FINAL REPORT
VOLUME I – MAIN REPORT
Independent Review of the Investment Climate Facility for Africa
Prepared for the Investment Climate Facility for Africa
March 2013 Independent Review of the Investment Climate Facility for Africa – Final Report
Table of Contents
Executive Summary ...... i 1. Introduction ...... 1 1.1 Context and Objective of the Study ...... 1 1.2 Context of ICF...... 1 1.3 Structure of the Report ...... 2 2. Methodology and Work Undertaken ...... 3 2.1 Methodology of the Review ...... 3 2.2 Work Undertaken ...... 6 3. Analysis of ICF at Project/Programme Level ...... 7 3.1 Project Cycle - Initiation to Impact Assessment ...... 7 3.1.1 Overview ...... 7 3.1.2 Origination ...... 8 3.1.3 Initial Screening ...... 9 3.1.4 Due Diligence ...... 9 3.1.5 Board of Trustees Approval ...... 10 3.1.6 Project Agreement ...... 10 3.1.7 Implementation ...... 11 3.1.8 Completion ...... 12 3.1.9 Impact Assessment ...... 12 3.1.10 Comments ...... 14 3.2 ICF Portfolio Analysis ...... 14 3.2.1 Analysis of ICF Applications Tracker ...... 15 3.2.2 Portfolio ...... 18 3.3 Field Visits Synthesis ...... 20 4. Evaluation of ICF at Facility Level ...... 27 4.1 Origin and History ...... 27 4.1.1 ICF’s Creation...... 27 4.1.2 ICF - a Unique Tool for IC Interventions ...... 28 4.1.3 ICF as Part of the IC Scene ...... 29 4.1.4 Issue of ICF’s Continued Existence ...... 29 4.2 Governance ...... 31 4.2.1 ICF’s Institutional Structure ...... 31 4.2.2 Governance of ICF ...... 32 4.2.3 Institutional Relationship with Contributors ...... 34 4.2.4 Institutional Issues for ICF’s Continued Existence ...... 35 4.3 Organisational Structure and Staffing ...... 35 4.3.1 Staffing Levels ...... 37 4.3.2 Comments ...... 38 4.4 ICF Objectives and Strategy ...... 39 4.4.1 Evolution of ICF’s Strategic Orientation ...... 39
Independent Review of the Investment Climate Facility for Africa – Final Report
4.4.2 ICF’s Strategic Positioning as it Impacts Project Selection ...... 42 4.4.3 Comments on ICF Strategy and Strategic Evolution ...... 45 4.5 Efficiency and Value for Money (VfM) ...... 46 4.5.1 Comments On Efficiency and VfM ...... 47 4.5.2 Benchmarking ...... 50 4.5.3 Comments on and Ranking of ICF Efficiency ...... 51 4.6 Funding ...... 51 5. Conclusions ...... 53 5.1 General Conclusions ...... 53 5.2 KQ1: Have the Right Things Been Done? (DAC Relevance) ...... 53 5.3 KQ2: Have Things Been Done Well? (DAC Efficiency, Effectiveness) ...... 55 5.4 KQ3: What Results Have Been Achieved? (DAC Effectiveness, Impact) ...... 56 5.5 KQ4: How do the Results Compare with an Alternative Intervention to Achieve the Same Objective? (DAC Relative Effectiveness, Impact, Cost/Effectiveness) ...... 58 5.6 KQ5: How Could Things be Done Better in the Future? Are the Results Sustainable? (DAC Sustainability) ...... 58 6. Recommendations ...... 60 6.1 Principal Recommendation ...... 60 6.2 Independence ...... 60 6.3 Strategic Plan post 2014 ...... 60 6.4 Board of Trustees ...... 61 6.5 Project Origination and Processing ...... 61 6.6 Project Implementation ...... 61 6.7 Priority Areas ...... 61 6.8 Geographical Focus...... 62 6.9 Organisational Structure and Staffing ...... 62 6.10 Efficiency and Value for Money (VfM) ...... 62 6.11 Lessons Learnt and Knowledge Management ...... 62
ANNEXES ...... 63 ANNEX 1: Project Ranking Chart ...... 64 ANNEX 2: Meetings with Participants ...... 65 ANNEX 3: Principal Documents Reviewed ...... 69 ANNEX 4: Attendance List Presentation of Preliminary Findings, 18th December 2012 ...... 70 ANNEX 5: Terms of Reference of the Independent Review of the ICF for Africa ...... 71
Independent Review of the Investment Climate Facility for Africa – Final Report
Acknowledgements Maxwell Stamp would like to thank the members of the Independent Reference Group and other Contributors, ICF Board of Trustees, the Chief Executive Officer, ICF staff as well as other individuals who participated in interviews and facilitated field visits.
