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Trade and Transport Facilitation in Southeast Europe ProjectAGENDA FOR ACTION:
Institutional Readiness for Implementation
Working Paper No. 1
June 4, 1999
P. W. Moeller
TABLE OF CONTENTS
I.INTRODUCTION
II.INSTITUTIONAL ISSUES
Environmental Issues
The MOU, the Regional Orientation of the TTFSE, and Trade Facilitation
III.TECHNICAL ISSUES
Client input: General Strategy
Financial Management Systems and the PIUs
Procurement Assessment
Financial and Economic Analysis
Kosovo Crisis
IV.FINAL DOCUMENT PREPARATION
Trade and Transport Facilitation in Southeast Europe Project
AGENDA FOR ACTION:
Institutional Readiness for Implementation
Working Paper No. 1
June 4, 1999
I.INTRODUCTION
1.1The ability of the team to move ahead so rapidly with the preparation of the six Trade and Transport Facilitation in Southeast Europe (TTFSE) Projects, including Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, and Romania has been an impressive achievement. The fast-paced preparation of the six PADS, however, has raised concerns about quality at entry and the depth of commitment by the respective governments to these projects. The decision of the May 20, 1999 ROC Meeting to delay the presentation to the Board of the TTFSE Projects until early fall, in part a response to the Kosovo crisis and the possible impact of the crisis on the project, clearly provides the opportunity to review the preparation of the project for readiness at implementation.
1.2The extension of project preparation time by about three months needs to be effectively utilized by the team, building on the current fast-pace momentum. Although it will require a slight shift in the roles of the team at the same time as there is to be a reduction in the persons months available to the team, the extension represents a clear opportunity to add value to the projects. The discussion that follows focuses on the specific actions that need to be taken in order to move the projects on to presentation to the Board. [1] The chronological relation and phasing of the actions is shown in Figure 1.
II.INSTITUTIONAL ISSUES
2.1Two key institutional concerns were expressed in the advance agenda for the ROC Meeting, namely the need for:
(i) a well tested and confirmed commitment to reform by the corresponding governments with most of the legislation in place, and with the resources needed to carry out and sustain the reforms well identified; ( ii) institutional assessments available, including a solid analysis of the stakeholders and of the political economy of the reforms.
2.2In order to address these concerns an Institutional Readiness Assessment Mission will be fielded, including Philip Moeller and Maggie Kusemileva. The mission will use some newly developed Bank models for:
- conducting stakeholder analysis; and
- assessing client commitment.
The output of the mission in combination with the technical comments from the clients will feed into the technical mission to take place in August.
Figure 1
Chronological Overview of Actions
June/July
Institutional Readiness Assessment Mission / P. Moeller, M. KusemilevaJuly/August
Technical Comments from Clients / P. Taborga, S. Dubos, G. OllivierAugust/September
Technical Mission to Clients / Taborga, Ollivier, Field Team, MoellerSeptember/October
Final Document Preparation / As aboveOctober/November
Negotiations and Board Presentation2.3The TOR for the Institutional Readiness Mission is provided as Attachment 1. It is based on participatory methodology and represents an expanded but continuing link in user involvement in the design and implementation of the TTFSE Projects. This link is already referenced in the texts but will be expanded, with reference to the Mission, in the final PADs.
Environmental Issues
2.4As needed the team conducting the Institutional Readiness Assessment will also consult with environmental officials in the appropriate Government offices of each project country. This will include both fact finding and a discussion of the components of the project relevant to environmental considerations. Although the project has been cleared and there are no issues to resolve, consultation related to training and the application of environmental guidelines at border crossings is necessary.
The MOU, the Regional Orientation of the TTFSE, and Trade Facilitation
2.5The Institutional Readiness Assessment Mission will also share with the clients the revised version of the Memorandum of Understanding on Collective Program Implementation * (CPI*), which all participating TTFSE countries are expected to sign. The regional implications of this agreement will be reviewed, and the MOU will be left for internal* discussion and eventual signature. The regional dimensions of the project will be reviewed also in technical discussions by the August/September mission and highlighted in the texts.
2.6.In order to provide a practical regional character to the projects and give the users an immediate forum for continued input in project design, a web-page will be designed. This will give the users “access” to the mutuality of their needs and promote the foundations of the regional cooperation and collaboration advocated under the project.
2.7.On the basis of the findings of the Institutional Readiness Assessment Mission, drawing especially from the results of the stakeholder analysis, and using the background documents for the trade facilitation component and the general discussions of the development of a new culture for the Customs services, an Annex on the Stake- holder Analysis will be prepared to give additional insights. TORs for this component will also be shared with the clients in advance of the Technical Mission.
