6

47.4 5.4

2W5

1.5 0.8

Lath America 0 Carib.

556 4,767 2.650

1.3 2.1

78 73 26

91 §Q

120 116

118

2005 0 47

-37.1 0.7

65.4

89.0

2006

6.5 4.9

Upper- middle-

810 5,913 4,790

OB 1 3

75 70 26

93 93

112 106 to4

2006 O S 2

200620

Development diamond'

GNI Grow

C W enrollment per wmaw

L

Access to improved water IXMC%

l - Upperm'ddk-incPme graup -Grenada

Eawlomic ratio+'

Trade

STRUCTURE of the ECONOMY

(76 dGDP) Agncvlture ind$rsby

Services Househdd final mnsumptm expendbtwe General ~ v ' t Mal mumpbon expendrture Impwts of goads and S ~ N I C ~ ~

Manufadunng

1986 1996

168 8 6 1 7 f 200 5 6 6 7

6 5 5 713

71 9 693 186 16.4 n 5 656

(average affWprobttb) Agncvlture lndwtry

Mmwkctunng SeWICE3

Househdd final mnsumptron mpendbtwe General wv2 mal mnaumpbon wqxndrture Gross captal fc?malroo kn& Of goods d SeMCe8

1986-96 199646

- 1 1 2 8 4 5 5 0 6 3 2 6 3 6 2 9

2 2 4 6 0 7 4 6 3 % 3 7 1 3 4 3

2005

2005

2006 Grouth of capital and GOP (%)

Growth of exports and imports ( W ) I

I I

Note data are prelimnary es4mates mts table was pcoduesd from the Development Economics LDB dabbase

The diamcnds show fwr key mdiieetas in the 00- (YI bold) m p a r e d wth its inma-gnwp average H date are minsmg, the damond will be incomplete

100

101

World Bank * ICT at a Glance

Grenada

Populabon, total (millions) Urban popukmm (% of total pcpuktkn) Povem (46 of powlat(0n below U S 1 per day) GNI per csplts, AMm m%od (current US$) GDP gram, 1995-2000 and 2000-5 (96) Adult Meracy rate (?6 ages 15 and over) Pnmary, secondary. tenhsry s c b l enrollment (% gross)

Separate telewmmunicabons reguletol Status of mam KxCd-iine optrator Level of cwnpetrtron mtematmal long distsnot Level of cumpebtwn mobile Lev& OT Competmon’ lntemet sewice p r o v m Government pnonbratm of ICT (wale 1-7)

6W 551 72 77

8.6 5,634 4.045

3.5 2.3 94 40 79 BO

4.1 3.7

Accebs Telephone main lines (per 1 . m people) lntemabnal v o w traffic (minutee per person)’ Mobile aub8cmrs (per 1,000 people) Populabon covered by mobile Lclepbny (%) Internet u r n (per 1,OOO people) Personat computers (per 1,000 peop!e) Households vnth felevitm f%)

CJUerliY

-Fmd I mkik Mbrsr$m

Telephone faults (per 1 DO main Imes per year) Broadband subscribera (per 1,000 people) lnternationd Internet hndwdth (bits per penon)

d.flordobflity Pnce basket fa fixed llne (US$ per momh, res~dentml) Pnce Lrssket for mobile (US$ per month, 330006) Pnce basket for @terne! (uSS per month) Pnce of call to Uncted Slates ( U S per 3 murutas)

Insmohonsi eRmency end susteinsbrhty Total telecwnmunicabons revenue (%of GDP) Total telephone aubscnbera per employee Total telccwnrnunicatma Investment d of revenue)

ICT eppllcelions ICT expendlhrre (%of GDP) E-govemment readiness mdex (scale 0-1) Secure Internet sewers (per 1 mllllon p p k , 2006) S C b k ConnectEd to me Intenlet (%)

12.1 9.5

17.0 1.06

3.6 583 24 3

5.2 OW 16.9 60

10.0 9.4

25.8 1.50

4.3 390

5.9 0 48 12 0

1 i

102

St. Kitts and Nevis at a dance

2006

.. '. ..