Independent Review of the Investment Climate Facility for Africa – Final Report
Acronyms and Abbreviations
AfDB African Development Bank AGM Annual general meeting APRM African Peer Review Mechanism ASEAN Association of Southeast Asian Nations AU African Union BAA Business Action for Africa BoT Board of Trustees CCI Chamber of Commerce and Industry CEO Chief executive officer CF Contributors’ Forum CFA Commission for Africa COO Chief operating officer CRSA Commercial Registration Services Agency DAC Development Assistance Committee of OECD DB World Bank and IFC's Doing Business rankings DFID Department for International Development DG Director General EABC East Africa Business Council EAC East African Community EDPRS Economic Development and Poverty Reduction Strategy EIA Environmental impact assessment EOI Expression of interest ERCA Ethiopia Revenue and Customs Authority FIAS World Bank Group Facility for Investment Climate Advisory Services FINCOM Finance sub-committee FTE Full-time equivalent GAINDE Automated Management of Customs and Economic Information System GDP Gross domestic product GoR Government of Rwanda GoSL Government of Sierra Leone GoT Government of Tanzania GoZ Government of Zambia GUF Guichet unique du foncier (OSS) IAR Impact assessment report IC Investment Climate ICF Investment Climate Facility for Africa ICT Information and communication technology IDA International Development Association IFC International Finance Corporation IP3 Institute for Public-Private Partnerships IPP Independent power producer IRG Independent Reference Group IRR Internal rate of return ISC Investment sub-committee KfW Kreditanstalt für Wiederaufbau KPI Key performance indicator LAIS Land Administration Information System LAN Local area network LBP Land bank parcel
Independent Review of the Investment Climate Facility for Africa – Final Report
LSRP Legal Sector Reform Program M&E Monitoring and evaluation MIS Management information system MOU Memorandum of understanding MST Maxwell Stamp evaluation team MSP Maxwell Stamp PLC NEPAD New Partnership for Africa's Development NLB National land bank NLP National land policy NRD Norway Registers Development OARG Administrator and Registrar General ODA Official Development Assistance OHADA L'organisation pour l'harmonisation en Afrique du droit des affaires ORBUS Electronic single window for the collection of pre clearance documents OSS One-stop shop PA Project agreement PAD Dakar Port Authority PCA Post clearance audit PMT Project management team PMU Project management unit PPIAF Public-Private Infrastructure Advisory Facility PPM Project Procedures Manual PPP Public private partnership PS Permanent secretary PSF Private Sector Federation PWC PricewaterhouseCoopers QCBS Quality and Cost-Based Selection RCRSA Rwanda Commercial Registration Services Agency RDB Rwanda Development Board RG Registrar General RICP Rwanda Investment Climate Project SC Steering committee SIDA Swedish International Development and Cooperation Agency SME Small medium enterprise TA Technical assistance TAC Technical Advisory Committee ToR Terms of reference TRIPS Trade-Related Aspects of Intellectual Property Rights UNDP United Nations Development Programme UNFPA United Nations Population Fund VAT Value-added tax VfM Value for money WB World Bank WCO World Customs Organisation WTO World Trade Organisation ZJM Zambia Judiciary Modernisation
Independent Review of the Investment Climate Facility for Africa – Final Report
Executive Summary The Investment Climate Facility for Africa (ICF) was launched in June 2006, its CEO appointed in March 2007 and it became operational soon after in Dar es Salaam with its first investment approved in May 2007. The “sponsors” of ICF were African Governments through the AU and NEPAD, and contributors at subsequent stages were from both the public and private sectors. ICF is structured as a trust and is a Public-Private Partnership (PPP) structure that enables ICF to draw on the combined experience of these contributors. ICF was set up to focus exclusively on the removal of barriers to private investment in Africa. Its intended role included raising the profile of investment climate reform among African Governments, as well as the donor community. Its defining features included blending Official Development Assistance (ODA) and private funding. Active participation of the private sector in its operations was a strong expectation, as it was seen that donor governments and the private sector should coordinate their efforts to unleash entrepreneurship in Africa. In this sense, ICF was expected to be a unique new tool. ICF was set up with a lifespan limited to seven years, at the end of which it was to be dissolved. In view of this period, which finishes at the end of 2014, the contributors through ICF contracted Maxwell Stamp PLC in October 2012 to undertake a second Independent Review addressing, inter alia, the necessity and meaningfulness of a potential prolongation of ICF beyond its original lifespan. The Maxwell Stamp Team (MST) has undertaken a desk review of documents and made field visits to six of ICF’s projects in its three