Document of - World Bankdocuments.worldbank.org/curated/pt/... · Document of The World Bank FOR OFFICIAL USE ONLY

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 74840-AFR

PROJECT PAPER

ON A

PROPOSED ADDITIONAL GRANT

IN THE AMOUNT OF SDR 43.3 MILLION (US$65.0 MILLION EQUIVALENT)

AND RESTRUCTURING

TO THE

AFRICAN CAPACITY BUILDING FOUNDATION

FOR THE

ACBF REGIONAL CAPACITY BUILDING PROJECT

November 21, 2013

Poverty Reduction and Economic Management AFTP1 Africa Regional Integration (AFCRI)

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 30, 2013)

Currency Unit = US$

US$1 = SDR 0.66491130

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AAP Africa Action Plan ACBF African Capacity Building Foundation ACIR African Capacity Indicators Report AERC African Economic Research Consortium AFCRI Africa Regional Integration Unit AFDB African Development Bank APIF African Policy Institutes Forum BIDPA Botswana Institute for Development Policy Analysis CAPAN Projet de Renforcement des Capacités de l’Assemblée Nationale (National

Assembly Capacity Building Project) CAPES Centre d’Analyse des Politiques Economiques et Sociales (Center for

Economic and Social Policy Analysis) CAS Country Assistance Strategy CEPA Center for Policy Analysis CEPOD Centre d’Etudes pour les Politiques de Développement (Center for

Development Policy Studies) CGIAR Consultative Group on International Agricultural Research CLK-Net Country Level Knowledge Networks COI Conflict of Interest COSO Committee of Sponsoring Organizations of the Treadway Commission CDMAP Capacity Development in Africa Management Action Plan CESAG Centre Africain d’Etudes Supérieures en Gestion (African Center for

Graduate Management Studies) CODESRIA Council for the Development of Social Sciences Research in Africa COMESA Community of East and Southern African Studies CPIA Country Policy and Institutional Assessment EB Executive Board ECCAS Economic Community of Central African States ECOWAS Economic Community of West African States EPAM Economic Policy Analysis and Management EPM Economic Policy Management

ES Executive Secretary ESAMI Eastern and Southern African Management Institute ESRF Economic and Social Research Foundation GIMPA Ghana Institute of Management of Public Administration HESPI Horn Economic and Social Policy Institute IBRD International Bank for Reconstruction and Development IDA International Development Association KIPPRA Kenya Institute for Public Policy Research and Analysis K&L Knowledge & Learning MDAs Ministries Department and Agencies MDTF Multi-Donors Trust Fund MAP Management Action Plan MEFMI Macroeconomic and Financial Management Institute of Eastern and

Southern Africa M&E Monitoring and Evaluation MfDR Managing for Development Results OECD Organization for Economic Cooperation and Development ORAF Operational Risk Assessment Framework PACT Partnership for Capacity Building in Africa PARP Policy Analysis and Research Project, National Assembly PDO Project Development Objectives PIC Policy Institute Committee PRCS-RCA Projet de Renforcement des Capacités en Statistiques – République

Centrafricaine (Central African Republic – Statistics Capacity Building Project)

PTCI Programme de Troisième Cycle Inter-universitaire (Post-Graduate Inter-University Program)

RBM Results-Based Management RECS Regional Economic Communities RE-MDTF Recipient Executed Multi-Donor Trust Fund RMF Results Monitoring Framework RIDA Regional IDA SADC Southern African Development Community SMTP Strategic Medium Term Plan SOE Statement of Expenditure SSG Strategic Studies Groups UNDP United Nations Development Programme WAMI West African Monetary Institute

Vice President : Makhtar Diop

Country Director : Colin Bruce Sector Director Marcelo Giugale Sector Manager : John Panzer

Task Team Leader : Deryck R. Brown

REGIONAL


CONTENTS

ADDITIONAL FINANCING DATA SHEET ............................................................................. i

Project Development .................................................................................................................... iii

I. Introduction ........................................................................................................................ 1

II. Background ......................................................................................................................... 2

III. Rationale for Additional Financing .................................................................................. 6

IV. Proposed Changes ............................................................................................................ 16

V. Appraisal Summary ......................................................................................................... 18

VI. Conclusions ....................................................................................................................... 59

VII. Lessons Learned ............................................................................................................... 61

VIII. Recommendations ............................................................................................................ 63

ANNEXES Annex 1: Results Framework and Monitoring Plan for ACBF Regional Capacity Building Project (RIDA-II) .......................................................................................................................... 22 Annex 2: Operational Risk Assessment Framework (ORAF) ...................................................... 27 Annex 3: ACBF Letter of Commitment ....................................................................................... 31 Annex 4: List of Proposed Projects for RIDA II Funding by Thematic Area .............................. 44 Annex 5: Detailed Description of Modified or New Project Activities ........................................ 48 Annex 6: Summary of the Independent Evaluation of the African Capacity Building Foundation’s Strategic Medium Term Plan II (SMTP II) ............................................................ 51 TABLES Table 1: ACBF: Confirmed Pledges and Receipts – SMTP III (as of November 14, 2013) ........ 13 Table 2: Confirmed Pledges by African Members as of November 14, 2013 .............................. 14 Table 3: Key Changes to the Results Measurement Framework (RMF) ...................................... 18 Table 4: Revised Costs by Component (US$ millions) ................................................................ 19 Table 5: Disbursement Schedule for Additional Financing (US$ millions) ................................. 20

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ADDITIONAL FINANCING DATA SHEET

Basic Information - Additional Financing (AF)

Country Director: Colin Bruce Sector Manager: John Panzer Team Leader: Deryck R. Brown Project ID: P127549 Expected Effectiveness Date: December 16, 2013

Lending Instrument: Specific investment Grant Additional Financing Type: IDA commitment

Sectors: General public administration (50%); Central government administration (50%) Themes: Other economic management (30%); managing for development results (20%); poverty strategy, analysis and monitoring (20%); other rule of law (15%); other social development (15%) Environmental category: C Expected Closing Date: December 31, 2017 Joint IFC: N/A Joint Level: N/A

Basic Information - Original Project

Project ID: P122478 Environmental category: C

Project Name: ACBF Regional Capacity Building Project

Expected Closing Date: December 31, 2015

Lending Instrument: Grant Joint IFC: Joint Level:

AF Project Financing Data

[ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other:

Proposed terms:

AF Financing Plan (US$ m)

Source: Regional IDA Grant Allocation Total Amount (US$m)

Total Project Cost: Co-financing: Borrower:

Total Bank Financing: IBRD

IDA

New

Recommitted

65 0 The African Capacity Building Foundation 65 0 65 0 65 0

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Client Information

Recipient: The African Capacity Building Foundation (ACBF) Responsible Agency: ACBF Contact Person: Dr. Emmanuel Nnadozie, Executive Secretary Telephone No.: (263) 4 700208 Fax No.: (263) 4 702915

Email: [email protected]

AF Estimated Disbursements (Bank FY/US$ m)

FY 2013 2014 2015 2016 2017 2018

Annual 11.8 15.7 18.2 12.3 5 2

Cumulative 11.8 27.5 45.7 58 63 65

mailto:[email protected]

iii

Project Development Objective (PDO) and Description:

Original PDO: To (i) enhance capacity for effective policy formulation in ACBF sub-grants recipient countries; and (ii) to improve and sustain management of ACBF operations. Revised PDO: To (i) improve capacity of ACBF’s clients to deliver and measure their development results; and (ii) enhance ACBF’s organizational effectiveness and efficiency.

The Project consists of the following parts:

Part A: Capacity Building Sub-grants, Capacity Indicators Report and Peer Learning Activities

(1) Financing, through the provision of grants, including Sub-grants, of specific development projects to enhance the institutional capacity of the governments of Sub-Saharan African countries, regional organizations serving such countries, and other entities established in such countries in the following areas:

(i) economic policy management;

(ii) public sector management; and

(iii) regional integration, regional economic cooperation and provision of regional public goods.

(2) Provision of consultants’ services and training pertaining to:

(i) Research, analysis, workshops and conferences associated with the production of the Africa Capacity Indicators Report (ACIR); and

(ii) Coordination and convening of peer learning activities, e.g. Policy Institute Committees (PICs) and Strategic Studies Groups (SSGs).

Part B: Institutional Development

Carrying out of a program of institutional development of the Recipient, consisting of the following activities, and provision of goods, consultants’ services, training and Operating Costs required for the purpose:

(1) Continued implementation of activities designed to strengthen the efficient and effective organization, management and operations of the Recipient, consistent with the Action Plan set out in ACBF’s Letter of Commitment.

(2) Continuous enhancement of the monitoring and evaluation system for the Recipient’s operations.

(3) Appraisal, supervision and evaluation of Sub-projects.

iv

Safeguard and Exception to Policies

Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50)

Projects in Disputed Areas (OP/BP 7.60)

[ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No

Does the project require any waivers of Bank policies?

Does the project require any exceptions to Bank policies?

Have these been endorsed or approved by Bank management?

[ ]Yes [X ] No

[ X ]Yes [ ] No

[X ] Yes [ ] No

Explanation: Africa Region Management approved the exception to allow retroactive financing of up to 33% (i.e., in excess of the 20% limit) on 28 June, 2013.

Conditions and Legal Covenants:

Financing Agreement Reference Schedule 2, Section I. D Schedule 2, Section II.B.4

Description of Condition/Covenant ACBF shall, in order to further enhance its monitoring and evaluation of Sub-projects under Part B of the Project, ensure that assessments of the monitoring and evaluation systems to be used under proposed Sub-grants are conducted by the Recipient during the preparation of each Sub-project, prior to its approval for financing. As part of the financial audit, ACBF shall have all procurement activities undertaken by it under the

Date Due: Ongoing Annually, commencing with FY 2012, due six months after the end of

v

Schedule 2, Section IV Schedule 2, Section V, Para.1 Schedule 2, Section V, Para. 2

Project audited annually, commencing with its Fiscal Year 2013, by auditors under terms of reference and with qualifications and experience satisfactory to the Association. Each such audit shall cover the period of one Fiscal Year and shall be furnished to the Association not later than 6 months after the end of such Fiscal Year. Retroactive Financing for eligible expenditures with respect to the Additional Financing up to an aggregate amount not to exceed US$21,300,000 equivalent may be made for payments made on or after December 13, 2012. In order to ensure its efficient and effective organization, management, staffing and operations, ACBF to continue to carry out its operations and conduct its affairs in a manner consistent with the Management Action Plan and the Governance Action Plan.

(a) The Recipient shall carry out the ACBF Action Plan.

(b) In order to ensure the

continued efficient and effective organization, management, staffing and operations of the Recipient, the Recipient shall at all times carry out its operations and conduct its affairs in accordance with the ACBF Action Plan.

(c) The Recipient and the Association shall from time to time exchange views on the progress achieved in carrying out the ACBF Action Plan.

the FY N/A Ongoing Ongoing

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(d) The Recipient shall promptly inform the Association of any situation that would have the effect of materially reversing the objectives of the ACBF Action Plan or any action taken under it.

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I. INTRODUCTION

1. This Project Paper seeks the approval of the Executive Directors for an additional regional IDA grant to the African Capacity Building Foundation (ACBF) in the amount of US$65 million to support the implementation of its third Strategic Medium Term Plan (SMTP III) (Project ID P127549). It also seeks approval for the restructuring of the original project, including a change of the Project Development Objective (PDO) and an extension of the closing date. 2. A regional IDA grant of US$25 million equivalent was approved in March 2011 to support the final year of implementation of SMTP II. This was accompanied by a Multi-Donor Trust Fund (MDTF) with pledges totaling approximately US$32 million. The original project design had two components aimed at supporting the Foundation’s second Strategic Medium Term Plan (SMTP II), namely: (i) capacity building sub-grants to public and private beneficiaries at country and regional levels in Sub-Saharan Africa; and (ii) institutional development including the development of a forward looking medium term strategy (i.e., the SMTP III). The specific activities financed with the proceeds of the grant were the provision of goods, services, training, and operating expenses (including staff salaries). In approving the grant, the Executive Directors indicated that future support to ACBF must address the issues of operational efficiency, long-term sustainability, widening/diversifying the donor pool, and demonstrating tangible results. 3. This proposed additional regional IDA grant in the amount of US$65 million is part of the Bank’s pledged support to ACBF’s SMTP III over the 5-year life of the plan and is intended to cover the first 3 years (2012-2014). Potential subsequent financing to cover the final two years of the plan period (2015-16) will be considered based on performance and results under both the original project and the additional financing, including the Action Plan set out in the Letter of Commitment. The request for additional financing includes an extension of the project’s closing date by two years from December 31, 2015 to December 31, 2017 as ACBF’s sub-grants generally disburse over 3-4 years. The additional financing also includes an exception to BP10.00 “Investment Project Financing” regarding retroactive financing to enable ACBF to receive an amount exceeding the stipulated 20 percent in retroactive financing, which has been approved by management consistent with the policy. 4. The proposed additional regional IDA grant would finance the costs associated with deepening and filling gaps in ACBF’s capacity building activities started under the original project (ACBF Regional Capacity Building Project – P122478). Accordingly, it is proposed to change the PDO as follows: To (i) improve the capacity of ACBF’s clients to deliver and measure their development results; and (ii) enhance ACBF’s organizational effectiveness and efficiency. Reformulated as such, the PDO seeks to place results at the heart of ACBF’s operations and to ensure that their grantees share the responsibility for tracking, measuring and reporting on results. This approach is intended to scale up the impact and development effectiveness of ACBF while leveraging the benefits from the ongoing restructuring of the Foundation.

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5. Whereas the original financing went to support the six core competency areas of the SMTP II, the proposed additional financing will be used to support the development of capacity in Africa within the framework of SMTP III, which includes improving the capacity for policy dialogue and tracking policy impact.

