Project:Building Capacity and Institutional Strengthening of Ministry Ofinternational

LanAFRICAN DEVELOPMENT BANK

PROJECT:BUILDING CAPACITY AND INSTITUTIONAL STRENGTHENING OF MINISTRY OFINTERNATIONAL COOPERATION

COUNTRY: THE ARAB REPUBLIC OF EGYPT

APPRAISAL REPORT

Date:October 2015

Appraisal Team / Team Leader
Team Members:
Regional
Director:
Resident
Representative: / Mr. Prajesh BHAKTA, Chief Country Program Officer, EGFO
Mr. William DAKPO, Chief Regional Procurement Coordinator, ORPF.1
Ms. SelmaENNAIFER, Chief Financial Management Specialist, ORNA
Mr. Yasser AHMAD, Chief Country Operations Officer, ORNA
Ms. Yasmine EITA, Country Program Officer, ORNA
Mr. Ayman ALGINDY, Procurement Officer, EGFO
Ms. Laila ELADLY, STS, EGFO
Mr. Jacob KOLSTER, Director, ORNA
Ms. Leila MOKADEM, Resident Representative, EGFO
Peer Reviewers / Ms. Evelynne CHANGE, Principal Governance Officer, OSGE.2
Mr. Carlos MOLLINEDO, Chief Strategist, COSP
Mr. Andre ALMEIDA, Principal Country Economist, MZFO
Mr. Obed MENSAH, Chief Country Program Officer, ORNG

TABLE OF CONTENTS

1. INTRODUCTION

1.1 Egypt’s Political and Economic Transition...... 1

1.2 Problems to be solved...... 3

1.3Rationale – Justification for the Use of Resources...... 4

II.DESCRIPTION OF THE PROJECT

2.1 Objective...... 5

2.2 Components...... 5

2.3 The Activities...... 5

III. COST ESTIMATES FOR THE ACTIVITIES

3.1 Detailed Cost Estimates...... 7

3.2 Financing Plan...... 7

3.3 Cost estimates by component...... 8

3.4 Cost estimates by expenditures category...... 8

IV.MODE OF PROCUREMENT OF SERVICES AND GOODS

V. IMPLEMENTATIONSCHEDULE

VI.FINANCING ARRANGEMENTS

VII. FINANCIAL MANAGEMENT

VIII.CONCLUSION AND RECOMMENDATIONS

Annex1– Government’s Request

Annex 2 - Components of the Program

Annex 3-Draft Work Program and Implementation Schedule(AfDB)

Annex 4– Procurement Activities

Annex 5– Existing Organizational chart of MOIC

Annex 6-TOR for consulting assignment for Human Resource Development

LIST OF ABBREVIATIONS AND ACRONYMS

AfDB =African Development Bank

EGP=Egyptian Pound

CSP=Country Strategy Paper

GDP=Gross Domestic Product

GoE=Government of Egypt

GECL=Legal Department of the African Development Bank

ICB=International Competitive Bidding

IT= Information Technology

MOIC=Ministry of International Cooperation

MOF=Ministry of Finance

ODA=Official Development Assistance

ORNA=North Africa Regional Operations Department of AfDB

TOR=Terms of Reference

GRANT INFORMATION

Client’s Information:

Recipient:Government of Egypt

Implementing Agency:The Ministry of International Cooperation (MOIC)

Financing Plan:

SourceAmountInstrument

ADBUSD4,455,000MENA TF

GovernmentUSD1,182,000Government Budget

Total CostUSD5,637,000

ADB’s Key Financing Information:

Grant CurrencyUSD

Timeframe – Main Milestones (Expected):