priority areas (property rights and contract enforcement; business registration and licensing; and taxation and customs) across Africa. The field visits reviewed six projects in terms of impact of the projects per se, and the specific contribution of ICF to the projects. The Review comprises an analysis at two levels: (i) The Project/Programme Level, and (ii) The Facility Level. The methodology adopted was devised to answer the five DAC development evaluation criteria: (i) ICF Relevance, (ii) Efficiency, (iii) Effectiveness, (iv) Impact, and (v) Sustainability. Unlike a traditional evaluation, however, the Review has focused on providing conclusions and recommendations that will first constitute a performance assessment of ICF since its creation, and second guide contributors as they decide on possible further funding and support post-2014. Conclusions The conclusions presented below begin with those relating to ICF as a whole. These are then followed by conclusions that relate to the five Review Key Questions as set out in the terms of reference. General The ICF business model was a radical approach for African Governments to mobilise resources, and for Contributors to make funding available. This radical conceptual approach has helped ICF’s efficiency. Blending ODA and private funding has helped mobilise resources and heightened the private sector profile of ICF. The involvement of private sector Contributors and its institutional structure allowed ICF to follow private sector operating methods. Other approaches such as subcontracting the management of ICF to a development agency or bank are unlikely to have given it the flexibility to start as rapidly as it did and approve, and he lp with the rapid implementation of, so many projects in six years. It should be noted however that the PPP structure per se has not been capitalised on to the extent laid out in the original vision, in terms of bringing to bear the experience of the Corporate Contributors. ICF has achieved a remarkable amount in the six years since it started operations. It has approved 54 projects in 17 individual countries across Africa, as well as a number of regionally focused projects. It is indeed remarkable that a temporary organisation has equipped itself, within a short duration, with all the attributes of an “institution” rather than a temporary trust. This is considered a unique feature of ICF. It remains though a small organisation with only 16 staff.
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ICF comparative advantage appears to encompass: o Its “uniqueness” in terms of rapid intervention capacity, and tangible results being achieved in a short time span. o ICF’s rapid response capacity is often enhanced by the absence of any need for project beneficiaries to apply through various government channels, as is the case for most IFI and bilateral funding. o The “whole African“ nature of ICF, i.e. being on equal “accompanying” terms (listen and coaching) with the beneficiaries, coupled with being private sector oriented in the sense of being pragmatic in its responsiveness, emerges from the field visits as a defining characteristic that makes many beneficiaries prefer to deal with ICF than many other donors. o ICF’s insistence on milestones in project implementation is considered by several beneficiaries as having accelerated reforms. o ICF’s insistence on strong project management and oversight, usually with private sector representation, and ICF’s continuous engagement, keeps projects on track. o In certain cases, being able to finance elements that do not fit in what other donors typically are prepared to support. o Other elements, such as multiplier effect, focus on fundamentals, and private sector involvement, are qualities of investment climate support that other agencies also strive towards. Strict controls and measurement are also demanded from most donors. The leveraging of ICF’s Corporate Contributors as envisaged in the original plans has not happened and represents a lost opportunity. ICF sees its finite seven-year life as an advantage, but the uncertainties generated by this may also have been a handicap. Amongst ICF’s eight priority areas, the three priority areas that are the focus of the Review account for 83% of commitments. In short, ICF’s actual and potential value added in the other five priority areas is more limited, and probably relates primarily to faster approval times. Nevertheless, by focusing on the three priority areas ICF would not be abandoning these other areas. Projects in the three priority areas should have benefits/impacts in the other five priority areas, especially financial markets (in particular for SME access to finance, but similarly for increased competition and reduced corruption). KQ1: Have the Right Things Been Done? (Relevance) The Strategic Framework 2007, which is the basis of grant agreements with most contributors, sets two phases for portfolio development. In the first, ICF would undertake projects “adopting a reactive approach”. A second phase “Moving into the second year of operations” was to have seen ICF operations “shift towards