II. BACKGROUND

Institutional Overview

6. ACBF was established in 1991 through a partnership between African and non-African countries, the World Bank, the African Development Bank (AfDB) and the United Nations Development Programme (UNDP). When ACBF was established, it was expected that it would become a specialized entity for capacity-building in Africa and donors would channel resources for capacity-building on the continent through this vehicle. To this end, ACBF’s interventions have historically supported both supply-side and demand-side policy and governance objectives. On the supply side, through its sub-projects involving training of a technocratic elite and support to think tanks and policy units, as well as its own highly selective analytical and knowledge products, ACBF contributes to the strengthening of the analytical and policy capacities of governments and improves the evidentiary basis for public policy making in Africa. On the demand side, many ACBF-supported think tanks engage in public advocacy and education, raising the level of public discourse and debate on critical policy issues facing African countries. As such, the Foundation contributes to both the demand for good governance and social accountability agendas of the Bank. 7. ACBF is an autonomous legal regional entity headquartered in Harare, Zimbabwe. The Foundation is governed by its Constitution and has a three-tier governance structure comprised of a Board of Governors (BoG), an Executive Board (EB) and a Secretariat headed by an Executive Secretary. The Executive Secretary Designate takes up the position on December 2, 2013, replacing the former Executive Secretary whose term ran from July 2009 to November 2013. Financing History 8. From its inception in 1991, the Bank supported ACBF with small grants until 1999 when it agreed to participate in the Partnership for Capacity Building in Africa (PACT) initiative, approving US$150 million to fund the program over a five year period from 2000-2005. In 2000, the PACT Trust Fund was established as an MDTF for the pooling of funds from the Bank and other donors, including African countries. Due to reduced actual support from other donors, however, the PACT business plan was scaled down from US$1 billion to US$340 million in 2001. In 2006, the Bank approved another US$150 million under the Development Grant Facility (DGF) for a further five years (2007-11) to support ACBF’s SMTP II. However, only US$83 million of the pledged US$150 million was actually disbursed before it was decided that it was no longer appropriate to use DGF resources to fund ACBF. In 2010, Bank Management agreed that regional IDA grants would instead be used for providing future Bank funding to ACBF beginning in FY11. The first such grant was approved in March 2011 to support the final year of implementation of SMTP II.

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9. In September 2011, ACBF’s BoG formally adopted the successor SMTP III covering the period 2012-16, to which the Bank pledged support, at its 20th annual meeting held in Arusha, Tanzania. In making this pledge, the Bank emphasized that its continued support would be based on the conditions that (i) African stakeholders take increased ownership of ACBF as evidenced by increased contributions to the Foundation; (ii) there would be increased finance-sharing as other donors show their commitment to ACBF by increasing their contributions; (iii) ACBF continue to abide by sound principles of corporate governance and improve its operational efficiency; and (iv) ACBF must be able to demonstrate results. Achievements to Date 10. ACBF was originally designed to build capacity for improved policy formulation and management through the funding of African think tanks and policy institutes/units and collaboration with tertiary-level training institutions. Since its inception in 1991, over 40 percent of ACBF's funding has been committed to the area of Economic Policy Analysis and Management, and 39 ACBF-supported policy units and think tanks have been established. ACBF has also committed significant resources to 73 higher education institutions and non-degree training programs in Africa, and has been a key supporter of regional training programs. 11. As ACBF has provided support to think tanks and trained numerous economists over the past two decades, capacity has improved in many countries. Today, 17 policy institutes/think tanks supported by the Foundation are ranked in the 2012 Global Go To Think Tanks Report, published annually by the University of Pennsylvania, as being among the Top 50 think tanks in Sub-Saharan Africa. The top 50 were ranked out of a total of 554 think tanks in the Sub-Saharan Africa Region and 34 percent of them are ACBF-supported. ACBF is also increasingly being integrated into the African regional institutional architecture and has leveraged strategic partnerships and alliances with the capacity-building “market”, as evidenced by the central role it played in coordinating an African position in the run-up to the 4th High Level Forum on Aid Effectiveness (HLF4) held in Seoul, South Korea. 12. In addition to these achievements, an independent evaluation carried out by ITAD Limited of the United Kingdom found that ACBF had achieved substantial results over the period of SMTP II. In particular, ACBF made important contributions to improving governance by promoting transparency and accountability mainly in two ways: (i) through strengthening the capacities of various actors to engage in the overall policy cycle, and (ii) strengthening capacities within the accountability chain. Furthermore, the study found that ACBF support had positive effects on improving the quality, processes, implementation and Monitoring and Evaluation (M&E) of national and sectoral policies and it promoted voice and inclusiveness of non-state actors in policy processes. It has enhanced accountability through building the capacities in the public financial management and statistical systems and parliaments.

13. The findings of the independent evaluation of SMTP II resonate with the Bank’s own 2012 Country Policy and Institutional Assessment (CPIA) for Sub-Saharan Africa. In particular, the study found that amid the difficult global economic conditions, the quality of

4

policies and institutions in a majority of Sub-Saharan African countries remained stable or improved; that the policy environment for growth and poverty reduction for some countries has improved and is the best in recent years; and that policies in African countries, excluding fragile states, compare well with those in non-fragile states elsewhere. The CPIA also found that the region’s fragile states are also seeing some improvement in their policy environments but that the governance challenge in Africa remains particularly acute. While it is impossible to attribute any or all of this directly to ACBF, it is likely that the Foundation’s sustained interventions over 20 years may have contributed in some measure to these improvements. Evolving Operating Environment 14. Africa’s economic performance has shown remarkable resilience to the turbulent global economic environment of the past several years. Macroeconomic management has generally been prudent following the global economic crisis of 2008-09, and countries adopted countercyclical policies to offset the external demand shock where there was policy space to do so. The 2012 CPIA score for economic management reflects the overall prudent stance of policies in Sub-Saharan African countries, the flexibility of policies to respond to shocks, and the appropriate use of policy buffers. 15. In addition to improvements in macroeconomic management, African leaders and citizens are increasingly embracing the regional integration agenda as well as the overall movement towards a results orientation. Across the continent, there is renewed momentum to enlarge markets, develop economies of scale, and work together on a regional basis to address common problems. The African Union is stronger and providing increasingly effective leadership on a number of critical development challenges, most notably peace and security. The Regional Economic Communities (RECs) are building capacity, and some are beginning to take on difficult political-economy issues, like the Economic Community of West African States (ECOWAS) on peace and security, and the East African Community (EAC) on trade integration. 16. At the same time, the development landscape on the continent has changed significantly in terms of instruments, technologies, and competitors to ACBF. As a result of the increasing capacity of think tanks and policy makers across the region, competing organizations — some of which were once funded by ACBF grants — have themselves emerged as capacity building and grant making institutions. In the context of emerging issues such as climate change, youth unemployment, food security and agricultural science and technology research, there are now a number of specialized agencies that have become increasingly active. On a multilateral level, organizations such as the AfDB have begun to pursue specific areas of research and are aiming to function as regional knowledge hubs or repositories. 17. While the number and capacity of competing organizations has increased over the past 22 years, obtaining donor funding has become more challenging. As indicated above, the original idea in establishing ACBF was that it would become the specialized capacity-building institution in Africa. This implies that, over time, donors would reduce or discontinue their own direct investments in this area. However, some donors have never relinquished their own capacity-building programs and many of ACBF’s clients are themselves direct recipients of

5

grant funding from bilateral donors and other sources. At the same time, tighter aid budgets in the OECD countries have made it increasingly difficult to gauge future support.

Business Model and Sustainability of the Foundation 18. To meet these changing realities and continue to thrive, ACBF will continue to fill the niche where it has a comparative advantage, achieve tangible results and avoid expanding into too many new areas. As described in the SMTP III, ACBF’s comparative advantage lies in the fact that it is an African institution staffed by African professionals who understand the continent’s capacity constraints and what is required to address them. Its key products are grants and, to some extent, technical assistance. In this context, ACBF’s core business will continue to focus on its areas of comparative advantage, namely, building capacity through (a) training in technical skills germane to policy-making and (b) financing of think tanks that undertake policy-relevant research and seek to influence government policy on key development issues. ACBF will pursue these priorities in an efficient and sustainable manner as outlined in the Letter of Commitment attached as Annex 3 to this Project Paper. For its part, the Bank will work with ACBF to continually review the business model to ensure not only its financial and operational efficiency, but also the efficiency of its capacity building activities. 19. In occupying its niche, ACBF aims to ensure both its medium and long-term sustainability by tailoring the scope of its operations and containing its overhead costs. Accordingly, the medium term goal of the Foundation’s strategy for financial sustainability is for African members, who are the primary beneficiaries of the ACBF’s operations, to cover the entirety of its operating costs (administrative and program delivery costs) by 2017. The long-term aspiration of the strategy is to build a stable funding platform that addresses not only of the operating expenses but also a continuously increasing share of the overall programmatic resource needs of the Foundation.

20. Sustainability at ACBF is linked to the achievement of demonstrable and cost-effective results, which show how ACBF interventions are improving public discourse about policy issues and policy-making in African countries. “Capacity building” is by nature difficult to quantify and measure. As such, the results framework will rely on proxy indicators such as gauging user satisfaction with ACBF clients' products and services, including the quality of those products and services. To better demonstrate to donors that they are getting value for money, grantees will assume greater responsibility for results measurement and reporting, and ACBF will continually improve its management of those results. The Results Matrix at Annex 1, which will replace the one in the original parent project, introduces new and more measurable indicators and is accompanied by a diagram showing the underlying change theory of the intervention.

21. In this regard, ACBF has made considerable progress with respect to the M&E arrangements that enable it to monitor, track and report on project performance. ACBF has put in place an M&E Unit of four staff, one of whom serves as its head, who competently and effectively carry out their roles and responsibilities, including providing upstream and downstream support to ACBF Operations Department and to sub-grantees. An M&E Manual was developed and rolled out for use by the grantees in June 2013, and sub-regional training

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workshops were organized for 134 participants from 70 sub-projects, representing 29 sub-projects from West and Central Africa and 41 from East and Southern Africa, respectively. Sub-grantees are now required to appoint individuals to serve as focal points to interact with ACBF program staff. Arrangements have also been made to design and implement an M&E Management Information System (M&E-MIS), which should be functional by the end of 2013. 22. In pursuit of sustainability, ACBF is attempting to diversify its funding by creating new revenue streams, leveraging its knowledge-generation and project management capabilities. In particular, the Foundation has undertaken several “special operations” under contracts funded by AusAid and the AfDB. However, these “special operations” bring relatively small streams of revenue to ACBF and point to new activities/services in which the Foundation might engage in the future, but it is unlikely that ACBF will become financially self-sufficient based on these services.

23. ACBF has also established an Endowment Fund into which it has already vested approximately US$6.5 million. The Endowment Fund was created by resolution made at the 46th Executive Board meeting held in April 2012 and was announced at the 22nd BoG held in Nairobi, Kenya, July 2012. The original principal amount was allocated from SMTP II surplus commitment authority and cannot be used unless approved by the Board. It is expected that African members will make one-off payments into the Fund which will be invested and the interest income earned will be used to meet the operating costs of the Foundation. In addition, a consultancy was financed by ACBF to develop a plan for the operationalization of the Endowment Fund, and a proposal was put to the 23rd BoG held in Libreville, Gabon in June 2013. The BoG, which comprises mainly African Finance Ministers, has established a Resource Mobilization Committee to assist in raising contributions to the Endowment Fund from potential donors. Its goal is to raise US$500 million for capacity development in Africa by 2020.

III. RATIONALE FOR ADDITIONAL FINANCING

24. To address the changing development context, the proposed additional financing will fund the implementation of additional and expanded activities that scale up the impact and development effectiveness of the first regional IDA grant. Whereas the original financing went to support six core competency areas, the proposed additional financing will be used to support the development of capacity in Africa with three overarching goals, namely: (a) promoting economic and social stability for transformative change; (b) enhancing capacity to engage and regulate the productive sector; and (c) improving capacity to track policy impact. Underpinned by ACBF’s core mandate to support regional integration and regional solutions to the continent's development challenges, these strategic goals seek to build effective institutions that drive the regional integration agenda and inform the regional policy debate. Relevance 25. The project is consistent with the Africa Strategy (Africa's Future and the World Bank's Support To It - Africa Regional Strategy) discussed by the Board on March 1, 2011 (SecM2011-0116[IDA/SecM2011-0121]). Governance and public sector capacity are the foundation of this Strategy. Enhancing capacity for policy analysis and management, and

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developing the necessary skills for managing Africa’s development, will contribute to economic growth, poverty reduction and employment creation. Through the proximity of ACBF to its clients, it has the advantage of being able to provide context-specific as well as general programmatic or strategic support for capacity development, with the potential to overcome fragmentation of the Bank’s activities in a field requiring tailor-made approaches. The Africa Strategy recognizes the potential of ACBF and explicitly states the intention to partner with it and leverage its capabilities to move away from retail provision of training courses to wholesaling knowledge and experience by strengthening local and regional centers of excellence. 26. The Bank’s Strategy for Africa also identified regional integration as critical to the continent’s development. It is complemented by the Regional Integration Assistance Strategy update (Partnering for Africa's Regional Integration: Progress Report on the Regional Integration Assistance Strategy for Sub-Saharan Africa), discussed by the Board on April 5, 2011 (SecM2011-0181[IDA/SecM2011-0217]), which sets out a comprehensive framework for the Bank’s engagement, including strategic pillars to guide Bank support for regional integration, key guiding principles and selectivity criteria to prioritize investment activities, modalities for implementation, and a results framework to monitor program impact. The strategy focuses on regional infrastructure development, institutional cooperation for economic integration and coordinated interventions to provide regional public goods, with a cross-cutting theme of capacity development of regional institutions. In particular, RIAS focuses on: (i) capacity development of the African Union Commission, NEPAD, and the Regional Economic Communities (RECs); and (ii) strengthening the connection between regional policy commitments and national planning. To date, progress with capacity development of regional institutions has been limited and ACBF aims to support the Bank in this important area. Eligibility 27. Based on the amended eligibility requirements of regional IDA grants approved by the IDA Deputies on March 21, 2013, ACBF meets all six eligibility criteria:

i. Recipient is a bona fide regional organization that has the legal status and fiduciary capacity to receive grant funding and the legal authority to carry out the activities financed.