912m7

Growth of capital and GDP (%) 6p

9p

30

B

-m

GDP (US$ Ntkws) Grou capdal fonnationlGDP Expahs of gcrods and d c e s l G D P Gross danesbe savngslGDP Gross national savlnpsEGDP

Current account belanceiGDP Interest paymenW0P TOM debtlGOP Tab! debt strvice/expolts Present Wue of deWljDP Present value 0rdebVexpci-b

0.09 27 3 61 4 11 7 234

-62 0 5

17 9

1986-96 1996-06 l'everege m u & growfi?) GDP 4.7 3.3 GDP per capita 5.2 t.2 Experts of goods and sewices 2.9

SL Kim and

Nevir

0.05 8,840 0.43

1.5

32 71 18

100

99 96

102

1996

0.25 45.9 49.7 16.9 15.4

-30.5 0.8

26.3 5.5

2005

4.1 1.9

Latin America & C8tiib.

556 4,767 2,650

1.3 2.1

78 73 26

91 90

118 120 116

2005

0.45

-20.9 4.5

66.5 20.6 65 6

128.0

2006

4.6 3.7

Upper- middle- income

810 5,913 4,7w

0.8 2 3

75 10 26

93 93

112 106 104

2006 0.49

2006-10

STRUCTURE of the ECONOMY

(% of GDPJ Agnclriture Industry

Servrcea

HarsehoM final consumptwn expendkture General govl I%& consumpboa expendflure Imports of goads and sefmea

W a a u n n g

iauer8ge ennuel gfowdhl AgnWre Induslry

Services

Harsehdd fine8 consumptm expenditure General gCnn final axrsurnptioo expendrture Gross capctal fonnatiDn Imports of goods and m c e s

MBnufacIuring

1986 1996

108 5.2 24.7 24.6 15.4 10.3 64.5 70.2

E45 63.2 198 19.9 77.0 78.7

1986-86 199646

-05 0 3 3 9 5.7 0 8 5.4 5 8 1.7

3 6 -01 5 0 4.0 6 5 4.9 3 1

2005

2005

Development diamond'

Me expectancy

T ohll Gross per primary caans enrollment

L

Access to improved water scum

Economic ratioe+

Trade

-GCF -GOP

Growth of exports and imports (H)

.. 0 ni n7 nr N N ffi -EXpOrV. -Illpoi%

Growth of exports and imports (H)

.. 0 ni n7 nr N N ffi -EXpOrV. -Illpoi%

I I IJote tam data are preliminary estimates Thfs tabk wa5 produced fmm the Developmenf Economics LDB database * The diamonds show four key indicatms in the ccuntry (m bold) mpared wth its ~ncinne-prwp average tf data are missmp, the d w m d will

be incomplete.

103

1898

1 w -0 7

30 5 3 9

-3 3

43%

34 17

I S 142 23 s

40

a

t 496

*27 I33 -7. I

-7 1 4iT

-75

75 -3

3s -1.7

l rn6

65 3 1 .. 7 0 0

"0 -1 35 0

5 0 0 0 0 0

2005

18 7.6

36 4 2 1

-4.1

2005

52 8

I so

2005

232 234 -52 -6 1 19

-95

2 7

2005

301 13 1

43 2 3

2 1

-14 47 0

1 1 1 0 1

-1

I

1 EO

tm

a

-17

104

St. Lucia at a glance mm7

POVERTY and SOCIAL S t Lucia

0.17 5,110 0.85

1 .o 2.3

28 74 12

98

109 110 157

1996

0 57 21.4 62.3 15.2 11.2

-10.2 0 9

2S.O 3.3

2005

5.8 4.3

LStill America

C.rib,

556 4,767 2,650

1.3 2.1

78 73 26

91 90

118 120 116

2005

0.83

1.7 51.5

50.6

2006

4.9 4 1

Upper- middle- 'mmme

ai0 5,913 4,790

0.8 1 3

75 70 26

93 93

112 1% 1W

2006 (1.91

2006-10

Economic ratios*

Trade

STRUCTURE of the ECONOMY

fss of GOql Agriculture hdUSlry

Services

Harsehoid final conwmptm expenditwe General goVt lrnsl mumpbon evpendlture

MrvKlfaduring

hpO& of goods aod S e M C e S

1986 1996

l8 . l 8.9

8.2 6.8 64.7 72.0

172 18.8

632 69.2 200 15.6 81.9 68.5

198696 1996-06

1 3 4 6 5 3 1.5 13 4.2 5 5 1.8

2005

2005

2006 Growth of up i ta l and GDP (96)

-GCf -GDP

L I Note 2006 data are prelimnary esbmates. Thm table wag pmduced fmm the Development Econumtcs LD8 drtabme

