1. Operational approaches to Catalytic Fund implementation: moving toward greater aid effectiveness
Sajitha Bashir
The World Bank
2nd Africa Region Education Capacity Development Workshop “Country Leadership and Implementation for results in the EFA-FTI Partnership”
Tunis, December 3, 2007

2. Presentation goals
To assess how CF grant implementation modalities have contributed to strengthen aid effectiveness through stronger alignment, harmonization and results
To identify good practices and lessons learned that could be useful to inform the Expanded Catalytic Fund

3. Presentation outline CF implementation modalities Assessment
Emerging good practices
Lessons learned

4. CF implementation modalities Flexible disbursement options
CF Operational Guidelines provide for flexible implementation modalities, based to the extent possible on country systems
policy-based agreements are the preferred disbursement option
project-based options may be relied upon when fiduciary risk is very high
A policy-based agreement allows for full or partial use of country systems.
The first tranche of the grant is released immediately after signing the grant agreement. The criteria are:
a national poverty reduction strategy which anchors education objectives to country-level consultative and budgetary processes;
a sector-wide education program, agreed with in-country donors;
an agreement to monitor a set of benchmark indicators.
The subsequent tranches are released on the basis of a satisfactory report of implementation progress.
A project-based approach usually relies on ring-fenced modalities similar to those used in traditional investment projects. These may include disbursement against specific expenditure and reliance on parallel mechanisms like project implementation units.

5. CF implementation modalities Disbursement options used in practice
In most of the 18 countries implementing a CF grant, Grant Agreements provide for a policy-based approach and are fast disbursing...
Eighteen countries have begun implementation of a CF grant since 2004, all of which are still active.
The countries are Cameroon, Djibouti, Ghana, Guyana, Kenya, Kyrgyz Republic, Lesotho, Madagascar, Mauritania, Moldova, Mongolia, Nicaragua, Niger, Rwanda, Tajikistan, The Gambia, Timor-Leste and Yemen.
The analysis of the CF Grant Agreements shows that
11 CF grant agreements provide for policy-based implementation (Cameroon, Djibouti, Ghana, Kenya, Madagascar, Mauritania, Nicaragua, Niger, Rwanda, The Gambia, Yemen)
7 CF grant agreements provide for project-based implementation (Guyana, Kyrgyz Republic, Lesotho, Moldova, Mongolia, Tajikistan, Timor-Leste)

6. 1. CF implementation modalities
Institutional and fiduciary arrangements used in practice
…in practice, policy and project-based CF grants use similar implementation arrangements akin to those of an investment operation and different from those used more broadly by the Ministry of Education.
6 implemented through PIUs and ring-fenced fiduciary arrangements
For both policy and project-based CF grants, funds are channeled through separate special accounts (in a development policy operation, funds are normally disbursed into a government account that forms part of the foreign reserve holdings).
Six of the 11 policy-based CF grants follows either special financial management procedures or Bank procurement or both (a development policy operation has no procurement)
6 implemented through PIUs and all through ring-fenced fiduciary arrangements
In virtually all countries, CF reporting is only marginally integrated into national reporting

7. 2. Assessment Three assessment areas
Alignment
Donors base their overall support on partner countries’ development strategies, institutions and procedures
Harmonization
Donors’ actions are integrated among each other, transparent and more collectively effective
Managing for results
Management of resources, both internal and external, focuses on the desired objectives and uses information to improve decision-making
These definitions are drawn from the Paris Declaration on Aid Effectiveness, signed in March 2005, which commits partner countries and donors to strengthen aid effectiveness through ownership, alignment, harmonization, results and mutual accountability. It includes 56 partnership commitments or goals for both governments and the donor community toward enhanced aid effectiveness and 12 monitorable indicators to assess progress.

8. 2. Assessment Methodology
Good practice checklist
5 Alignment indicators
3 Harmonization Indicators
2 Managing for Results Indicators
EFA/FTI sources
Country-level sources
EFA/FTI endorsement reports
Joint reviews
CF grant progress reports
Donor questionnaire (Madagascar only)
FTI Case studies (Lesotho, Yemen)
Global Program Country Survey (Ghana)
World Bank’s Aid Effectiveness Profiles (
OECD/DAC Survey on Monitoring the Paris Declaration
Qualitative assessment
The good practice checklist is drawn from the Paris Declaration partnership commitments.
The qualitative assessment draws on a five-point scale used to assess progress toward indicator 1 (operational development strategies) and 11 (results-oriented frameworks) of the Paris Declaration on Aid Effectiveness:
L Little action: Due to a wide variety of circumstances, action has remained at a virtual standstill.
E Elements exist: There is some basis for making progress, either through what already exists, or definite plans.
A Action taken: Progress is being made, although not yet enough, and the basis exists for even more substantive progress.
D Developed: Significant action taken already, although further action is needed.
S Sustainable: There are no warning signs of possible deterioration, and there is widespread expectation that the progress achieved is sustainable.
Using an equivalent numeric score defined in ranges, with the lowest range 1 – 1.5 (little action) and the highest range (sustainable), the scores for each indicator have been averaged across country to present an overall score.
Education
Country-level

9. 2. Assessment Alignment
The assessment shows that in the education sector alignment is stronger than at the country level…

10. 2. Assessment Alignment
…in countries that have been implementing a CF grant for two years or more, progress is even more prominent than the average on two measures of alignment…
…but progress has been less strong than the average in integrating implementation units into country structures…
Seven countries have been implementing a CF grant for two years or more. They are Ghana, Guyana, Kenya, Madagascar, Mauritania, Niger and The Gambia.
The reference date is the date of the CF grant letter agreement transmitted to the recipient country by the Bank’s country director.