ACBF is a bona fide regional organization and has the legal status of an independent international organization with a membership that cuts across countries and multilateral organizations. ACBF was established in accordance with its constitution and is a not-for-profit international organization with full juridical personality.

ii. Recipient does not meet eligibility requirements to take on an IDA credit.

ACBF operates through grants provided to support capacity development projects and programs presented by African countries as well as knowledge events and products aimed at supporting their development process. As a non-profit organization, ACBF does not

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generate significant revenues out of its activities and would not be in a position to repay the IDA credit.

iii. The costs and benefits of the activity to be financed with an IDA grant are not easily

allocated to national programs.

ACBF’s activities enhance the training activities planned and implemented through national programs by scaling up technical skills and institutional capacities that are required for a successful implementation of national development programs. In addition, many of ACBF’s clients/sub-grantees would not ordinarily be able to access IDA funding under national programs agreed with governments. As such, the costs and benefits of ACBF-supported activities are not easily allocated to national programs.

iv. The activities to be financed with an IDA grant are related to regional infrastructure

development, institutional cooperation for economic integration, and coordinated interventions to provide regional public goods. Regional economic cooperation and integration, the provision of regional public goods and the search for regional solutions to Africa’s challenges are at the very core of ACBF’s mandate. ACBF has been a regional partner in capacity development with a long history of working closely with institutions, including the RECs. Not only is the Foundation assisting in advancing the regional integration agenda by supporting the capacity development efforts of RECs and other regional bodies such as the Council for Social Science Research in Africa (CODESRIA), the West African Monetary Institute (WAMI) and the African Economic Research Consortium (AERC), but it also produces regional public goods such as its flagship knowledge product, the Africa Capacity Indicators Report (ACIR). As such, ACBF-supported activities are related to institutional cooperation for economic integration and coordinated interventions to provide regional public goods.

v. Grant co-financing for the activity is not readily available from other development

partners.

ACBF is seeking IDA resources for activities that are not covered by any other development partners. In addition, other bilateral partners have traditionally channeled their funding to ACBF through a Bank-administered MDTF.

9

vi. The regional entity is associated with an IDA-funded regional operation or otherwise

supports the strategic objectives of IDA on regional integration.

As highlighted in the 2007 Independent Evaluation Group (IEG) report on regional programs and in the 2008 Regional Integration Assistance Strategy for Sub-Saharan Africa (RIAS) and its 2011 update, lack of capacity at both the regional and national level and lack of implementation of regional agreements at the national level are key constraints holding back implementation of regional investment projects and implementation of regional policy reforms in Africa.

With respect to this regional integration agenda, ACBF is a leading institution supporting systematic capacity building through technical and financial assistance to strategically selected institutions in Africa, and is a key partner in addressing this capacity challenge. Support for regional integration and regional solutions to the continent's development challenges are at the core of ACBF's mandate. As such, the ACBF provides capacity building support for RECs, regional technical organizations and think tanks, to build effective institutions driving the regional integration agenda and informing the regional policy debate. Regional institutions require national counterparts, and ACBF’s sub-projects support national planning and policy making which, in turn, can give effect to regional policy decisions.

28. In addition to meeting the revised IDA eligibility requirements, the additional financing is consistent with BP 10.00 – “Investment Project Financing”, which states that the Bank provides additional financing only when it is satisfied that:

a) The original project’s ISR ratings over the most recent 12 months, including those

for implementation progress (IP) and development objectives (DO), have been consistently rated as Moderately Satisfactory (MS) or better. Three ISRs have been filed since the project became effective and it has received an overall rating of MS. Progress towards achievement of the PDO and overall implementation progress have been rated MS. While it may be too early for the sub-projects financed by ACBF to generate concrete results, 13 such sub-grants have been approved by the ACBF Executive Board for a total value of US$29.6 million. Of these, 8 are funded under the regional IDA grant and 5 under the MDTF. Training and capacity development sub-projects account for US$24.6 million (83 percent) and support to policy institutes/think tanks received US$5 million (17 percent). After some delays in achieving effectiveness, all but one of the 13 approved sub-projects have been signed, are effective and under implementation. Two sub-projects where delays persist – implementation has either not yet begun or has been disrupted - are located in Cote d’Ivoire and Guinea-Bissau. Disbursements from the Bank to ACBF have been

10

satisfactory, with the IDA portion of the grant being 51 disbursed and the MDTF portion showing a disbursement rate of 78 percent;1

b) The project is compliant with grant covenants. ACBF has to date complied with the covenants of the Financing and Grant Agreements. The only covenant not complied with fully is the requirement for annual procurement audits starting with FY2011. As ACBF received its first disbursements in the last 2 months of 2011, and 2012 was the first full year of project implementation, the first such procurement audit will be undertaken for the year 2012. The Terms of Reference (ToRs) for the audit were commented upon by the Bank and no-objection given to ACBF to proceed with procuring a suitable consultant to carry out this work. Beginning with Fiscal Year 2013, the annual external audit will include both the financial and procurement aspects;

c) There are no unresolved fiduciary (including audit, environmental, social or other safeguard) issues or problems; and

d) The additional financing project will follow the Bank’s procurement procedures and guidelines.

29. The proposed Additional Financing is also being processed in accordance with the Investment Project Financing – Additional Financing Processing Instructions. Progress on Implementation of the Management Action Plan (MAP) 30. The MAP was instituted in 2009 to strengthen and enhance the control environment as well as improve and fine tune the structures, functions, procedures, products, and performance of the Foundation. The majority of the reforms focused specifically on strengthening the approach to risk assessment and management, as well as putting in place a solid framework for fiduciary and operational controls. These reforms were designed and implemented over a period of two years under the leadership of the former Executive Secretary who assumed duty on July 1, 2009. 31. The MAP focused on Internal Environment and Controls, Human Resources, Finance, Risk and Monitoring Systems, Communications, Strategy and Business Planning, Operations and Governance. The reforms were intended to bring about an improvement in the internal capacity of the Foundation, and as such they were implemented by eight internal teams involving all staff. Reforms were also introduced to ensure a culture of compliance in the staff of the Foundation. Outside expertise was incorporated at critical junctures and when needed, with significant inputs from July 2009 to July 2010 from the World Bank through the fiduciary reviews of several Bank missions, and by the AfDB through ACBF missions to Tunis and AfDB missions to Harare, including one by the AfDB’s Auditor General during the period under review. The Bank has monitored the implementation of these reforms and is satisfied that there

1 Several contributions have been received by the MDTF since the Grant Agreement was signed, bringing the total receipts to approximately $28.8 million.

11

has been notable progress in improving the overall control environment and functions within ACBF. Among the notable achievements to date are:

a) The Finance Department was strengthened and is now compliant with International Financial Reporting Standards.

b) An independent Internal Audit Department (IAD) reporting directly to the EB has been

established. The IAD is staffed by qualified auditors who were externally recruited through a competitive process with job descriptions that were reviewed and approved by the Bank. IAD’s annual reports are disclosed online and are available to all external stakeholders.

c) An Audit and Risk Committee (ARC) of the EB was set up to review the risk and control

environment at ACBF. The Committee, which meets four times per year, is chaired by the EB member from Canada who also chairs Transparency International, and is supported by three well-qualified independent members, including a former Auditor General of the AfDB.

d) An Enterprise Risk Assessment (ERA) process was also introduced to conduct top down

and bottom up risk assessments. The ERA is fully automated and is available to the IAD. Reports to the ARC and the full EB are made at each meeting. ACBF now operates using a Risk Appetite Statement that guides the control limits taken by management and also provides data and analysis to the EB on key risk indicators.

e) A Project Review Committee (PRC) has been established comprising members of the

senior management team to undertake reviews of project proposals and appraisals prior to submission to the Executive Secretary for recommendation to the EB, and there is a special Operations Committee of the EB that approves projects to be financed by ACBF.

f) Procurement has been strengthened through the recruitment of a Procurement Adviser

who provides guidance and clearances on all procurement matters and has established thresholds for approval along with a delegation matrix to limit exposure and manage risks from procurement. The Bank approves an Annual Procurement Plan and supervises the procurement activities during its implementation support missions.

g) In an effort to manage risks related to staff behavior, ACBF established an Asset

Declaration Mechanism and it is mandatory for all staff to report annually on their assets and liabilities to an independent assessor, who also carries out independent investigations when needed. There is a Fraud and Corruption Policy in place, approved by the EB, accompanied by a hotline, website and other reporting mechanisms. Several ‘Working with Respect’ workshops were also conducted and new staff are guided during on-boarding processes on the expected behaviors.

h) All Information Technology (IT) systems have been upgraded. ACBF has two servers

operated outside of the country and has also established a Business Continuity Center and has a Business Continuity Plan that is regularly tested and upgraded. An independent

12

audit of the IT systems was undertaken with support from the AfDB IT Security team and by an independent consulting firm, and ACBF has followed up and tightened up systems in all the areas where penetration tests showed weaknesses. IT system controls have also been upgraded. Financial transactions are now fully automated, as are travel and HR systems. The management of ACBF uses a dashboard to track performance of the Foundation and is managed using a set of performance ratios approved by the EB and monitored by the Bank.

32. Notwithstanding these achievements, ACBF still has further to go and, to this end, ACBF’s EB has committed itself to an updated Action Plan set out in a Letter of Commitment (LoC) which appears at Annex 3. This LoC addresses concerns in five key areas, namely:

a) Strategy and selectivity; b) Efficiency and cost structure; c) Long-term sustainability; d) Ensuring results/impact; and e) Governance and the role of the EB.

The LoC elaborates a number of time-bound actions on each of the above-mentioned issues that will be closely monitored by the Bank during project supervision. Status of Pledges and Contributions to SMTP III 33. African countries and institutions are taking increasing ownership of ACBF and have demonstrated their commitment by increasing their pledges quite significantly. As of November 14, 2013, total pledges to SMTP III amounted to US$188.81 million. Apart from the Bank’s pledge of US$100 million over 5 years (2012-16), the AfDB pledged US$50 million, the United Nations Development Programme (UNDP) pledged US$1 million, African countries have collectively pledged approximately US$27.65 million, and one bilateral donor (Sweden) pledged US$10 million over 5 years. South Africa and Swaziland are the most recent African countries to pledge US$500,000 each. Table 1 below provides a breakdown of the confirmed pledges as at November 14, 2013, including how much has actually been received. A list of the 32 African countries which have pledged to SMTP III, showing the amounts pledged and paid in 2012 and 2013, appears below in Table 2. In addition to these confirmed pledges, other donors are expected to pledge their support to ACBF once they have overcome their current fiscal challenges. It is envisaged that, with the Bank’s contribution coming on stream, some bilateral and even multilateral donors would be encouraged to make pledges and, to that end, a pledging conference for interested donors will be held in 2014.

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Table 1: ACBF: Confirmed Pledges and Receipts – SMTP III (as of November 14, 2013)

Source Amount of Pledges

(US$m) Percentage of

Total Pledges (%) Amount Received by ACBF (US$m)

World Bank 100.00 52.96 --

African Development Bank

50.16 26.57 --

UNDP 1.00 0.53 --

Bilateral donors (Sweden) 10.00 5.30 --

African Members 27.65 14.64 8.57

TOTAL 188.81 100.00 8.57

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Table 2: Confirmed Pledges by African Members as of November 14, 2013