The diamonds show f a ksy indii#tm in the oountiy (tn bid) mpared wth #s Inme-gnwp marage If data are mlsstng, the dramond wll be inwmpMe

105

1986

2 0 5 9

28 1 2 8

-4 2

W E

83 53 I

I? a 55 31 42 31

96 97

ID0

i 986

1m 5 85 -18

-5 38

-6

$6 -2 f

15 2 7

'i98Ei

52 0 0

7 0 0

3 7 3

15 0

0 0 0 0 0 0

3996

0'3 -0 9

14 3 3 G

-27

dY%

8!3 47

1 27

344 83 76 68

IBJ 117 89

i 9%

353 3.98 -56

56 13

-58

51 7

54 2.7

lWEi

a42 4 8

13 0 0

78 II 0

78 D

0 3 0 3 a

2005

3 3 -?a

25 0 4 3

-5 0

2005

1 i3B

44 a

2005

2 7

20%

42% 10 27

33 2 1

5 2

-5 108

a

9 5 1 3 1 3

rm

'M

B

3

5

-13

- IS

-B

106

Worib Bank K T at a Glance

St. Lucia

Separate telecommunrcabOna regulam StaRrs of mein fixWlne operator Level of competlbon. nlemattonal bng distance Level of c ~ ~ n nxrbils Level of cornpelttan htemet service provlder Government pnontizatun of ICT (sale 1-7)

Access Telephme mea lines (per 1,000 people) lntemabonal voice traffic (mmutes per person)' Mobile wbscrrbsrs ipef 1,000 people) Populabon covered by mobile telephony 1%) bnbrsl users (pef 1,000 people) Personal computers (per 1,000 people) Households w@ Mevlsbm (%)

QuaW Telephone faults (per 100 main lmcs per year) Broadband subscnben (per 1,000 people) Internabmat Internet bandwidth p&s per person)

A M a M t y Pnce basket for Rxed line (US5 per mnth, resdcntrsl) Price basket formokle (USS per month. 2M16) Price basket fw Merne1 (US$ per month) Price of ea11 to U n M States !US$ per 3 mnutes)

tnshtutrhnal &h?l@Wj' e& SusraUrebAltf Topel telecannuntcabra revenue (%of GDP) Total telephone eubscnbers per emptoyee Total telecommunicstms iRvement (% of revenue)

ICT appkabons ICT expenditure 1% of GDP) E-government readmeas index (scale 0-1) Secure Internet sewers (per d millm people. 2006) Schools connected to the lntemet (96)

230 46

671

196 113 97

2 f 2 21.0 21 6

12.1 9 5

17.0 106

3 6 563 24 3

5.2 054 16.9

60

I 77

439 90

1% 88 87

165 f61

IO 0 9 4

180 25 a

4 3 390

5 9 046 12 0

107

St. Vincent and the Grenadines at a glance g128/07

22: POVERTY and SOCIAL Development diamond*

S t Vincent and the

Grenadines

0.12 3,930 0.47

0.5 2.1

46 72 17

111 117 105

1948

0.28 28.0 52.9 14.7 14.7

-12.6 1.0

44.3 6.7

2005

2.2 1 7

Latin America 6 Carib.