generating proactive task-force supported programmes”. This has not happened. ICF continues to support projects in an opportunistic way rather than through prior strategic planning. The field visits to six projects provided the opportunity to assess ICF’s role or additionality in two ways: financial and non-financial. It can be said that: o In all six projects ICF’s financial role was necessary for the project to go ahead. o ICF’s non-financial role was more varied and its contribution may actually have occurred prior to approval in the design of a project, as well as subsequently during implementation. o In two projects it is clear that ICF’s primary role was that of a provider of funds. o In four projects ICF was involved in the project design and made significant contributions to implementation. o MST was frequently told that ICF is more hands-on during implementation and less bureaucratic than other donors. o Were the ICF projects amongst the most relevant? In making this assessment it is important to restate that ICF does not undertake country or regional diagnostics to identify in which areas of the investment climate environment the maximum
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development impacts could be generated through reform programmes. It is therefore difficult to judge whether the projects ICF has chosen were in fact those that would generate the maximum “development bang for the buck”. Nevertheless, we can judge four projects as having met this value for money standard. KQ2: Have Things Been Done Well? (Efficiency and Value for Money (VfM)) Over the six years that ICF has been in existence it has received $107.3m from contributors, disbursed $53.0m to clients and incurred costs of $22.1m. The ratio of total ICF expenditure ($22.1m) to project disbursements ($53.0m) is high at 41.7%. Although it has costs, ICF is a lean organisation in terms of staffing, perhaps too lean with only 16 staff. After increasing the volumes of new project approvals to a peak of 15 (committed value $33.6m) in 2009, there was a decline in 2010 and especially 2011 when only four new projects were approved (committed value $7.0m). There was a pickup in 2012 with 12 new project approvals (committed value $22.4m) due in part to follow on phase 2 projects in Rwanda, Zambia and with OHADA. The number of active projects per employee has declined from a peak of 2.9 in 2009 to 2.0 in 2012. This appears to be low. Assessing ICF’s efficiency by reference to multi-lateral, bilateral and UN agencies is difficult because of a lack of reliable data and the issue of comparability. Nevertheless, ICF appears to be a relatively high-cost organisation with a cost to disbursement ratio similar to that of a UN agency and considerably higher than multi-lateral and bilateral organisations. Project duration ranged from 13 to 46 months. The latter was a three year project, normally the maximum duration approved by ICF, that was late in implementation due to start up delays. Major reasons for implementation taking longer than planned are delays in start-up and procurement. Dar es Salaam is perhaps not an optimal location to be based, in the view of several Trustees and contributors. Direct air links are limited, attracting staff to work there is a challenge and the cost of living is making it uncompetitive. KQ3: What Results Have Been Achieved? (Project Review Findings) Applications peaked in 2009, since when they have declined. There appears to have been a decline in ICF approvals in the subsequent years, although this could also be due to the limited funds available to ICF. Three regions - East, West and to a lesser extent Southern Africa - account for nearly all the individual country applications. There were only seven applications and no approvals from three countries in Central Africa, and just three applications and one approval from two countries in North Africa. Tanzania made the largest number of applications with 25, equal to 10% of the total, but only four projects (16%) were funded. This large number may in part be due to ICF being located in Dar es Salaam. On the other hand, in four of the 10 countries there were no project approvals despite a large number of applications having been submitted (Ghana (10 applications), Kenya (9), South Africa (9) and Uganda (8)). Four countries stand out in terms of the concentration of project commitments: three in West Africa (Burkina Faso, Senegal and Sierra Leone) and Rwanda in East Africa. Approved projects were concentrated in three regions: West (45% of commitments), East (31%) and to a lesser extent in Southern Africa (16%), followed by multi-country projects (7%). There are two possible or likely reasons for this concentration: o In Central African countries there is a lack of projects that meet eligibility criteria. o For North Africa, it would have been difficult for ICF to establish itself as a credible provider of investment climate advisory services without having spent a large amount of time and resources that it could not afford given its small size. Even with such an investment it is unclear whether ICF has a role in this region.