Benin 500,000.00 -

Burkina Faso 500,000.00 97,749.51 99,950.00 197,699.51

Burundi 500,000.00 86,716.25 83,302.75 170,019.00

Cameroon 750,000.00 750,000.00 750,000.00

Central African Republic 500,000.00 - -

Chad 1,000,000.00 198,731.45 198,731.45

Demorcratic Rep. of Congo 750,000.00 - -

Republic of Congo 1,000,000.00 140,000.00 140,000.00

Côte d'Ivoire 2,000,000.00 -

Djibouti 500,000.00 100,000.00 100,000.00

Ethiopia 250,000.00 49,980.00 49,980.00

Gabon 1,200,000.00 555,280.53 555,280.53

The Gambia 500,000.00 50,968.51 29,481.14 80,449.65

Ghana 1,500,000.00 - -

Guinea 500,000.00 500,000.00 500,000.00

Kenya 500,000.00 100,000.00 100,000.00

Liberia 500,000.00 50,000.00 50,000.00

Malawi 500,000.00 -

Mali 500,000.00 111,775.26 315,374.19 427,149.45

Mauritania 500,000.00 -

Namibia 250,000.00 50,000.00 50,000.00 100,000.00

Niger 500,000.00 -

Nigeria 5,000,000.00 1,959,796.41 1,959,796.41

Rwanda 600,000.00 600,000.00 600,000.00

Senegal 500,000.00 -

Sierra Leone 750,000.00 -

South Africa 500,000.00 166,667.00 166,667.00

Swaziland 500,000.00 40,177.00 292,838.64 333,015.64

Tanzania 1,500,000.00 297,003.71 297,003.71

Togo 500,000.00 99,950.00 99,950.00

Uganda 600,000.00 -

Zambia 500,000.00 120,873.00 79,966.20 200,839.20

Zimbabwe 1,500,000.00 750,000.00 749,925.00 1,499,925.00

Total 27,650,000.00 2,043,994.69 6,532,511.86 8,576,506.55

100% 7% 24% 31%

Country Total PledgePayments

in 2012Payments

in 2013 TOTAL

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Operational Efficiency 34. ACBF has committed to maintaining strict cost ratios during the period of IDA funding. During Year 1 (2013), the split between operating costs and program-related costs will be 36:64, meaning that no more than 36 percent of total Foundation costs will be spent on operating expenses, with 64 percent going towards direct program delivery. In Year 2 (2014), the target ratio is 25:75, while in Year 3 the target ratio is 20:80. There will be a concerted effort to improve operating efficiency and allocate an increasing share of available resources to grants and related programmatic activities. Any additional contributions received over and above the US$188.81 million will be directed towards program activities and not towards increasing operational expenses. Hence ACBF was required to bring down total operating costs to under US$13 million in 2013, a more than 30 percent reduction over the original 2012 budget. 35. The considerable reduction in operating costs would require a number of cost-cutting measures, some of which have already been introduced or initiated. First, the downsizing of staff numbers from 86 to 64 in October 2012, while producing an immediate spike in the last quarter figures for 2012 (as a result of redundancy packages and repatriation benefits), yielded annual savings of approximately US$3.5 million. The further reduction of 19 to a staff complement of 45 by January 31, 2014, in combination with a downward adjustment to compensation - including non-payroll benefits - of approximately 20 percent, will shave a further $3 million off the wage bill. Second, program-related travel, which has been a major cost driver, declined by 58 percent in 2013 compared with 2012, resulting in a 61 percent reduction in travel expenditure. It is not expected that travel costs will return to pre-2013 levels. Third, ACBF has accelerated its planned relocation to its new headquarters building, which was purchased by the Foundation at a cost of US$1.2 million, of which the host government (Zimbabwe) contributed US$0.8 million. It is estimated that this will result in savings of approximately US$0.4 million per annum. Fourth, ACBF senior management has committed to reviewing and re-engineering its business processes in order to develop a new operating model and identify areas where other cost-saving measures can be introduced. Finally, ACBF will focus on fewer countries and thematic areas rather than dispersing its efforts and resources widely at the expense of impact. This is in line with the findings and recommendations of the independent evaluation of SMTP II, a summary of which appears in Annex 6 of this Project Paper. These measures are among the commitments made by ACBF’s EB and set out in the Letter of Commitment at Annex 3. Financing Alternatives 36. Alternatives to additional financing were considered, including preparing and appraising a new grant as well as offering budget support to ACBF. These options were not deemed suitable, partly due to the need for speed in securing results for early capacity building for regional integration and ensuring a smooth transition between SMTP II and SMTP III; and partly to ensure the harmonization of the project’s objectives, reporting requirements, and results framework to minimize any negative disruptive impact on ACBF. The Bank also wanted to accompany the African Donors in their unprecedented support to the project, demonstrated by a near fourfold increase in pledges to ACBF from US$7 to US$27.6 million. The additional financing also partially covers the needs of the Foundation as a result of unanticipated delays in

16

the disbursement of pledges to SMTP III and the slow buildup of commitments by bilateral donors due to the ongoing financial crisis.

IV. PROPOSED CHANGES

37. This Project Paper seeks Board approval for the restructuring of the original project, including an extension of the closing date, and proposes additional financing that will allow ACBF - through the implementation of its new SMTP III - to go beyond policy formulation to provide support to policy implementation and measurement of development impact of implemented policies. The original project supported SMTP II, which aimed to build capacity in six core competency areas, namely (i) economic policy analysis and management; (ii) financial management and accountability; (iii) public administration management; (iv) statistics and statistical systems; (v) policy analysis capacity of national parliaments and parliamentary systems; and (vi) professionalization of the voices of the private sector and the civil society. The project aimed to achieve the objectives of enhancing capacity for effective policy formulation in ACBF sub-grants recipient countries and to improve and sustain management of ACBF operations. 38. The most significant change is the replacement of the PDO in the original project with a new PDO that puts results at the core of the intervention. The new PDO is: “To (i) improve the capacity of ACBF’s clients to deliver and measure their development results; and (ii) enhance ACBF’s Organizational effectiveness and efficiency.” The rationale for replacing the PDO in the parent project is that, based on the experience of operationalizing the Results Framework, it was difficult – if not impossible – to measure the degree to which countries’ capacity for effective policy formulation had been enhanced, and the extent to which this could be attributed to ACBF. The reformulated PDO seeks to ensure that the grantees are capacitated to track, monitor, measure and report on their own results, which would differ from one grantee to the next. Thus, for instance, a think tank or policy institute might seek to track the uptake of its research output and the impact this has had on the policy discussion and, more importantly, the eventual policy decision arrived at. Similarly, a training institution might track and monitor the progress of its graduates, not only in terms of where they end up but also the direct impact they are able to have in shaping public policy. 39. The restructured project will have the same two components, though slightly modified. These are: (i) program activities including (a) the provision of grants to ACBF-supported programs and sub-projects and (b) knowledge and learning limited to the production of the annual flagship publication, the African Capacity Indicators Report (ACIR), and coordination of peer learning forums in capacity development such as the Policy Institutes Committee and Strategic Studies Groups (SSGs), including conferences/workshops related to the ACIR, PICs and SSGs; and (ii) partial institutional support to ACBF. The development objectives have been reformulated to focus on enhancing the capacity of ACBF’s clients to deliver and measure their development results, and improving ACBF’s organizational effectiveness and efficiency. In particular, the revised project is structured around the achievement of SMTP III objectives: improving the capacity for policy dialogue and tracking policy impact.

17

40. The Project Paper is also seeking an extension of the closing date of the original project from December 31, 2015 to December 31, 2017. The proposed additional financing will support 26 sub-grants totaling US$53.1 million spread over five years. The list of proposed sub-grants to be financed with the proceeds of the additional financing appears in Annex 4. Significantly, given the use of regional IDA grant resources, the proposed sub-grants include a number of regional projects or national projects that support the implementation of regional integration policies and commitments. 41. Critical to the success of the restructured project, the proposed additional financing will draw on the lessons learned in implementing SMTP II. As mentioned above, the independent evaluation carried out by ITAD Limited of the United Kingdom found that ACBF has achieved some results in influencing policy processes and outcomes, and strengthening transparency and accountability. Based on the ITAD evaluation, project objectives were modified to achieve a bigger country and regional impact of ACBF’s capacity building activities. In particular, ACBF will limit its program to 15 African countries (SMTP III ‘focus countries’2), intensify its work with think tanks and policy units, as well as continue its work with university partners to develop a critical mass of skilled economists and policy makers. ACBF will also use the additional financing to put particular emphasis on regional integration and the capacity needed to move forward on key policies managed by regional institutions.

42. The above-mentioned changes have led to some modification of the indicators and components. These modifications are reflected in the Results Measurement Framework (RMF) of the Additional Financing proposal. Due to the restructuring of the project, outcome indicators from the original project are not comparable to those of the additional financing. The full, revised RMF is presented at Annex 1 with the revised outcome indicators and a results chain in the form of a diagram summarizing the intervention logic or theory of change underlying the project components. The outcome indicators for the additional financing are summarized in Table 3 below at the PDO level. The Regional IDA (RIDA) II results chain explains the logical sequencing of key events that are necessary or required to achieve the project development objective (PDO), defined in the results framework, namely to “improve the capacity of ACBF clients to deliver and measure results and enhance ACBF organizational effectiveness and efficiency”. 43. In order to meet the PDO, the results chain maps out the causal linkages and the potential risk factors that may either facilitate or impede progress. At the bottom of the chain is “input” or resources provided by RIDA to ACBF to enable it carry out its programs. Typically to achieve results, it is assumed that ACBF will use a substantial proportion of the regional IDA and other resources it receives efficiently to support clients that have the right skills mix and experience to implement projects/programs that have been defined with technical and financial support. Efficient use of the resources will result in the delivery of products and services which are defined as “outputs” in the results chain, which are generated by ACBF

2 The SMTP III ‘focus countries’ are: Burkina Faso, Burundi, Cameroon, Cote d’Ivoire, Djibouti, Ethiopia, Ghana, Malawi, Mauritania, Nigeria, Rwanda, Senegal, South Africa, Tanzania and Zambia. Although South Africa is not an IDA eligible country, the sub-project to be supported - the Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN) - serves 16 Southern and Eastern African countries from both SADC and COMESA. (See Annex 4 for the full list of sub-projects to be financed.)

18

clients as well as ACBF itself. Such outputs range from training researchers, to the production of knowledge products, to the provision of timely policy advice on a number of relevant issues. These are generally understood to be short and medium term outcomes, and are intended to inform the policy discussion on the continent. The success of ACBF’s clients—and ACBF itself—will be gauged by the increase in demand for these products, as measured by the number of requests for these products and services as well as by user satisfaction surveys and peer reviews of the outputs produced by ACBF’s clients. 44. In capacity building, outcomes are expressed in terms of change in circumstances or widespread improvements in policy and decision making. The key underlying logic of the RIDA II results chain is that, to deliver results, ACBF needs to efficiently and effectively manage the resources deployed through RIDA funding, without which the PDO will not be achieved. In simple terms, ACBF must deploy a greater proportion of the funds it receives on clients rather than on itself in order to show results.

Table 3: Key Changes to the Results Measurement Framework (RMF)

Indicator Original target Changes with AF Revised target

User satisfaction of ACBF clients’ products and services

60% 30% 90%

Percentage of sub-projects in ACBF portfolio rated satisfactory and above

62.1% 14.9% 77%

Percentage of total disbursements (including knowledge products) to total cash outflow (Efficiency Ratio)

63.1% 7.7% 70.8%

V. APPRAISAL SUMMARY

45. Assessments conducted by the Task Team concluded that ACBF has in place adequate financial management and procurement systems and capacities to facilitate the implementation of the proposed Project. The accounting and financial reporting of the Foundation show fair representation of its financial position and it has received unqualified audit opinions from its external auditors for 2011 and 2012. The Bank carried out a Procurement Risk Assessment and Management Strategy (P-RAMS) during the appraisal mission of 2-9 April, 2013 and, overall, the procurement capacity and systems were noted to be adequate and procurement risk was noted as being Moderate. 46. Significant progress has also been made with respect to the M&E arrangements that enable ACBF to monitor, track and report on project performance. The Bank is satisfied with ACBF’s overall readiness and capacity to track and report on results. As indicated at paragraph 21 above, ACBF now has in place an M&E Unit of four qualified staff who are capable of carrying out their roles competently and effectively, including providing upstream and downstream support. Upstream, the M&E Unit is now more involved in collaborating with the

19

Operations Department to ensure that each sub-project under preparation has a sound results framework with measurable indicators that are aligned to the PDO in the RIDA project and an M&E plan that ensures each sub-grantee can monitor its own performance. Downstream, ACBF’s M&E Unit works directly with the sub-grantees to build their capacity for monitoring and evaluation and coach their staff. Disbursement

47. As in the parent Project, the proceeds of the additional IDA Grant will be disbursed against eligible expenditures incurred under SMTP III. These expenditures would comprise eligible goods, training, consultant and non-consultant services, and operating costs. Retroactive financing of up to US$21.3 million equivalent – maximum of US$10 million equivalent of the IDA Grant for expenses under Component 1 (Program Activities) and US$11.3 million equivalent for operating expenses under Component 2 (Institutional Development) - for which payment has been made between December 13, 2012 and the expected date of signing of the Financing Agreement, will be made available. Table 4 below shows the revised costs by component while the disbursement schedule in Table 5 shows the estimated disbursements from December 13, 2012 through December 31, 2017. It should be noted that all commitments will be made by December 31, 2014; the only items to be financed beyond this date will be disbursements on sub-grants financed under this additional regional IDA grant.

Table 4: Revised Costs by Component (US$ millions)

Component Original cost Changes with AF Revised cost

Capacity Building Sub-Grants, Capacity Indicators Report and Peer Learning Activities

15.00 43.00 58.00

Institutional Development 10.00 22.00 32.00

Total 25.00 65.00 90.00

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Table 5: Disbursement Schedule for Additional Financing (Bank FY/US$ millions)

Category 2013 2014 2015 2016 2017 2018 TOTAL Category 1

(i) Goods, Training Operating Costs and Consultants’ Services for Sub-Projects

(ii) Goods,Training, Consultants’ Services and Non-Consulting Services

3.2 0.6

7.0 1.7

9.5 2.7

12.3 ---

5 ---

2 ---

39.0 5.0

Category 2 (Goods, Training, Consultants’ Services and Operating Costs)

8.0

7.0

6.0

---

---

---

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TOTAL 11.8 15.7 18.2 12.3 5.0 2.0 65.0

48. The proposed additional financing includes an exception to Bank policy BP 10.00 “Investment Project Financing” which states that:

Retroactive financing may be provided when: (a) the activities financed by retroactive financing are related to the DOs and are included in the Project description; (b) the payments are for items procured in accordance with the applicable Bank procurement procedures; (c) the total amount of retroactive financing is 20 percent or less of the financing3 amount (40 percent for Projects in situations under paragraph 11 of OP 10.00, in which the borrower is deemed by the Bank to be in urgent need of assistance because of a natural or man-made disaster or conflict or experiences capacity constraints because of fragility or specific vulnerabilities (including for small states)); and (d) the payments are made by the borrower not more than 12 months before the expected date of legal agreement signing.

49. While the retroactive financing is consistent with (a), (b) and (d) above, an exception has been approved by Africa Region Management for (c), consistent with the policy, which allows exceptions to the 20 percent limit to be granted by management. Specifically, the portion of the additional IDA grant proposed for retroactive financing is up to a maximum of US$21.3 million (approximately 33 percent), which exceeds the 20 percent maximum set out in the policy. This will be applied to eligible payments made not more than 12 months before the expected date of signing of the legal agreement, which is December 13, 2013. 50. As with the parent project, disbursements of the additional financing grant will be based on consolidated and quarterly withdrawal requests submitted by ACBF. The Bank

http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXTOPMANUAL/0,,contentMDK:20064538~menuPK:4564187~pagePK:64709096~piPK:64709108~theSitePK:502184,00.html#fn3

http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXTOPMANUAL/0,,contentMDK:20064659~menuPK:4564187~pagePK:64709096~piPK:64709108~theSitePK:502184~isCURL:Y,00.html

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would provide ACBF with advances through a Designated Account to be opened for the RIDA grant. To allow for proper tracking of eligible expenditures financed under the RIDA Grant, withdrawal requests would be accompanied by unaudited Interim Financial Reports (IFRs) indicating sources and uses of funds. While the sub-grants would be committed in 2012 and 2013, the Grant proceeds will be disbursed over 3-4 years, reflecting the normal disbursement period of ACBF’s sub-grants.