11. 2. Assessment Harmonization
…progress toward harmonization is somewhat stronger than at the country level…

12. 2. Assessment Managing for results
…while managing for results is the same as at the country level.

13. 2. Assessment Factors of success
Joint reviews are behind the relatively better progress
Joint reviews provide for a number of factors of success:
Regular dialogue at the country level
Mechanism for government leadership
Capacity building for civil servants on project management
Mechanism to help inform the budget

14. 3. Emerging good practices Ghana, Madagascar and Rwanda
All policy-based CF grants with different institutional and fiduciary arrangements

15. 3. Emerging good practices Ghana—Managing for results
M&E embedded in sectoral M&E for education
EMIS monitors CF grant implementation
Operational manual facilitates a strong M&E team and quality reporting in the education sector
Reporting embedded into national reporting
Preliminary National Education Sector Review Report discussed at annual review including development partners and national stakeholders
Single point of reference for government and development partners for all issues concerning education performance and service delivery
Background: country-level progress toward managing for results
Ghana has taken action to develop a results-oriented framework.
Information on Government policies is easily accessible and disseminated regularly.
The quality and availability of poverty-related data is improving.
Significant progress has been made to implement a M&E Plan for the Growth and Poverty Reduction Strategy, but a country-level M&E system is still under development.

16. 3. Emerging good practices Rwanda—Harmonization
Coordinated financing mechanisms
Memorandum of Understanding
Pooled account for CF grant and other funds consolidates fiduciary requirements
Joint education reviews are in synch with budget preparation
Joint reviews of the education sector combined with joint budget support reviews
Review of performance of the sector thus informs the annual budget, which in turn helps strengthen the budget’s performance orientation
Background: country-level progress toward harmonization
The government and development partners have taken some action to strengthen harmonization in Rwanda.
Development partners are increasingly relying on common arrangements and procedures. They have established a Basket Fund for Harmonization, Alignment and Coordination in Rwanda, which is managed by the Aid Coordination Unit. 42 percent of aid is program based.
The Government and the development partners providing general budget support undertake joint Budget Support Reviews aimed at discussing sectoral and sub-sectoral budget allocations and expenditures at the national and district levels. The Government organizes Joint Sector Reviews on an annual basis. These Reviews offer the opportunity to review the performance of sectors against sector strategic plans and the PRSP, and each Review has high-level Government support.

17. 3. Emerging good practices Madagascar—Alignment
Alignment with country priorities
Government taking lead in developing
Integrated strategy for quality improvement (curriculum, teacher training, books)
National school construction strategy
Better costing
Development partners aligning around this
Government-led coordination
Joint bi-annual reviews have strengthened the Ministry’s capacity to lead development assistance coordination and helped development partners plan for and conduct joint missions
Background: country-level progress toward alignment
Elements exist to further strengthen alignment in Madagascar.
External partners have strongly supported the DSRP, and they are working with the Government to align their development assistance strategies with the MAP.
The Government is moving toward taking a leadership role in development assistance coordination, primarily through its efforts to lead dialogue on a common policy framework for budget support, although coordination is largely still managed by external partners.
The Government has requested that PIUs be increasingly integrated, where possible, within Government structures, although it has recognized that this goal can take some time.
. All external financing is reflected in the budget.

18. 3. Emerging good practices Madagascar—Alignment (cont.)
Integrated implementation unit
Multiple PIUs combined into a single PIU (but some not consolidated)
The PIU is being progressively integrated into the structures of the Ministry of Education
Financing reflected in the budget
Inclusion of external funds in the budget is helping the Ministry of Education strengthen budget execution reporting

19. 4. Lessons learned
Experience reinforces the need to maintain flexibility in CF grant modalities
Alignment with country priorities is a process that helps improve evidence-based decision-making as country leadership strengthens
CF grant can help strengthen institutional arrangements and fiduciary mechanisms regardless of the implementation modalities
Important not to lose sight of CF grants objective of using country systems when possible

20. 4. Lessons learned (cont.)
Joint reviews are helping strengthen aid effectiveness
Experience indicates that they have been better at strengthening alignment, government leadership, integrated implementation units and financing reflected in the budget
Progress in use of country systems, coordinated financing mechanisms, joint analytic work and M&E has been lagging behind

21. 4. Lessons learned (cont.)
Recipient countries’ governments could consider using joint reviews to focus more on
Country fiduciary systems
Coordinated financing mechanisms
Joint analytic work
M&E