III.TECHNICAL ISSUES
Client input: General Strategy
3.1.Preliminary discussions have been held with all the client governments in the form of either televideo conferencing or telephone conferencing. The clients, with the assistance of the Resident Missions, were asked to provide minutes of these discussions. This was seen as a means of not only underlining the participatory approach the Bank prefers to take with clients but also to prepare the clients for the role they are to play in the forthcoming missions. *
3.2.The sessions indicated that the clients did not well understand some of the key aspects of the TTFSE approach. As a first step a single page summary box was prepared for dissemination to all the clients. This box highlights the essential aspects of the projects (See Attachment 2). The opening to other donors and flexibility offered by the midterm review, for example, will also be further explained.*
3.3.At the time of the first round of discussions not all of the clients had the full set of project documents, and some of the documents had already been revised by the team. As of June 11, 1999 all project documents should be updated to current status and sent to the resident missions for translation and dissemination to the clients. [2] The clients have been encouraged to carefully read this new version of project documents and to pay particular attention to the annexes of the PADs. They have been invited to present additional comments to the team either in writing or via follow-up electronic conferencing. The strategy for this process is based on two phases: (i) collection and analysis of input from the client and (ii) response to the input in the form of clarifications and explanations. Stephane Dubos and * Mr. Taborga will be in charge of the first phase; they will be joined by Gerald Ollivier on the second phase.
Financial Management Systems and the PIUs
3.4.The application for Trust Fund assistance for the costs of establishing local Financial Management Systems (FMS) has been made. Following the plan outlined in the PAD, a consultant is on stand-by to begin and ensure that the Project Implementation Unit (PIU) and the FMS are in place and operational prior to Board presentation. The consultant, under the guidance of the Bank Financial Management Specialist assigned to this project, will assist in setting up the PIUs, selecting staff and proposing a FMS, inclusive of reporting requirements. The consultant will prepare a report identifying weaknesses and proposing remedial actions to enhance the system and enable the development of an appropriate PMR. On the basis of this report, the Bank Financial Management Specialist would define a time bound action plan to specify the steps necessary for (i) effectiveness, if any, and (ii) further strengthening of procedures and staff development during implementation.
Procurement Assessment
3.5.The procurement analysis used in the PADs has been based on the assumption that the Ministries involved have limited experience with Bank standards and guidelines for procurement. As a result, the minimal thresholds have been used. If the procurement assessments indicate that the thresholds in any one country can be increased they will be, but in the interim the lower thresholds will safeguard compliance with Bank practice. The PIUs must be in place in order for the assessment to take place.
Financial and Economic Analysis
3.6.The team has actively discussed the financial analysis used in the Pads with the Peer Reviewers. Preferably in July, but no later than early August a brown bag lunch open to a wide Bank audience will be organized by Ken Gwilliam to discuss the economic evaluation, especially in light of the findings of the stakeholder assessment.
Kosovo Crisis
3.7.The current crisis in Kosovo has already had some impact on the flow of traffic. The project team has been attempting to gather data on this impact. A box specifically addressing the issue of impact will be prepared using the most recent data the team has been able to obtain. This box will be placed in the PADs and the MOP as * appropriate.
IV.FINAL DOCUMENT PREPARATION
4.1The various changes in the draft documents being sent to the field have been reflected by the date-keyed colors of the text. Once the documents have been translated they will go into full black text. Changes prior to negotiation will again be in colors, the text will shift to black for negotiations, and colors will be used to indicated changes at the time of negotiations.
4.2.Maggie Kusemileva will be increasingly responsible for all changes in the text but will be assisted first by Stephane Dubos [3] and later by Gerald Ollivier with changes related to Cost-Tab functions and the financial links in the documents. Philip Moeller will overseas overall editing and quality control.[4]
Attachment 1
THE WORLD BANK/IFC/M.I.G.A.
OFFICE MEMORANDUM
DATE:June 4, 1999
TO:Pedro Taborga, PTL, ECSIN
FROM:Philip Moeller, Consultant, ECSIN
EXTENSION:89070
SUBJECT:Terms of Reference for the TTFSE Institutional Readiness Assessment Mission
1.The Terms of Reference (TOR) for a mission to the six proposed Trade and Transport Facilitation in Southeast Europe (TTFSE) countries of Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, and Romania scheduled for June 20 through July 18, 1999 is provided below. The members of the mission include:
- Philip W. Moeller, Home office team Manager and Institutional Development Specialist; and
- Magdalena Kusemilvea, Operations Assistant and Workshop Coordinator
2.The objective of the mission is to support quality at entry issues raised during the ROC Meeting of May 20, 1999 `with particular consideration of the readiness for implementation, including the need for: (i) a well tested and confirmed commitment to reform by the corresponding governments with most of the legislation in place, and with the resources needed to carry out and sustain the reforms well identified; ( ii) institutional assessments available, including a solid analysis of the stakeholders and of the political economy of the reforms, (iii) co-financing and/or parallel financing agreements in place with other donors ( EU in particular ), and counterpart funding identified, and (iv) implementation readiness conditions fully met.