51. Social (including safeguards) - There are no social issues to be addressed under this project.

52. Environment (including safeguards) – The EA category for this project remains “C” since all activities will be for technical assistance and will not have any environmental impacts. Sub-projects that might involve design work leading to investments, such as feasibility studies and engineering designs, would not be eligible for financing under the IDA Grant.

53. Other Safeguards Policies triggered – None.

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Annex 1: Results Framework and Monitoring Plan for ACBF Regional Capacity Building Project (RIDA-II)

PROJECT DEVELOPMENT OBJECTIVE (PDO) is to (i) improve the capacity of ACBF’s clients to deliver and measure their development results; and (ii) enhance ACBF’s organizational effectiveness and efficiency.

PDO Level Results Indicators* C

ore Unit of

Measure Baseline

2012

Cumulative Target Values3** Freq

Data Source/ Methodology

Responsibility for Data

Collection

Description (indicator definition etc.)

Dec 2013

Dec 2014

Dec 2015

Dec 2016

Dec 2017

User satisfaction of ACBF clients’ a) products b) services

% 60% 65% 75% 80% 85% 90%

Annual Survey of users Clients and ACBF

To gauge the perceived usefulness users attach to the products and services of ACBF’s clients. Products: refer to: published and unpublished research (books, journal articles, paper series, reports..), training materials, curricular and ICE materials. Services: refer to: short & long term trainings, TA and advocacy. Satisfaction: refers to: clarity, relevance of the services and timeliness of the services and products

% 55% 60% 65% 70% 75% 80%

Percentage of sub-projects in ACBF portfolio rated satisfactory and above

% 62.1% 65% 68% 71% 74% 77% Annual

Portfolio Review survey

ACBF Portfolio Review Team

A risk based assessment of the quality of a project/program and portfolio at different points in time during implementation.

% of total disbursements (including knowledge products) to cash outflows. (Efficiency Ratio)

Ratio (%)

63.1% 64% 75% 80% 80% 80% Annual

Review of financial reports

ACBF Finance Department

Program costs/institutional costs (percent of each dollar spent on grants, TA and K&L vis-à-vis operating costs). This indicator expected to improve as the bulk of any additional Funds in any Year will be allocated to Program costs.

3 While most of the indicator values are cumulative, some (such as the number of portfolio reviews carried out by ACBF) are annual.

23



ore Unit of

Measure Baseline

2012




Collection


Dec 2013

Dec 2014

Dec 2015

Dec 2016

Dec 2017

INTERMEDIATE RESULTS

Component 1: Grants to ACBF Supported Programs and Projects

Number of requests for products and services received by ACBF’s clients Number 200 400 600 800 1,000 1,200 Annual

Review of ACBF’s program and Client reports

Determines the level of demand for the products and services of ACBF clients as well as training programs supported by ACBF. A total average portfolio worth of 65 projects is considered with a minimum of 3 requests per project per annum

% of clients’ products that have undergone peer review process (or any other quality control mechanism)

% 55% 60% 65% 70% 75% 80% Annual

Expert/Panel review of ACBF

ACBF M&E/ clients

The peer review is an internal process aimed at verifying or establishing whether the products and services of the clients conform to best practice, meet a set of pre-determined criteria and are used for their intended purposes. Peer review will cover: policy briefs, studies and reports; curricula, training materials and programs and IEC materials produced by ACBF’s clients (think tanks, universities, training institutions and civil society & other non-state actors.

% of ACBF clients with functional M&E systems

% 25% 40% 50% 60% 79% 80% Annual

Review of ACBF’s program/M&E and client reports

Assesses the capacity of ACBF clients to track performance by collecting and reporting on impact/ outcome data.

Number of engagements/ interactions between ACBF

Number 60

120

180

240

300

360 Annual

Review of ACBF’s program/M&E and client reports

ACBF M&E/ clients

Determines the frequency with which ACBF clients engage in outreach programs / dissemination activities to publicize their products and services. (at

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ore Unit of

Measure Baseline

2012




Collection


Dec 2013

Dec 2014

Dec 2015

Dec 2016

Dec 2017

clients and policy-makers (cumulative)

least one engagement activity per project per each of the 60 projects)

# of participants attending long and short-term trainings conducted by ACBF clients (cumulative)

# 300 600 900 1,200 1,500 1,800 Bi-

Annual

Training institutions’ reports

ACBF Operations Dept

Number of participants attending ACBF-supported workshops in areas such as policy analysis, management, research methods, statistics, etc. (estimated that 25% of the 60 projects at any one time will be training. If annually each project trains 20 beneficiaries, it gives an annual target of 300 participants)

#r of times ACBF K&L products/documents are downloaded in (a) Africa (b) Rest of the world

# 5000 10,000 20,000 35,000 45,000 55,000 Annual

ACBF’s knowledge reports

ACBF Library

Assesses number of times K&L products are downloaded (an indication of level of interest in ACBF K&L products and documents).

# of requests received by ACBF for K&L products # 140 170 200 230 260 300 Annual

Review of ACBF’s reports

Determines the volume and frequency of demand for ACBF’s knowledge and learning products (downloads of K&L products from ACBF’s website as a proxy for assessing demand).

# of times ACBF K&L products are cited.

# 2,500 4,500 6,500 8,500 10,500 12,500 Annual Review of ACBF’s reports

Citations in media, policy documents, speeches by policy-makers, etc.

Component 2: Institutional Support to ACBF % of total staff costs to cash out flows

Ratio 22.3% 24.9% 17% 17% 17% 17% Annual

Financial Reports ACBF Finance Dept.

Determines how efficient the Foundation structure is in delivering programs and products. Total Cash outflow includes disbursements to projects.

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ore Unit of

Measure Baseline

2012




Collection


Dec 2013

Dec 2014

Dec 2015

Dec 2016

Dec 2017

Actual contributions from African governments to SMTP III

US$ 24.35 28 30 32 34 35 Annual

Resource mobilization reports

Resource mobilization Unit

Increased contribution from African governments will confirm the relevance of ACBF’s programs to African governments.

% of activities implemented from Annual Business Plans

% 70% 75% 80% 85% 90% 95% Annual

Business Plan Progress Report

COO’s Office Assesses actual delivery/results vs. planned activities.

# of portfolio reviews conducted

# 2 2 2 2 2 2 Annual

Grantees, Operational staff and program reports

Portfolio Review Team

Determines the effectiveness of portfolio management and performance.

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ACBF RIDA II Results Chain

Med term outcomes

Short term outcomes

Outputs

Inputs

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Annex 2: Operational Risk Assessment Framework (ORAF) Stage: Board

Project Stakeholder Risks Rating Substantial Description: Political interference by governments of the countries where grantees are operating: Governments may be tempted to interfere – where possible – and disrupt the activities of ACBF grant recipients, especially where these are NGOs such as think tanks, policy institutes and training institutions.

Risk Management: ACBF to support enforcement of letters of non-interference. ACBF to intensify dialogue with relevant government entities and improve the transparency and visibility of grantee activities to avoid disruption of activities by host governments. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Description : Failure to secure adequate pledges from traditional donors or non-payment of pledges: Change of strategic focus among donors, either away from capacity development or from Africa in general

Risk Management : ACBF to continue diversification of income streams and increase efficiencies. Improved results-based management framework that demonstrates tangible results. Building alliances supported by evidence. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Description : Failure to achieve SMTP III funding targets or delays in disbursements by donors/members: ACBF has agreed to keep operating costs at 36 percent of total outflows by 2013, 25 percent by end of 2014, and 20 percent by 2015 based on total grant income of US$188.8 million. Any shortfall in this number can negatively affect these ratios and ACBF’s program delivery.

Risk Management : Failure to achieve the funding target will require downward adjustments in the operating costs to ensure that agreed ratios are maintained. Resp: Grantee Stage: Implementation Due Date : Ongoing Status: Ongoing

Implementing Agency Risks (including fiduciary) Capacity Rating: Substantial Description : Reputational risk for ACBF: Excessive demand for ACBF services that cannot be met

Risk Management : Number of countries in which ACBF will work limited to 15 ‘SMTP III focus countries’. Better communication to manage expectations among stakeholders, including African member/client countries. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Description : Loss of key staff: Turbulent financial situation at ACBF may cause uncertainty and cause better-trained, qualified staff to leave in search of better career opportunities.

Risk Management : Create a favourable working environment that makes ACBF an employer of choice among qualified African development professionals. Create opportunities for advancement, publication, and long-term career development for staff. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

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Description : Fiduciary Issues: ACBF may over-extend itself by trying to do too much, in the process compromising effective supervision of projects and communication with grantees.

Risk Management : Implementation of Operations and other Procedures Manuals relating to grantee operations; improved teamwork among ACBF staff.

Resp: Grantee Stage: Preparation/Implementation

Due Date: Ongoing Status: Ongoing

Governance Rating: Moderate Description : Change in leadership: The current Executive Secretary’s term expires on November 30, 2013. The successor assumes office on December 2, 2013. The transition could usher in a period of uncertainty as a new leader may have different strategic priorities and could change course in mid-stream.

Risk Management : Careful management of the succession process by ACBF’s Executive Board. The Executive Secretary Designate was included in all major decisions 2 months before assumption of duty. Resp: Grantee Stage: Preparation Due Date : June, 2013 Status: Ongoing

Description : Lapses in application of rules & regulations

Risk Management : Internal audit to take place more frequently to ensure application of rules and regulations. Updates on Management Action Plan to be given on a periodical basis. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Description : Risk of relapse into old (pre-2010) ways of operating: The hiatus caused by the receipt in 2008 of an anonymous letter alleging mismanagement and corruption has been overcome but the risk of reoccurrence remains.

Risk Management : Sustained institutionalized systems and processes; enhanced supervision and vigilance by Bank staff to ensure new systems and procedures introduced as conditions under RIDA I are implemented, adhered to and constantly updated/improved; continued emphasis on good corporate governance started under the Management Action Plan. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Project Risks Design Rating: Moderate Description : ACBF becomes over-bureaucratic, slow and loses its comparative advantage: Bank support to ACBF no longer uses DGF-financing but has shifted to RIDA. With the change of instrument came stricter requirements and increasing attention to supervision, not only at ACBF but also at the sub-grantee level. There is a risk of possible push-back from ACBF and sub-

Risk Management : Improved efficiency at ACBF and improved communication with clients.

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grantees on the grounds that the Bank has transferred requirements and systems on to ACBF.

Resp: Grantee Stage: Implementation Due Date : Ongoing Status: Ongoing

Social & Environmental Rating: Low Description : None

Risk Management : N/A Resp: N/A Stage: N/A Due Date : N/A Status: N/A

Program & Donor Rating: High Description : Failure to secure adequate pledges from traditional donors or non-payment of pledges: Change of strategic focus among donors, either away from capacity development or from Africa in general (e.g. some donors have narrowed their focus in Africa to only a few least developed countries or fragile and conflict-affected states).

Risk Management : ACBF to continue diversification of income streams and increase efficiencies. Improved results-based management framework that demonstrates tangible results. Building alliances supported by evidence.

Resp: Grantee Stage: Preparation/Implementation

Due Date: Ongoing Status: Ongoing

Description : Failure to achieve SMTP III funding targets or delays in disbursements by donors/members: ACBF has agreed to keep operating costs at 35 percent of total outflows by 2013, 25 percent by end of 2014, and 20 percent by 2015 based on total grant income of US$188 million. Any shortfall in this number can negatively affect these ratios and ACBF’s program delivery.

Risk Management : Failure to achieve the funding target will require downward adjustments in the operating costs to ensure that agreed ratios are maintained. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Delivery Monitoring & Sustainability Rating: Moderate Description : Non-achievement of results

Risk Management : Regular assessment of grantee performance Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Other Rating: Moderate Description : Poor governance in grantee organizations: Grantees’ endogenous risks affecting their capacity to deliver - many are small organizations managed by the founder/leader and without adequate corporate governance structures and decision-making processes.

Risk Management: Regular institutional assessments and insistence on proper-functioning corporate/ decision-making structures.

Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

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Description : Weak M&E systems at grantee level: Inability to capture and report on results. Most ACBF grantees are small organizations without dedicated M&E staff functions

Risk Management: Training and mentoring in M&E to help develop adequate M&E capacity. Development of M&E Guide for use by ACBF Grant Recipients. Resp: Grantee Stage: Implementation Due Date: Ongoing Status: Ongoing

Description : Co-financing at Grantee level: Ability of grantees to raise and manage co-financing for programs that are partially funded by ACBF

Risk Management: Improve (realistic) assessment of co-financing at project/program design stage; Improve monitoring mechanism to track co-financing; Support grantees’ resource mobilization strategies. Resp: Grantee/Sub-grantees

Stage: Implementation Due Date: Ongoing Status: Ongoing

Overall Risk: Moderate

Implementation Risk Rating: Moderate

Risk Description:Overall, the major risk is the possibility of failure to secure adequate pledges and achieve the ambitious funding targets of SMTP III. This will affect not only overall delivery of the program but also the very future of ACBF. Other risks can be mitigated though measures outlined in the ORAF.

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Annex 3: ACBF Letter of Commitment

32

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34

35

36

37

38

39

40

41

42

43

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Annex 4: List of Proposed Projects for RIDA II Funding by Thematic Area

THINK TANKS AND POLICY UNITS

Project/Program HOST

COUNTRY TYPE GRANT

AMOUNT GRANT

SIGNING DATE

PROJECT DESCRIPTION

Institut de Développement Economique (IDEC IV)

Burundi National 2,200,000.00 Oct-12 The overall objective of the project is to improve public policies through policy research studies and dissemination, training and knowledge sharing.

Economic and Social Research Foundation (ESRF IV)

Tanzania National 2,000,000.00 Dec-12 The project goal is to improve economic growth for sustainable development and social advancement.