556 4,767 2,650

f .3 2.1

78 73 26

91 BO

118 120 I16

2005

0.43 31.0 44.4 11.6 7.9

-24.0 1.9

65.7

62.4

2008

4.1 3.6

8tO 5,913 4,790

0.8 I .3

75 70 26

93

Life expectancy

T

1 Acceea to tmpmved wafer source

MOB

0.47 Economic rarior.

.‘ I I

2006-10

STRUCTURE of the ECONOMY

(SS dGDP) Agriculture Industry

S e M C e S

Hovsehold final msumphm expendrture General gw? fmsil omsum- expenditure

Macxrfaehrnrg

lmporta of goods and BBiY iCeS

1986 1996

191 125 2 4 3 24.3 103 8 3 566 631

584 568 196 285 800 662

1986.96 199606

0 2 -05 4 2 2 0 1.7 -2.4 5.3 4.0

3 3 1.4 7 1 -2.4 2 1 0 4 0 6 -0.5

2005

69.0 19.3 64.8

2005

Growth of capital and GDP (%I 39

i s

.i5

J U

-GGF -GOP

I (3rolwth of exports and imports 1%) I

Nate. 2006 data are preiiminaryestmates Th~e table mcs produced from the Development Emnomics LD8 database

The diamonds show fcur key ndscators in the country (in bold) cwnpand wth it% income-gnwp weraga If data are misscng, the dremond mli be Incomplete

108

2uO5

QT 3 0

?Y c -- - -5 9

2m5

41 Y

18

2005

191 273 -57

-33 14

-1313

133 8

2.7

2w5

232 1

15

24 0 0

5 5

23 545

3

t 3 0 3 0 3

E ~ p ~ a f and import levels [US$ mill j

X6 T

2008

2 7

3

-I:

109

World Bank ICT ut a Glance

St. Vincent and the Grenadines

8 6

Separate telewmmunrcatans regulator Status of main fuedline operator Lave! of competitron rntemabonal bng d l l t a n ~ Level of competibon' mbde Level of compchtron htemet M N i O C pmvKIa Government pnontuabon of ICT (=arc 1-7)

ICT sector performance Access Telephone msn lines (per 1,M)O people) hlemahonal V Q C ~ tramc (minutes psr person}* Moixle wbscraxrs (per 1,000 people) Popolsbon covered by mobile telephony (%) Internet usera (per 1 ,wO people) Personal computer8 (per 1,000 peopce) Households vnth teieviston i%)

Qualify Tel+ghone faults (per 100 main I m s per p e r ) Broadband rubscrltKrs (per 1.000 people) Mmabonal lntemet LrandwiWI ( b e per person)

Afoorddbiirty Pnce W e t for f i x 4 line (VSS per mc&, residential) Pnce basket for mobile (USS per mmih, 2006) Pnce basket for Lnternet (US$ per month) Pnce of call to Un114 States (US$ per 3 mhutfs)

/nah/ubons/ effrcremy end susadnabildy Total telecommunicakms revenue (56 of GDP) Total telephone subscrlrnrs per empbyee Total tekcommuntcatrom investment (X of revenue}

IC T epprrcphons E T expenditure {% of GDP) E-government readiness index (scale 0-1) Secure Internet servers (per 1 milimn people 2006) Schds cmected to the lntemet (%)

196 158 f 13 58

91 87

21 2 21.0 16.5 218 (61

12.1 10.0 9.5 9.4

17.0 25 3 1.06

3.6 383 24 3

5.2 054 16.9 60

110

Puerto Rico (US) VirginIslands(US)

Virgin Islands(UK)

BARBADOS

TRINIDAD andTOBAGO

R . B . D EV E N E Z U E L A

Anguilla (UK)

St. Maarten (Neth),St. Martin (Fr)St. Barthelemy (Fr)

St. Eustasius (Neth)

Montserrat (UK)

Guadeloupe (Fr)

Martinique (Fr)

Saba (Neth)

ANTIGUA AND BARBUDAST. KITTS and NEVIS

DOMINICA

ST. LUCIA

ST. VINCENTand the

GRENADINES

GRENADA

AT L A N T I C

O C E A N

C a r i b b e a nS e a

18°

17°

16°

15°

14°

13°

12°

11°

10°

19°

20°

63°64°65°66°67° 62° 61° 60° 59°

66°67° 65° 64° 63° 62° 61°

18°

17°

16°

15°

14°

13°

12°

11°

19°

20°

Area ofMap

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endorsemen t or a c c e p t a n c e o f s u c h boundaries.

0 50 100 150

MILES

THE CARIBBEAN AREA

ORGANIZATION OF EASTERN CARIBBEAN STATES

OECS PARTICIPATING MEMBERS

IBRD 33564

AUGUST 2004