3.The mission will address primarily (i) and (ii) above.; (iii) will be addressed by other means; (iv) will be partially addressed by the mission, but such issues as the FMS and the creation of the PIUs are being handled by other means. The key actions to be taken by the team include:
- holding initial consultations with the resident mission;
- conducting a stakeholder workshop; and
- assessing client commitment; and
4.As needed the team will also consult with environmental officials in the appropriate government offices. This will include both fact finding and a discussion of the components of the project relevant to environmental considerations.
5.During the mission the clients will be presented copies of the latest version of the Memorandum of Understanding for internal discussion and eventual signature . The team will also serve as a mechanism for the receipt of comments from the government on draft project documentation.
6.The outputs of the mission will include: (i) an Aide Memoire, (ii) a report on stakeholder analysis, and (iii) an assessment of client commitment.
Attachment 2
The TTFSE: Key Design Concepts
How does this project differ from the typical project?Regional Character- The TTFSE Projects are regionally linked. They seek to promote more efficient and less costly flows of trade across the borders of the participating countries and provide EU compatible customs standards. This requires the cooperation of the participating countries and a mutual sharing of concerns for the reform of the Customs Services of the respective countries. To assist such cooperation and facilitate the sharing of information, a Regional Steering Committee (RSC)will be created. All participating countries will be represented on this RSC and will sign a memorandum of understanding detailing the operation and role of the RSC. A Common Advisory Consultancy Service (CASC), financially supported on a mutual basis, will be able to assist the Project Implementation Unit to be established in each country to oversee the implementation of the TTFSE.
Reform versus the provision of infrastructure- The focus of the project is on the implementation of reforms that will result in increased productivity on the part of the Customs Services. As a result of this increased productivity, any one border crossing will be able to process a greater number of crossings in less time than is currently the case. Taking into account the increased productivity after the reforms are in place, it is estimated that there are some border crossings that would remain bottlenecks. In these cases, the Project recommends physical investment in these border crossings.
Cost Savings- The introduction of new procedures and the associated increase in productivity will reduce the level of staffing required, opening the way in turn for the increased salary levels needed to stimulate professionalism. The cost savings will also cover the cost of the loan, and the increased trade resulting from the reduced costs to trade and transport will, in fact, increase national revenues. Government contributions will fit within the envelope of the current budget, eliminating the need for increased counterpart funding or co-financing.
Fit to evolving needs- Any reform is an iterative process without any fixed blueprint. The reform of the Customs Services in the region is already underway. Each country differs in the progress that has been made, and with each passing month the identification of needs in any one country shifts to varying degrees. The TTFSE provides a non-static definition of needs by (i) providing start-up consultants to review such needs as changes in processes and procedures and training at the very point of effectiveness, and (ii) requiring periodical reviews of the progress made and evolving changes in needs.
Non-duplicative structure- The TTFSE seeks to offer the Customs Services the guarantee that reform needs will be addressed in a way least costly to the government. Governments are encouraged to seek grant funding from other donors for any portion of the components identified under the TTFSE. In such a case, the Project has a mechanism in place, in the form of the Mid-term Review of the project, to allow the re-allocation of the funds so freed up, assuming the mutual agreement of the Bank and the Government. This avoids the duplication of the efforts of any other possible donor willing to invest in customs reform and, at the same time, ensures that funds are provided for the identified needs in case no donors provide grants in the meantime.
Participatory Approach- The design and implementation of the TTFSE is based on participatory methodology with the firm conviction that the projects belong to the participating countries and need to be endorsed and owned by the various stakeholders, including the beneficiaries. Ownership is best promoted by participation. Consultations have occurred during the design phase and mechanisms will be created to obtain user input in the monitoring and evaluation process.
[1]The basic approach presented here is based on discussions with the team including Eva Molnar and Ricardo Halperin.
[2]To facilitate discussion selected key TORs and the Memorandum of the President will also be furnished to the clients. The MOP is likely to change somewhat prior to presentation to the Board.
[3]Note: Stephane Dubos will leave the team during July (date to be negotiated).
[4]Arlene Tate and Lisa Fonick Haworth will also review the documents prior to submission to the Board.