Institute of Policy Analysis and Research Capacity Building Project (IPAR-CAP)

Rwanda National 2,150,000.00 Sep-12 The project goal is to contribute to improved economic performance of Rwanda in achieving the development objectives defined in the Vision 2020 of the country. .

Malawi Public Policy Research and Analysis Project (MPPRAP)

Malawi National 1,500,000.00

Yet to be approved by the Executive Board

The project intends to strengthen public policy formulation, coordination and implementation for sustainable economic growth and development in Malawi

Centre Mauritanien d'Analyse des Politiques (CMAP III)

Mauritania National 3,000,000.00 30-Jun-12 The goal of the project is to improve the resilience of Mauritania economy to internal and external shocks in delivering development results of the PRSP III.

Cameroon Policy Analysis and Research Center (CAMERCAP-PARC)

Cameroon National 1,174,000.00 Not yet signed The goal of the project is to contribute to the successful implementation of Cameroon's Growth and Employment Strategy for the improvement of the country's economic performance.

Centre d'Etudes de Politique pour le Developpement, (CEPOD), Phase III

Senegal National 1,100,000.00 Not yet signed The goal of CEPOD is to contribute to improve Senegal’s economic performance through the implementation of the country's Growth and Poverty Reduction Strategy.. .

Ghana Planning and Monitoring Program Ghana National 2,200,000.00 Yet to be approved by the Executive Board

The goal of the project is to contribute to the improvement of planning and monitoring process for development results in order to reduce poverty in Ghana.

TOTAL THINK TANKS/ POLICY UNITS 15,324,000.00

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REGIONAL TRAINING PROGRAMS

Project/Program HOST

COUNTRY TYPE GRANT

AMOUNT GRANT

SIGNING DATE

PROJECT DESCRIPTION

Financial Governance and transparency Strengthening Project in Djibouti (GFID)

Djibouti 2,700,000.00

The project objective is to improve financial governance in Djibouti and scale up audit and control function in the public sector in African francophone countries.

Africa Institute of Science and technology (AIST) Arusha

Tanzania Regional 3,100,000.00

Nov-12 The goal of the project is to improve the quality of high education in science and engineering in Africa for effective technological innovations that better support the economic development of Africa. The AIST Arusha is a regional training facility that benefit all EAC Countries in the area.

Economic Policy management Training Program (EPM-Zambia II)

Zambia Regional 1,229,000.00

Not yet signed The goal of EPM-Zambia program is to improve efficiency in Economic Policy Management in Public Sector of Southern Africa.

Economic Policy Management, EPM Ghana

Ghana Regional 3,000,000.00

8-Dec-12 The main goal of EPM-Ghana is to improve the performance and efficiency of the public sector in Anglophone West Africa by enhancing the skills and competencies of policy analysts and economic managers for regional integration.

Economic Policy Management, EPM Abidjan

Cote d'Ivoire

Regional 2,500,000.00

12-Apr-12 The goal of the program is to improve the performance and efficiency of the public sector in Francophone Central Africa sub-region countries through enhancement of skills of policy analyst and economic managers.

Economic Policy Management, EPM Yaounde

Cameroon Regional 2,000,000.00

12-Apr-12 The goal of the program is to improve the performance and efficiency of the public sector in Francophone Central Africa sub-region countries through enhancement of skills of policy analyst and economic managers. EPM-Yaounde is part of the poles of a network of regional economic policy management institutions supported by ACBF. In line with the standard mandates of the EPM programs, the Yaounde regional program builds capacity in both national and regional economic management issues . Participating students acquire capacity to engage in well-grounded integration analytical issues. EPM Yaounde program covers the CEMAC region with emphasis on regional integration in ECCAS member countries.

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Centre d'Etudes Superieures en Administration et Gestion (CESAG)

Senegal Regional 1,575,000.00

12-Apr-12 The goal of CESAG-MBF Phase III is to improve financial management and accountability of African countries in the areas of corporate banking, risk management and capital markets. .

International Institute for Water and Environmental Engineering (2IE)

Burkina Regional 2,000,000.00

8-Dec-12 The Institute International water and environmental engineering (2iE) is an international public-private partnership involving several African states; private firms; academic, technical, and scientific bodies; and technical institutions. The Project's goal is to contribute to the development of high quality expertise in science and technology through the training of students in science and engineering in various fields.

The African University of Science and Technology(AUST)

Nigeria Regional 2,000,000.00

3-Nov-12 The African University of Science and Technology (AUST) is a regional inititaive that is private, pan-african, co-educational, research university aimed at equipping sub-Saharan Africa's youth in West Africa with cutting edge knowledge through regional and inetrnational networks. The goal of the project is to improve the qualiy of high education in science and engineering in Africa for effective technological innovations that better support the economic development of Africa. .

Nouveau Programme de Troisieme Cycle InterUniversitaire en Economie (NPTCI), Phase II

Burkina Regional 1,200,000.00

Not yet signed PTCI-Economics main goal is building a critical mass of leaders and drivers of change in national economic development to enable Africa effectively compete in the global economy.

TOTAL REGIONAL TRAINING PROGRAMS 21,304,000.00

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REGIONAL INTEGRATION

Project/Program HOST COUNTRY

TYPE GRANT AMOUNT

GRANT SIGNING DATE

PROJECT DESCRIPTION

AU-CAP -bridging funding Ethiopia Continental 800,000.00

6/1/2013 One year Bridging funding

The goal of the AU-CAP Program is to support the AUC institutional transformation process and implementation of the AU Strategic Plan, thus enabling the African Union to effectively promote regional integration.

EAC Research Capacity Building Project

Tanzania Regional 1,500,000.00


The goal of the project is to enhance EAC Secretariat capacity in policy formulation and implementation to foster regional integration.

AU CAP Phase II Ethiopia Continental 3,000,000.00


The goal of the 2ndphase of AU-CAP is to support the institutional transformation processes of the Commission and to provide targeted capacity building support to facilitate the implementation of the priority thematic programs of the Commission approved by the policy organs of the African Union

Strengthening Capacity of IGAD Secretariat Project

Djibouti Regional 1,000,000.00


The goal of the project is to support the IGAD Secretariat in facilitating intra- regional trade through trade policy formulation and implementation.

The Food, Agriculture And Natural Resources Policy Analysis Network (FANRPAN)

South Africa*

Regional 2,000,000.00 Dec-12 The project’s overall objective is to strengthen the capacity of the FANRPAN network to support development of food, agriculture and natural resources policies in East and Southern Africa. FANRPAN is a network of 16 countries in the East and Southern Africa sub-region, collectively fighting against hunger and food insecurity through key regional strategies such as harmonization of national agricultural policies, facilitation of trade across borders and the exchange of research outputs and information with the ultimate aim of influencing regional and nation policy processes and agenda for regional integration. FANRPAN is a key player in NEPAD (CADAAP), COMESA and SADC. Both RECs are members of FANRPAN Board of Governors. Member Countries are Angola, Botswana, Congo (DRC), Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe*. (*Note that Zimbabwe will receive no IDA funds.)

African Women Development Funds (AWDF)

Ghana Regional 2,730,000.00 23-Feb-12 The goal of the project is to promote non-state actors empowerment with the principal focus on women organizations for the economic empowerment and participation in policy dialogue in Africa.

Association of African Universities (AAU-CADRE)

Ghana Regional (Continental)

3,500,000.00 10-Dec-12 The goal of the Association of African Universities is building capacities of Higher Educational Institutes (HEIs) for promoting development and regional integration.

West African Economic and Monetary Union (WAEMU) CAP

Burkina Regional 2,000,000.00 Yet to be approved by the Executive Board

The goal of the project is to build the capacity of the WAEMU Secretariat and member countries for successful implementation of the Regional Economic Program REP 2012-2016 for regional monetary and economic integration in West Africa..

TOTAL REGIONAL INTEGRATION 16,530,000.00 GRAND TOTAL 53,158,000.00

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Annex 5: Detailed Description of Modified or New Project Activities

ACBF seeks to achieve results under a strategic framework with overlapping levels of influence, which drives what the Foundation chooses to do in a given setting. The overall goal of the Foundation is to support activities that lead to the achievement of effective governance for real poverty reduction by working to improve the capacity of country and regional organizations that are primarily responsible for development and poverty reduction. Throughout its 20 years of existence, ACBF has learned that capacity building is a long term process, requiring patient capital, and flexibility in the design of interventions, focus on knowledge and ownership and attention to tracking results. In carrying out its mission, ACBF works with a number of stakeholders, such as departments and ministries within governments, national and regional entities responsible for development policy and implementation, private sector associations and networks, universities and training institutes and civil society organizations. This diversified approach to partnerships has allowed the Foundation to discover innovative ways of building capacity and has contributed to the sustainability of ACBF programs in difficult contexts, such as in fragile states and areas with limited capacity at entry. Choices of where to intervene, whom to work with, what activities to support and how, are guided by a framework with three strategic priorities, represented as the third level of influence in Figure 2. They include:

(a) Enhancing critical capacities to promote political and social stability for transformational change.

Activities to develop the types of leaders who can transform the environments in which they work are important aspects for achieving this objective and they relate to support for leadership development programs and efforts that build transparency and enhance accountability of processes guiding public resource allocation and use. Such investments are particularly important to enhance revenue management systems in resource rich but capacity poor countries. Activities that improve participatory and inclusive decision processes also fall under this strategic pillar, as would investment in skills, tools and policies that enhance results-based management skills in the public sector. Because of the importance of inclusive service delivery in enhancing social and political stability, the Foundation aims to support activities that strengthen the critical planning and implementing processes at the national level and municipal level that underpin service delivery. Attention will go towards activities that ensure the soundness of economic policy and planning approaches to managing in the public sector. Enhancing skills of individuals with service delivery responsibility and disseminating and sharing tools for efficient public sector administration and management through existing university partnerships will be of critical importance in achieving this strategic objective.

(b) Enhancing capacity to engage and regulate the productive sector.

Interventions to enhance the ability of policy institutes and think tanks to analyze and research policies related to rule-based governance, inter-country and regional trade, complex infrastructure contract management across country borders, and economic policies that impact the agricultural sector would fall under this strategic pillar. Efforts that support skills building of ministerial staff responsible for implementing these policies would be given

49

special attention for scaling up through restructured university partnerships that ACBF has developed over the years. Consultative dialogues to source ideas from the private sector and use them for supporting engagement in public private partnerships would be critical. An effective productive sector depends on the quality of inclusion and overall values of actors in the public and private sphere. The Foundation will pay specific attention to investing in dialogue and reflection on values that lead to good governance, working in collaboration with regional and country entities on a series of important themes. Individual skills building efforts that are focused on ethics, integrity, and accountable governance will get added priority. Work will go towards investing in partnerships for generating data to assess progress in governance and creating demand for analysis and data.

(c) Enhancing capacity to track policy impact

Attention in this strategic pillar will be paid to activities that support the assessment of capacity at the country and regional levels and to those that propose how to better utilize existing capacity in the areas of macroeconomic policy management, policy coordination and implementation capacities of economic and planning ministries. Special emphasis would go to enhance long term and strategic planning in key ministries as well as support to the statistical requirements for tracking policy impact. Activities aimed at developing a culture of evaluating public programs will be given priority. Furthermore, programs aimed at strengthening policy advocacy capacity of non-state actors, intensification of effective oversight functions, and operationalizing efficiency of information disclosure and access systems would get support. Partnership for implementation ACBF's commitment to a transformational approach to capacity development requires a careful choice of whom to work with and why. The main agents of change are typically a select cadre of individuals, strategic organizations and critical institutions. The strategy of the Foundation includes selecting who are the key players to work with. To do so the Foundation engages in a thorough assessment of technical and political factors, in order to ensure that the Foundation remains a trusted broker, committed to African transformation and leadership. Choices are made along the following categories of potential partners: (a) Public sector institutions, whose organizational capacity is important to make significant contributions to the emergence and growth of an effective developmental state. This would include public entities charged with service delivery, local authorities, and sub national entities who tackle core policy and service delivery needs as well as manage uncertainty and risk that comes from globalization and climate change. Critical actors in this sphere are ministries of finance, and departments responsible for development and economic planning. The main purpose of focusing on this group is to enhance the culture of management for development results and improvement of service delivery. The choice of who specifically to work with in such entities would be guided by the potential to influence change in the governance system, by enhancing the legitimacy and transparency of public institutions; (b) Policy units and think tanks that are autonomous or semi-autonomous and play a critical role in shaping research, analysis and thinking around policy decisions. ACBF will seek to scale up the capacity of existing policy units and support the creation of new ones.

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Particular effort will go towards strengthening their capacity to provide analytical and evaluative support to government in emerging areas of policy beyond their current focus on macroeconomics to include sectoral issues such as agriculture and rural productivity, and the myriad of policies needed to secure green growth; (c) Non-state actors, including specific dynamic groups, organizations and individuals in civil society and the private sector for long term results and impact, including support to umbrella organizations at the country and regional level; (d) Regional institutions, e.g. university departments, regional training institutes, and regional entities within regional economic communities that are responsible for cross country regulation and procurement, contract design and supervision for complex multiple-country infrastructure projects, cross-border trade and regional procurement. Special attention will be paid to linking up statistical agencies to grow the demand for good data and analysis, knowledge and professional networks, and alumni of ACBF projects and programs; and (e) Universities and training institutions, because of the central role that they have played in the last 20 years and that they will continue to play in the new strategy as partners and implementers. Universities and regional training institutes will serve as incubators for the development of a critical mass of leaders and drivers of change. Pipeline of Programs and Projects to be supported over the implementation of the project The specific programs and projects to be covered under the additional financing are listed in Annex 3 of the Project Paper. Activities of the Project The activities of the project are: the appraisal, supervision, monitoring and evaluation of sub-grants to be financed under the project, and the reporting on progress in relation to these sub-grants. The project will also cover a limited program of knowledge and learning confined to the preparation and publication of the annual Africa Capacity Indicators Report (ACIR) and the coordination of peer learning activities such as the Policy Institutes Committee and the Strategic Studies Groups.