Submission of Grant to ORVP:October 30 2015

MOIC Grant Approval: November 1 2015

Effectiveness: January 10 2016

1. RESULTS-BASED LOGICAL FRAMEWORK

Country and project name: / EGYPT: Building Capacity and Institutional Strengthening of Ministry of International Cooperation
Purpose of the project: / Transformational capacitybuilding and institutional strengthening to better equip MOIC to carry out its aid coordination/management and resource mobilization mission efficiently and effectively.
Results chain / Performance indicators / Means of verification / Risks/mitigation measures
Indicator
(including CSI) / Baseline / Target
Impact / Increased and well managed ODA to Egypt / Official Annual ODA (loans and grants) channeled through MOIC / 2014 ODA assistance of USD 5.5 billion / 2020: increase of ODA by 25% from 2014 figures / Reports from enhanced Aid InformationManagement System at MOIC / Risk #1:delays in approvals and implementations of new orgcharts, processes and systems due to political uncertainties and changes in Cabinet.
Mitigation #1: continuous dialogue with GoE and need for greater aid for Egypt will ensure that such a project will have continued support
Risk #2: external shocks or internal political uncertainties in country or region that hamper increased ODA
Mitigation #2: Staying flexible while updating the Ministry regularly to receive inputs on preliminary outputs. Staying engaged
Risk #3:Sustainability of training.
Mitigation #3: Staff receiving external training will be required to stay at least 2 years or pay for training
Outcomes / Strategic plans and policy frameworkof best practices in ODA systemsimplemented at MOIC / Number of approved Ministerial Decisions / 0 / 4 Ministerial decisions:
Policy framework for international cooperation
MoIC detailed strategy and action plan
ODA systems and processes in operation
New vision by 2017 / MOIC webpage
Decrees
Component 1: Organizational and Institutional Strengthening
Output 1.1 Institutional Health Assessmentendorsed / Report / 0 / Report /

• Report endorsed by Minister

Output 1.2Improving existing and establishing new Units / Functional units / 0 / 3 new units established
2 existing units improved
At least 15 new JDs created and # of staff recruited for the new Units.
At least 25 staff trained /

• Training proof of attendance
• Structure and mandate of new units
• Job descriptions for new units

Output 1.3Study tours for senior economic researchers / Study visits / 0 / At least 10 study visits executed /

• Detailed study visit reports

Component 2: Human Resources Development
Outputs / Output 2.1 HR Strategy Report/skills audit reportendorsed / Report / 0 / HR Strategy report validated and training plan approved / Needs assessment report and training planendorsed
Output 2.2 Training program in various thematic areas for staff to better service delivery / Evaluation forms
Training reports (highlighting all the planned trainings by topic and planned dates) / 0 / At least 100 persons trained (broken by gender). / Training and evaluation reports per session
Output 2.3 Specialized executive and technical trainings in various thematic areas / Training reports / 0 / At least 8 staff attending specialized training (disaggregate by gender) / Detailed training and evaluation report per staff
Component 3: Enhancing the IT Infrastructure
Output 3.1
Installation and operation of new equipment / Equipment (printers, scanners, photocopiers, laptops, server, internet access points, routers etc…) / Existing old equipment ( one photocopier per 2 floors, no scanners for example) / Equipment installed and operational
Number of VCs organized per year / Procurement delivery reports
Annual reports from the project
Output 3.2
IT infrastructure upgraded / Report / 0 / New intranet developed / Web site operational
Intranet operational and used
M&E reports
Output 3.3
New AIMS system operational / New system / DECODE
APSIS / New integrated AIMS installed and operational
New M&E system developed / Reports
Output 3.4
New web site launched / Web page of MOIC / Existing website / Upgraded website / Internet
Key activities / components / Inputs
Component 1: Organizational and Institutional Strengthening
A.1Carry out an institutional health assessment by reviewing the current organizational structure of MOIC and formulate proposals for improving it.
A.2Strengthening the Ministry’s capacity and building on previous initiatives and projects through improving existing Units,
A.3Organize specific study
Component 2: Human Resource Development
B.1Conduct an in-depth review (HR Strategy) of the ministry’s human resource
B.2 Design and implement training programs for senior and middle level staff
B.3Execute a training program for admin staff on soft skills etc.
B.4Specialized training courses or executive trainings (from 2 to 6 weeks) at specialized institutes on specific topics
Component 3: Enhancing the IT Infrastructure
C.1 Purchasing office equipment, computers, laptops, scanners, internal network infrastructure, software, VC equipment for at least two meeting rooms
C.2 Hiring of an IT firm to technically make an assessment of the existing facilities/equipment and implement some of the priority recommendations that may include equipment.
C.3 Strengthening the Ministry’s capacity of providing timely and accurate information on aid and the status of cooperation through enhancing AIMS
C.4 Hiring a web designer to revamp the web site so that up-to-date information (Individual consultant / firm)
Component 4: Project Management
D.1 Recruitment of Technical Adviser/Project Manager and Project Implementation Team
D.2Operating costs (airline tickets,stationary, printers and photocopiers ink, maintenance, rent cars, per diem, …etc)
D.3Auditor / AfDB through the MENA TF will provide USD4,455,000to support all the planned activities.