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Annex 6: Summary of the Independent Evaluation of the African Capacity Building

Foundation’s Strategic Medium Term Plan II (SMTP II)

Independent Evaluation of the

African Capacity Building Foundation’s

Strategic Medium Term Plan II (SMTP II)

Evaluation Summary

October 2012

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Introduction

At the end of the second Strategic Medium-Term Plan (SMPT II) period (2007-2011), the Foundation has requested an independent assessment of the progress of implementation of the SMTP II. The purpose of the evaluation is to assess the extent to which STMP II achieved its intended objectives as well as the performance of the African Capacity Building foundation (ACBF) as an organization in the implementation of the programme.

The structure of this evaluation, as suggested by the Terms of Reference, falls into two parts: (1) assessment of SMTP II outcomes and (2) assessment of ACFB organizational performance and effectiveness.

Figure 1: The evaluation questions

Component 1: Review of SMTP II operational results

Component 2: Review of ACBF organizational performance

EQ1: Have the results stated at the outcome level in the SMTP II been achieved or what progress has been made towards their achievement?

EQ2: What external factors (political, economic, financial etc.) have affected the outcomes, either positively or negatively? How have these factors limited or facilitated progress towards the outcomes?

EQ3: What are the key outputs achieved and what are the quantity, quality and timeliness of theses outputs? What factors impeded or facilitated the achievement of such outputs?

EQ4: Are the outputs and outcomes of the SMTP II being achieved at an acceptable cost, what are the benefits obtained in comparison to the costs?

EQ5: To what extent are outcomes sustainable at the relevant levels (human, institutional and organizational)?

EQ6: How effective has SMTP II enabled ACBF meet its strategic objectives of enhancing state effectiveness, the interface between public sector, private sector and civil society, and regional economic integration in Africa?

EQ7: What is the extent of achievement and influence of ACBF on its six core competency areas in Africa?

EQ8: How effective has the Foundation’s funding model including co-financing arrangements been in generating the requisite resources to finance the SMTP II?

EQ9: Have the internal reforms undertaken under the Management Action Plan positioned the Foundation for the challenges facing Africa?

EQ10: How successful has the Foundation been delivering its programs and in transforming itself into a knowledge based organization?

EQ11: What can others learn from ACBF’s efforts at internal reform and capacity building?

Source: Terms of Reference

The assessment of SMTP II outcomes was carried out through a portfolio review of a sample of 39 operations and field visits to 22 projects in 10 countries. The assessment of ACBF organizational performance and effectiveness was done through a review of the strategy and the organization. The SMTP II strategy review drew evidence from strategic and policy documents, case studies, stakeholder interviews and web survey responses. The organizational assessment drew its evidence from the review of organizational documents, from interviews with staff, members of the Executive Board and Board of Governors, a web surveys and from country visit findings.

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The evaluation process unfolded as follows:

• Inception: The team undertook an inception visit to ACBF Headquarters in Harare in January 2012 to clarify stakeholder expectations, elaborate the detailed evaluation questions and methodology, conduct an initial set of interviews and discussions and visit an ACBF-supported organization in Zimbabwe.

• Country visits, portfolio review and web surveys: In February the evaluation team visited a sample of 22 projects in 10 selected countries. Country visits included a series of interviews and group discussions with grantees and other stakeholders. In parallel the desk review of selected project documents was conducted and four web survey modules were implemented.

• Synthesis: The synthesis phase in March included another visit to ACBF for collection of additional information and discussion of draft findings. The final visit included a workshop to present draft findings to a wider group of management and staff, to discuss draft conclusions and elaborate options for further steps.

• Reporting: The first draft report was submitted in May. Comments on the draft were gathered during May and June and the initial round of comments was incorporated into a revised draft report which was submitted in July. A few further final amendments were made and the final report was submitted on the 23rd July.

Review of SMTP II operational results – key findings

Operationalisation of the SMTP II strategy SMTP II was a continuation of SMTP I; it was mainly oriented towards expanding the existing portfolio beyond the traditional focus on EPAM through growing engagement within the other competency areas. But, the SMTP II document itself did not describe the strategy which ACBF would use to strengthen its engagement in competency areas where it has less experience and fewer partners so far. In the following, ACBF has rather followed an iterative process in responding to a wide range of opportunities and demands, thus venturing into new areas and partnerships. While SMTP II has been oriented towards the expansion of the portfolio into new competency areas, less consideration was given to aspects of strategic focus and choice. Strategic focus became a major issue of concern only halfway through SMTP II. SMTP III uses “lack of supply” by others as the defining principle for strategic focus and choice, implying that ACBF will continue to see its critical role as addressing capacity building gaps. SMTP II had defined ACBF’s comparative advantage rather generally around ACBF being an African organization; the following SMTP III has then made some headway towards defining ACBF’s comparative advantage around the specific role it plays in capacity development. Without policy documents or operational strategies guiding the organization-wide approach to programme development and implementation, strategy was very much driven by the living knowledge within the organization. The organization mainly achieves strategic focus and direction through a process of discussion and deliberation, guided by the general principles and mandates for ACBF’s work as well as the (both expressed and perceived) priorities for capacity building in the African countries.

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SMTP II Portfolio

As a result of the disruption, ACBF grants approval dropped sharply in 2009; it went back to normal again in 2011. In 2008 there was also a decline in disbursements to projects in 2009. However, overall disbursements to projects remained fairly stable over the period, mainly as a result of continued disbursements for projects that were already approved under SMTP II or SMTP I. 2010 and 2011 disbursements even exceeded 2008 levels. At the same time, the administrative expenses saw a significant increase since 2009 as the organization began its process of restructuring and systems improvement.

The disruption of the SMTP II implementation also had its impact on the composition of the ACBF portfolio. Disbursements to EPAM projects increased sharply since 2009 while those to other types of projects declined over the same period. PVP) saw the sharpest decline of disbursements, with old projects coming to an end and very few new projects being approved. By the end of SMTP II, EPAM – the historical core competency of the ACBF – had received a striking 56 percent of all disbursements over the SMTP II entire period. Under SMTP II, ACBF has moved towards supporting a wider range of partners. National government organizations are the largest recipient of ACBF grants. Regional bodies are the second largest recipient, followed by think tanks. Operational results Despite the disruptions, ACBF has achieved some substantial results over the period of SMTP II. ACBF has made important contributions to improving governance by promoting transparency and accountability mainly in two ways: (i) through strengthening the capacities of various actors to engage in the overall policy cycle, and (ii) strengthening capacities within the accountability chain. ACBF support has had positive effects on improving the quality, processes, implementation and M&E of national and sectoral policies and it promoted voice and inclusiveness of non-state actors in policy processes. It has enhanced accountability through building the capacities in the public financial management and statistical system and parliament. Results vary across the six competency areas, with good results in EPAM and FMA, mixed results in PVP and PAM and some results in SNS and SNP (see below). The mixed performance across the competency areas can to a great extent be related to a lack of specific strategies for different thematic areas and in particular strategies for how to influence beneficiary institutions, partner governments and other development partners in bringing about sustainable development. ACBF’s approach to the different competency areas, and in particular the “new” competency areas started under SMTP I, has been more a process of trial-and-error, done through experiential learning but not a result of a planned strategy leading to both results and failures.

• Economic Policy Analysis and Management (EPAM): EPAM has received the bulk of ACBF financial support and ACBF has had a clear value added thanks to its long-term, predictable and high financial support. ACBF has played a catalytic role in creating new or strengthened national and regional think tanks/policy units which has contributed to improving the effectiveness of the design and management of public policies and programmes, moving forward policy debates and generating innovative approaches and tools for policy analysis, implementation, monitoring and evaluation. ACBF supported trainings are of high quality and have increased the number of trained economists within public and private sector organizations. Main shortcomings are the existing gender and country biases of

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the training provided as well as the limited visibility of and limited linkages between the programmes.

• Financial Management and Accountability (FMA): ACBF support to financial management and accountability has largely achieved good results contributing to strengthening the capacity of various actors throughout the accountability chain. Training on macroeconomics and financial management has facilitated the improved quality of decisions making by producing an increased cadre of economist, many of whom are working in strategic positions at ministries of finance and planning. However, public financial management reform is a complex area, requiring substantial expertise and engagement on the ground. ACBF’s value added is relatively minor, compared to other donors who have more experience with PFM reform and assessment, such as the World Bank.

• Public Administration and Management (PAM): This competency area has received significant financial support next to EPAM and PVP. Some first good results are emerging in the area of public administration and management although the picture is uneven across the projects reviewed. Achievements include changes in performance at individual level (e.g. skills building on performance management, public finance management at local level) and at institutional level (e.g. promoting the establishment of an African platform of learning through exchange of knowledge and experiences on subjects like women empowerment and decentralization).

• Professionalizing the Voices of the Private Sector and Civil Society (PVP): ACBF has helped to increase the outreach of many private sector and CSO organizations through promoting the creation and strengthening of umbrella organization, which has facilitated dialogue, synergies and voice of member organizations; but, results at output and outcome level are generally mixed across the projects reviewed.

• Supporting Statistical and Monitoring Capacity (SMS): ACBF has responded well to the increasing demand for official statistics and supported complex inter-institutional projects. Albeit its support has to some extent increased the visibility of statistical systems at country level resulting in a number of stakeholders requesting more statistical products, the effectiveness of ACBF support has been undermined due to weak project design, inadequate preparation for implementation of project activities and delay in start-up of the projects during the strategy period.

• Support to Parliaments (SPA): ACBF support achieved some results in strengthening the capacity of legislators and parliamentarians, in particular their problem solving and decision making skills, and helped to build the policy analysis and research capacity of civil servants working for parliament.

• Gender: Attention to gender equality issues was a priority in SMTP II, although ACBF has never finalized a specific gender strategy. ACBF has addressed gender issues through (a) the general strengthening of the partners’ gender policies and practices and (b) support of specific partners and organizations working at mainstreaming gender in government policies and programmes. ACBF studies have indicated that despite these efforts the participation by women in ACBF-funded training programme has been rather low. At the same time success has been noted in bringing gender onto the agenda at national and regional levels. A visible

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outcome of ACBF’s focus on gender has been the promotion of gender budgeting, which has been taken up by a number of national and regional think tanks, such as MEFMI.

• Sustainability: Issues of institutional sustainability generally did not receive sufficient attention across all competency areas. For example, PUs have found it difficult to mobilise resources from outside the Foundation, because their products and services are perceived largely as public goods and hence the immediate benefits are difficult to appreciate. There is a potential strategic role of ACBF to promote or even convene a debate on the role and importance of policy think tanks as a crucial pillar of national economic governance system. For ACBF and its partners there are a number of possibilities to promote institutional sustainability. First, an exit/sustainability strategy could be built-in as part of the proposal document. Second, the Foundation could support partners in building strategic partnerships, for improved outreach and access to funding.

Efficiency Capacity building by its nature is a long-term undertaking whose benefits take long to be realised. The “value chain” for capacity building is not always obvious; it is lengthy and requires perseverance. ACBF’s support to capacity building has provided benefits of a long-term and more enduring in nature. For example, the bulk of ACBF funding in EPAM has been used for long-term investments into institutional capacity building (personnel costs, degrees, institutional infrastructure). ACBF has also added value by filling capacity gaps which most donors do not address because they tend target their support to areas where it is easier to generate visible results within a short time. The long-term support ACBF rendered towards capacity building has resulted in many benefits which are most evident in the case of PUs. Long-term support has led to heightened consolidation of the recipient institutions; greater visibility and recognition, and greater performance. This wide range of results has been achieved with relatively little financial support from ACBF. Furthermore, adding subsequent phases of support meant reduced risks for ACBF as partnerships were already well established. However, ACBF could increase the efficiency of programme management and implementation by addressing issues of delays and micromanagement which have led to increased transaction costs of ACBF partners. Review of ACBF organizational effectiveness Strategy outcomes ACBF has achieved its most significant results and influence in EPAM where it has long-standing partnerships and where it had channeled most of its support over the strategy period. Under SMTP II ACBF has also invested heavily into PAM and FMA with mixed results so far. The complexity of the programmes and the governance context has made it difficult for the ACBF to establish a clear value added so far. Implementation through government partners was often less straightforward and ACBF still has to find ways of making the engagement with government partners more effective. ACBF has made clear progress towards achieving its strategic objective to enhance state effectiveness under SMTP II. ACBF has achieved substantial results in influencing policy

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processes and strengthening transparency and accountability. ACBF’s influence in strengthening capacities for public service delivery has been rather limited and there are few visible results yet. The same holds true for its support on regulatory frameworks. ACBF’s influence in strengthening of the interfaces between public sector, private sector and civil society was also limited, although its support to the private sector and civil society was much appreciated by beneficiaries as it has filled in important gaps. But overall interventions were too dispersed and insufficiently linked to achieve the critical mass of support for leveraging results in this area where many actors are involved. Progress on strengthening regional integration has been rather slow. ACBF’s profile at policy levels appears to be limited and contributions are mainly related to strengthening individual and organizational capacities. Support to RECs has been limited so far and strategic links with the ACBF supported regional programmes are weak. ACBF has clearly established its unique role and value in providing long-term support to capacity building, elaborated in the operations review. A majority of ACBF staff and partners felt that ACBF has significantly strengthened interventions in the building of capacity to build and nurture capacity. With regard to its long-term objectives, ACBF has made significant progress in positioning itself as a specialized African capacity building organization, supporting a holistic approach to capacity building. The organization has also a made substantial progress in its transformation into a knowledge-based organization and is in line. However, achievements in building partnership between African governments and development partners were rather moderate. There is a clearly perceived need for ACBF to engage more with other development partners and country governments. Internal reforms Implementation of SMTP II was disrupted half-way through its strategy period following anonymous allegations of human resource and financial malpractices in September 2008 which were necessitated a review of management practices and governance issues the organization adopted a Management Action Plan (MAP) in late 2009. In 2009 and 2010, the organization was focused on implementing the internal reforms outlined in the MAP. The MAP was seen as an instrument for delivering the Foundation out of its current problems and rebuilding the confidence of the donors and other stakeholders. The implementation of the MAP was accompanied by the World Bank’s move to a new funding instrument In June 2010. The use of Regional IDA (RIDA) grant rather than the DGF Facility implied that the World Bank support to ACBF was now governed by standard World Bank operational policies including closer fiduciary and technical supervision. For the ACBF this meant that it has to adopt a much tighter approach to managing grants, as detailed in the revised operation manual when it finally returned to normal business in 2011. The MAP has taken the Foundation beyond compliance with the findings of the audits and fiduciary reviews to begin the process of strategizing ACBFs future. Staff felt empowered and

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energized by the experience of MAP implementation, which challenged individuals and practices in a positive way. Implementation of MAP has built internal skills and increased the confidence of staff who see the new organizational structure and decentralized approach to management as real positives. With the greater focus on flagship products such as the African Capacity Indicators Report and on strategic, the Foundation is more visible. With regard to the Foundation’s capability the internal reforms have impacted most positively on internal systems, external credibility and reputation, ACBF’s understanding of the challenges facing Africa, and its overall ability to fulfill its mission. Other positive impacts cited included a strengthened management approach, improved staff motivation, clearer strategic focus and strengthened organization and staffing. Negative impacts identified by the staff survey relate mainly to the stringency of controls and how these affect ACBF’s ability to provide speedy support, while those on transparency relate to concerns that an information gap is opening up between staff and management. Other negative impacts range from concern that the Foundation may struggle to match its achievements to its revived reputation, through continuing heavy workload and silo culture, to a concern that organizational structure is in constant flux. The reforms have also had their impact on partner relations. Overall, partners experienced the ACBF as becoming more approachable as a result of the reforms. However, while the organization was absorbed by implementation of internal reforms in 2009 and 2010, a number of partners also experienced significant delays in approval of new projects. Overall, grantee partners consulted during this evaluation summarized the main strengths of ACBF as “creating, building and growing African institutions”. However, grantee partners also referred to certain shortcomings in the way ACBF manages its projects, in particular micro-management, limited flexibility and responsiveness in managing the project cycle, and delays in project approvals. The experience of micro-management and delays mirror the negative impacts of reforms reported by ACBF staff in particular the stronger systems for control and risk management, following the implementation of the reforms. Knowledge management Knowledge management has received much attention during the strategy period. ACBF’s knowledge management strategy vision implies a dual focus on ACBF as a learning organization and ACBF as a knowledge center. Since the reforms, the vision for KM has changed significantly. ACBF now seeks to be a proactive knowledge partner, with a strong emphasis on embedding knowledge within the organization. Staff responses to the web survey indicate that common characteristics of a learning organization are generally present within ACBF. This includes: provision of a supportive culture; capturing internal knowledge about its own performance; effective knowledge products and services; effective access to external learning; effective knowledge management system; and integration of learning into strategy, policy and practice. ACBF’s KM efforts and initiatives had achieved valuable results and that the ACBF has established itself as an active knowledge hub in Africa. But partners also pointed to a degree of weakness in the Foundation’s ability to capitalize on the knowledge that rests within its partner network and project portfolio. At country level, ACBF’s relative lack of visibility outside its

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immediate circle of partners means that it still has some way to go to project itself and its knowledge products and services more effectively. Challenges to be addressed under SMTP III SMTP III has come a long way in reflecting upon the achievements and results, but also on the weaknesses and challenges under the previous period. Its main concern is about demonstrating the unique value of ACBF and the sharpened focus of the ACBF’s work. However, there are a number of unresolved issues that are not yet covered by the SMTP III documents. This includes: clarification of the organizing principles for defining the focus of ACBF’s work and the approach to developing the contextual analysis to enable strategic positioning and selective focus of the portfolio at country level; attention to issues of institutional sustainability, both for ACBF partners and ACBF itself; a strategy to build capacities within partner governments; an empowering approach to partnerships; and commitment to align itself with the development effectiveness agenda at country level. The evaluation has identified four key challenges which ACBF will have to address to strengthen its effectiveness.

• Integrated package of support: SMTP III does not provide any detail on how the various support instruments at ACBF’s disposal will be recalibrated and linked into more of an integrated portfolio at country, regional or Foundation level.

• Multiple roles: ACBF’s main role under SMTP I and the early stages of SMTP II that of a project manager, working through the project cycle to support partner organizations. In order to establish itself as center of excellence on capacity building, ACBF will need to strengthen its own capabilities as technical experts and facilitators.

• Institutional sustainability: Partners of many years standing still find themselves overly reliant on ACBF financial support, without a clear vision that defines what institutional sustainability means to them and therefore without a clear strategy for achieving it. Moreover ACBF will need to address heads-on the issue of its own sustainability by developing options for sustainability under different funding scenarios.

• Focus on capacity-building results: Recent attempts to strengthen M&E in the ACBF have focused on accountability rather than on learning. It is important that ACBF will embrace the capacity-building aspect of M&E, to support its partners in learning from success and failure; it is equally important that donors support ACBF in placing learning at the heart of its M&E systems.

VI. CONCLUSIONS

33. Systemic approach: The disjointed nature of operations at the country level has been a major obstacle to the increased effectiveness and influence of ACBF-supported interventions. The disjointedness is mainly related to two aspects: First, ACBF focuses its support on organizations rather than systems. This has led to a neglect of issues outside of the organization that nevertheless have a direct impact on its sustainability and influence (e.g. institutional set up, political and legal framework etc.). It has also meant that ACBF did not systematically support

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existing or potential linkages between different organizations and initiatives that would have augmented the impact beyond the individual operation. Second, ACBF has not been successful in coordinating its support with other development partners, thus often ending up with a gap-filling role exacerbating the disjointed nature of the support.

• Conclusion 1: For ACBF’s interventions to be effective they must be embedded into the systemic context and they must be better coordinated.

34. Contextual analysis: The focus on individual operations has prevented a broader organizational or systems perspective. As a result ACBF did not have a strategy on how best to tackle capacity development in the beneficiary countries, in particular a vision of which instruments and entry points work best in which environments, and in which areas of capacity building can ACBF make the biggest difference. The African Capacity Indicators are a useful reference for comparative analysis, but they do not provide sufficient detail and depth for the design of interventions at country level. Country capacity assessments have not been implemented systematically. As such they do not replace the need of a good political-economy analysis which would provide a basis for the identification of effective entry points to influence governance. A hasty shift to “country programmes” will not solve the problem, if they are based on weak analysis. As the example of Uganda shows it is impossible to design a successful country programme without sound analysis of the governance context and good coordination with other development partners.

• Conclusion 2: Good analysis of the country context has been the missing link between the (demand-driven) individual operations and the thematic priorities of the organizations.

35. Partnership strategy: Government organizations are by far the most important partners for ACBF, yet engagement with government partners at country level has been ad hoc, lacking a longer-term perspective. Generally, ACBF does not have a strategy of how it aims to influence governance issues. For example, it could have played a more strategic role in advancing the role of policy thinking across Africa by fostering systematic discussions and increased funding by African governments and other development partners. To ensure that ACBF can convene and facilitate the right partnerships, it needs to be plugged into the pan-African institutional architecture and forums for capacity development. Also, partnerships with other development partners must be strengthened. This means that ACBF needs to know what others are doing and how it can fit their support within a wider division of labor, based on its particular value added.

• Conclusion 3: Although ACBF has been strategic in identifying partners, the way it pursued and developed partners was often characterized by a lack of long-term strategic vision.

36. Institutional sustainability: ACBF could have done more to assist partners in developing a clear vision for institutional sustainability and strategies for achieving it, in particular strategies to access alternative funding sources and strategies to address staff turnover and management changes. Much could be done in cooperation with other stakeholders and development partners, with ACBF facilitating access to new partnerships and mobilization of support.

• Conclusion 4: The issue of institutional sustainability has not received sufficient attention from ACBF.

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VII. LESSONS LEARNED

Lessons from internal reforms 37. Many of the problems raised by the Chamba letter had in fact been apparent, albeit informally, for some time prior to the arrival of the letter, and a number of the activities subsequently included in the MAP had been in discussion between the EB and the senior management team for some time also – such as the operations manual. The key impetus to the success of the reforms was the arrival of the new ES; her quick actions in addressing the problems in hand, and her ability to galvanize ACBF staff into concerted action that was both remedial and strategic.

• Lesson 1: Leadership combined with quick and decisive action is vital in initiating and sustaining a change process as substantial as that encompassed by the MAP.

38. A second lesson relates to the process and content of the MAP. The first action that the ES took as soon as she arrived in post was to consult with all of her staff. In short order she led formulation of the MAP and formed the teams that would implement it. Given that she was following on from a management regime that had been criticized for its autocratic style, she took a bold step in turning that approach upside down by appointing MAP teams that did not reflect the Foundation’s management hierarchy, with MAP team leaders often leading their formal seniors.

• Lesson 2: This non-hierarchical and participatory way in which the reforms were implemented empowered staff and gave them a greater understanding of the organization’s strengths and weaknesses. It also saved a significant sum of money, thereby presenting a quick win in demonstrating the Foundation’s efficiency.

39. The MAP was formulated not only to address compliance issues but also to start the process of repositioning the Foundation and sharpening its vision and mission. The combination of ‘inside-out’ and ‘outside-in’ aspects, including the particularly strong emphasis on communication, meant that the MAP was a very positive plan.

• Lesson 3: The way in which the Foundation addressed compliance issues was not just about fixing problems but also about equipping the Foundation for its future under SMTP III.

Lessons on capacity building: 40. The way ACBF provided support through long-term core funding has been highly effective and has delivered value for money. The results and influence that policy think tanks delivered shows that ACBF’s approach to capacity building has been worked.

• Lesson 4: Long-term core support pays off and leverages broader impact as well as resources and their sources due to reduced risk with each successive phase.

Most of the ACBF partners were well chosen, with a perspective of the potential influence they can make, and usually at a time where no other donors were interested to support them.

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• Lesson 5: Support to new or emerging organizations involves taking risks, but offers potential for substantial impact (in the long run).

ACBF has fulfilled an important role in nurturing young organizations through close supervision and hands-on support.

• Lesson 6: Although a close hand-holding relationship in early years is appropriate, relations must evolve as the organizations mature.

The fact that ACBF has been supporting young and promising organizations has often encouraged other donors to join in with their support.

• Lesson 7: ACBF (start-up) support gives confidence to other donors to provide support it has been building basic capacity to receive and handle funding partnerships.

With its focus on core funding and its highly supportive attitude, grantees have usually been able to follow-through their own priorities and agenda. This was generally seen as an empowering experience, adding to the confidence of grantee organizations.

• Lesson 8: ACBF support allows for a grantee-driven process of capacity development. Lessons on M&E: A major problem with ACBF’s approach to RBM was that it did not have a clear understanding of its own theory of change. Therefore it was not able to articulate its results frame to partners, thus coming up with unclear and constantly changing requests for reporting results.

• Lesson 9: if M&E is supposed to fulfill a capacity-building role one needs to support partners in clarifying their own theory of change and finding the best ways to monitor results.

The highly contextualized results observed in operations cannot readily be filtered back to a rigid RMF. A more inductive approach is required to identify and monitor capacity building outcomes. In particular demands for complicated results monitoring framework should not be imposed on partners with weak capacities.

• Lesson 10: M&E has to be empowering and it should support learning for partners. Throughout the SMTP II period, ACBF has placed much emphasis on project M&E at the expense of monitoring organizational effectiveness. Internal information management systems still deserve much to be improved.

• Lesson 11: If ACBF wants to deliver results, it has to know that it is working effectively as an organization first.

The evaluation was impressed by the fact MTRs have been systematically conducted and that they are generally of good quality. They are an excellent source of information to monitor the performance of projects and emerging results but they are often conducted towards the end of the project.

• Lesson 12: MTRs must happen earlier in project life if they are to improve performance in the current phase.

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VIII. RECOMMENDATIONS

41. Towards a systemic approach: In order to fulfill its commitment to development effectiveness ACBF has to work closer with other development partners. No standalone projects anymore!

• Recommendation 1: ACBF should select a few countries to scale up its engagement where, based on a proper analysis of the political economy, it identifies key strategic partners and defines it’s the specific area and role through which it will add value.

Linking grants to the wider strategy: Not only has the lack of linkages between operations been a limitation, also the lack of linkages between grants and other ACBF supported activities.

• Recommendation 2: ACBF should review mechanisms to link different forms of support effectively, like country strategies or thematic strategies.

Without such a mechanism, grant operations could become increasingly delinked from the SMTP strategy.

Stepping up to the new role: For ACBF to play the role of a convener and facilitator, staff will require a set of ‘soft’ skills to complement their traditional ‘hard’ expertise.

• Recommendation 3: ACBF should take an appreciative approach to staff development, building on existing thematic achievements and knowledge to strengthen the specific skills needed for the new role, including facilitation, convening and influencing skills, the ability to understand and interpret context and to take a systems perspective.

42. More attention to institutional sustainability: Despite the recognition of the long-term nature of capacity development, ACBF should have an exit strategy built into project design. Also ACBF should provide more hands-on support to partners in identifying new partnerships and accessing alternative funding possibilities.

• Recommendation 4: ACBF should review existing good practices to strengthen institutional sustainability and issue guidance to staff on how to build in sustainability into project design and supervision.

43. Building capacities for M&E: It is important that the organization itself has an effective system for monitoring its performance, and there is still much to be done to make the existing systems deliver the information that management and staff need to know that they are moving in the right direction. But it is equally important that ACBF recognizes that it has a responsibility to build partners’ capacities for monitoring outcomes.

• Recommendation 5: ACBF should focus on (a) finalizing the integrated data management system; and (b) develop an approach to supporting partners in monitoring capacity building outcomes, through training, design and supervision.

44. Monitoring for accountability purpose should be mainly done through assessment of results during MTRs and end-of-project evaluations.

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