1

EGYPT – Building Capacity and Institutional Strengthening of the Ministry of International Cooperation

1. INTRODUCTION

1.1Egypt’s Political and Economic Transition

1.1.1Since 2011 Egypt went through a protracted political and economic transition. However, since 2014, increasing signs of recovery and a positive outlook have been surfacing.On the political side, a new constitution was ratified in January 2014 and presidential elections were successfully conducted in May 2014. Parliamentary elections willbe held in October and November 2015 which will lead to the establishment of a new Parliament by end 2015.

1.1.2However, Egypt still faces important structural bottlenecks and fiscal challenges. Fiscal deficit, unemployment, poverty rates remain notably high putting increased responsibilities on the GoE to deliver social justice and decent jobs to all Egyptians. The fiscal deficit grew from 8.1% of GDP in FY 2010/2011 to 13.7% in FY 2013/2014 due to reduced revenues and extra spending to address social demands. To finance the fiscal deficit, the GoE relied extensively on domestic borrowing a well as implementing fiscal reforms and relying on international financial support. Public debt grew from 86% of GDP in FY 2010/2011 to 93.6% in FY 2013/2014. Extensive domestic public borrowing reduced available financing for the private sector, therefore contributing to a stagnation of private investment and job creation.

The Government is committed to implementing its reform program focused on four key pillars: enhancing fiscal revenues and transparency for macroeconomic recovery; subsidy reforms primarily targeting energy sector; and enhancing business environment and protecting the poor and vulnerable with targeted social project programs.This is outlined in theGoE’s priorities as outlined in 2 key documents, namely the “Sustainable Development Strategy (SDS): Egypt’s Vision 2030” and the “5-year Macroeconomic Framework and Strategy” (MFS) covering FY 2014/2015-2018/2019 as well as a clear comprehensive macroeconomic reform program adopted by the new Cabinet in October 2015.

1.1.3With the political roadmap almost finalized and significant reform efforts underway, signs of improvements are gaining momentum. Growth has been steadily picking up throughout FY 2014/2015 reaching 5.6% during the First half (H1) of FY 2014/2015 compared to 1.2% in H1 FY 2013/2014. Private investments also grewby26 %y-o-y in real termsduring Q1 2015 with growth coming mainly from the gas, manufacturingand real estate sectors. Increase in FDI is also materializing, fostered by the successful Egypt Economic Development Conference (EEDC) in March 2015 which resulted in signing of investments worth USD 38.2 billion, and agreements around additional potential projects worth USD 92 billion. Consequently, Moody’s upgraded Egypt’s credit rating to B3 from Caa1 in April 2015 and S&P revised its outlook from stable to positive.

1.1.4However, with the influx of greater FDIs following the EEDC but also reduced assistance from the GCC countries and growing public debt due to extensive borrowing on the domestic market, there is a clear need to enhance the role of Ministry of International Cooperation (MOIC), to increase the level of ODA that Egypt can seek, as well as ensuring results and impact through better aid coordination, management and monitoring. With increased needs of member states in the region, the competition for funding will become more acute and there will be a strong need to show delivery of results and long-term impact to meet the demands of the citizens.

1.1.5The importance of the role and functions of the Ministry of International Cooperation as the main ministry in charge of aid coordination will become even more critical. The Ministry of International Cooperation (MOIC) was established in 1987 by a Presidential decree (303/2004), with the mission to manage and monitor the legal and financial aspects of ODA agreements and protocols, as well as matters related to ODA planning, management, monitoring and evaluation at project/program level which are done jointly with the Development Partners (DPs).

1.1.6The technical departments of MOIC are organized based on geographic considerations, as follows: cooperation with Europe, cooperation with USA, cooperation with Asia, Australia, Canada and Latin America, cooperation with Arab and African countries, and finally cooperation with international and regional financing organizations. The non-technical departments include: corporate policy development and strategic planning, HR management, HR development, IT technical support, Administration and Finance, Public Relations and Internal Communication, Legal Affairs and Internal Control and Audit.MOIC in its mandate to source external resources and to monitor projects plays an essential role of coordinating and liaising with all the relevant line Ministries. The project will help build or strengthen new units such as Implementation Unit which will be able to provide hands-on FM and procurement advice to all Executing Agencies implementing projects with IFIs. This will help improve the implementation of the Bank’s portfolioand which is part of the weaknesses identified in the 2015 Country Fiduciary Risk Assessment (CFRA) performed by the Bank.

1.1.7As of September 2015, MOIC had a total of 453 technical and managerial staff recruited under different status: permanent civil servants (313) and short term consultants (140). The structure (Annex 4) shows the Ministry’s current organization chart where seven heads or acting heads of sectors report directly to the ministry. Six of the sector heads are in charge of international portfolios while one deals with the minister’s office related issues. MOIC played a central role in the organization of the Egypt Economic Development Conference that took place in March 2015 which was coordinated with the strong support of other key Ministries that were part of the EEDC Steering Committee: Prime Minister, Ministry of Foreign Trade & Industry, Ministry of Planning and Administrative Refrom, Ministry of Finance, Ministry of Foreign Affairs, Ministry of Investment, and Ministry of Supply and Internal Trade. MOIC has been tasked with the monitoring of the results from the Conference as well as organizing future such Conferences, with the next one to be done jointly with the World Economic Forum in March 2016.It is thus critical that the capacity both in terms of adequate and state-of-the-art infrastructure as well as manpower and the specific skillset is available within MOIC, to lead this task of coordinating with the Government Ministries and with external partners.

1.1.8The proposed institutional support builds on previous assistance and recommendation provided through grants from the European Union, World Bank as well as UNDP. The EU[1]has an ongoing project (until end 2015) where assessments and recommendations of the main issues affecting functions of the MOIC have been identified and some limited training has been provided. In addition, in 2011 the World Bank[2] provided grant assistance to carry out a training gap analysis on one of the units at MOIC, theinternational and regional financinginstitutions, one of the biggest units carrying a big portion of the ministry’s mandate. These studies though focused on specific aspects or on one particular Unit and various issues have been identified but for which no action in terms of implementation has been taken. UNDP[3] also undertook a study in June 2013 on assessment and recommendation towards establishment of an integrated Aid Information Management System (AIMS).

1.1.9The purpose of this grant is to take stock of main findings from these studies and carry out detailed assessment and analysis for the entire Ministry in order to establish a new and robust structure supported with a solid infrastructureandtrained staff to deliver on the main mandates of MOIC. It aims at equipping the ministry’s staff technically while empowering them to take the needed decisions timely and as efficiently as possible. Given the new workload of the ministry, the current structure as well as capacity of staff, causes delays and many times leaves the staff unable to execute specific tasks due to the lack of basic equipment like scanners, printers and internet. The grant would help better connect the ministry with the international community to speed up the decision making and executions processes.[4]

1.2Problems to be solved

1.2.1Overall MOIC is performing its mandate reasonably as stipulated in its Presidential decree especially in areas such as ODA planning and implementation (though it does not implement projects but provides assistance to resolve problems); however, studies have shown that it is not carrying out its full mandate in an efficient manner especially in areas such as ODA monitoring and evaluation. It would be essential to execute the changes in close partnership with the ministry staff to assure they develop sense of ownership to the project. Some of the key problems identified by some of the donor funded capacity-building projects, can be clustered into the following groups:

Institutional

• Lack of strategic planning and policy development;

Human Resources

• The workforce is not cohesive as there is a mix of contracted and permanent staff with many problems arising in terms of job descriptions, definition of responsibilities and authorities;
• Personnel do not have the skills and knowledge to manage aid and project cycle management (PCM);
• A lack of a capacity development strategy and pro-active approach to managing training needs;
• Capacities are not institutionalized and rely mainly on skills and experience specific to each individual staff which does not create a culture of sustainability;
• Lack of any orientation sessions for new staff;
• Failures in communication internally and externally and in institutional monitoring systems;

Functions

• Fragmented and non-standard ODA systems and procedures;
• Insufficient attention given to monitoring and reporting on development results;
• Lack of established procedures, manuals and similar tools to help core functions of staff and to motivate staff;
• Lack of coherent workflow processes;
• Lack of an integrated information/database management systems (currently the Ministry has two independent systems: DECODE and APIS (Agreements and Protocols System);
• No archiving or standardized filing systems or electronic document management systems;
• Lack of proper internal communication tools and sharing of knowledge and information;
• Inadequate equipment and functional computers for the needs including software, video conference equipment.

1.3Rationale – Justification for the Use of Resources

1.3.1In light of the recent political changes that brought forth stability in Egypt and revised mandate under the new Cabinet to effectively expedite the delivery of budget support and investment projects, MOIC’s role is expected to become more crucial given the large expected aid flows that will be required to meet the Government’s reform program as well as monitoring contracts from the EEDC. The new Minister of International Cooperation has been given the mandate by President of Egypt to urgently restructure and re-organize the functions and units of the various departments of MOIC, its processesand procedures so that it can play an optimal role in implementing the new macroeconomic reform program. The project is in line with the Government’s 2030 strategy which includes a pillar dedicated for the enhancement of the effectiveness of the public services in an attempt to reduce bureaucracy and improve upon the quality of services provided.