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Impacts of Projects Visited It should be noted that of the projects visited, only in three cases (Cape Verde, Rwanda and Senegal) has there been more than a year since project completion. For the three others (Ethiopia, Zambia and OHADA) that were completed in 2012, it is too early for the impacts to become evident. The Cape Verde Business Life Cycles Project has resulted in the transfer of a significant number of enterprises from the informal to the formal sector, and facilitated SME access to finance. Equally important, it has become a model for other countries in the region to replicate. The impact of the Ethiopia e-taxation project is expected to be modest because of other investment climate challenges. The Rwanda Investment Climate Project has brought about a major improvement in Rwanda’s DB ranking. The tangible benefits in terms of new enterprises, investment and jobs have yet to materialise and may turn out to be less than anticipated. In Senegal there is already an increase in trade (imports and exports) as a result of the GAINDE system significantly shortening clearance times. Government customs revenues have also gone up markedly. The Zambia Judiciary Modernisation Project has seen an improvement in the perception of the transparency and efficiency of the judicial system. The OHADA project is expected to have a major impact in the 16 countries once the new Acts have been enacted. KQ4: How do the Results Compare with an Alternative Intervention to Achieve the Same Objective? (Relative Effectiveness, Impact, Cost/Effectiveness) The ICF business model was a radical approach for contributors to make funding available for the rapid implementation of investment climate reforms and process improvements in the legal/judicial, taxation and customs systems that helped improve the competitiveness of the private sector. ICF’s structure, and mainly its independence, as well as private sector orientation of managers allowed ICF to follow private sector operating methods. Other approaches, such as subcontracting the management of ICF to a development agency or bank, are unlikely to have given it the flexibility to start as rapidly as it did and approve so many projects in six years. It should be noted that ICF’s private sector type operating model where it can process projects in as short a time as three months from appraisal to project agreement compares favourably with multi-lateral and bilateral agencies that take much longer, a year or longer not being unusual. Also, ICF focuses on implementation through the definition of detailed project milestones. Clients appreciate this hands-on approach which also differentiates ICF from multi-lateral and bilateral agencies. The nature of the ICF projects (implementation of reforms and process oriented improvements to the investment climate) makes it difficult to identify alternative approaches that could have been employed. Other providers of IC services focus on policy, regulations and laws. KQ5: How Could Things be Done Better in the Future? Are the Results Sustainable? (Sustainability) At the project level GAINDE in Senegal is the best example of a financially sustainable project as it now is a profitable company that does not require additional government funding. In Cape-Verde NOSi, the project implementing agency, is close to being financially sustainable. All of the six projects have been or could be replicated. Three of the projects that have attracted particular interest are GAINDE, the Cape Verde project and Zambia’s electronic case management system.
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Recommendations Principal Recommendation It is clear that ICF has made a considerable contribution to improving the investment climate landscape in Africa over the last six years. ICF’s focus on (i) the practical implementation of tangible IC focused reforms, as well as the accompanying legal framework that can be implemented in a short time frame and which will lead to sustainable improvements in the investment climate , and (ii) process improvements in public sector investment facilitation as well as judicial systems that make the private sector more competitive, is a niche that other donors and providers of IC support services were not and are still not serving. A specialised implementation competence and expertise has been developed that should be preserved and built upon. Accordingly, it is recommended that ICF justifies support for a period of at least a further seven years and perhaps as long as 10 years. This recommendation is subject to changes being made in the way ICF operates and its governance structure. Independence It is recommended that ICF remains as a stand-alone independent entity that maintains its operating independence from contributors. An option that was considered is whether to relocate ICF’s operations into another organisation (presumably an existing IFI or bilateral donor) in order to reduce costs. However, if this was to happen it would need to have a large degree of autonomy if its rapid response, low bureaucracy business model is to be preserved and enhanced. In reality this may be very difficult to achieve. Even if at the beginning ICF was given the necessary autonomy/independence there is the risk that the IFI’s/bilateral’s more bureaucratic models, which were intended to be by-passed, would creep back into ICF, something that ICF management and BoT would need to resist. If ICF were to be burdened with more bureaucracy this could compromise its business model, particularly with regard to its agility and ability to process projects far more quickly than other providers of IC services are able. Moreover, if linked with another organisation ICF may be seen as less of a unique, independent African organisation and more like a traditional donor, bi- or multi-lateral initiative. Strategic Plan post 2014 A detailed strategic/business plan is required to map out what ICF should do, and how, post 2014. It would set out the focus, goals and objectives for ICF in terms of, inter alia, priority areas, country and regional spread. It should build upon what ICF has achieved since 2007. Key areas in such a plan include (i) a detailed review of the IC landscape and how ICF fits with other providers of IC services over a five year period, (ii) the business model to be followed including its role, value added and comparative advantage, and (iii) the financial model including sources of funds and revenues that could go beyond simply relying on grants from contributors and include, for example, revenues generated from the replication of projects. Board of Trustees It is recommended that the proposal of the 25 September 2012 board meeting to reduce the BoT to between seven and nine Trustees be implemented as soon as is practical. This need not happen by the resignation of Trustees; rather it could occur through the non-reappointment or replacement of retiring Trustees. The BoT should have a balanced number of Trustees from all parts of the continent. Project Origination and Processing ICF should become more strategic in the way it selects projects that it funds and supports. As a first step, ICF should undertake an in-depth analysis of the IC support service landscape that analyses (i) other IFIs, donors and bilaterals and their activities, services and geographical spread, (ii) trends in the landscape, and (iii) what ICF is in a position to contribute that other sources cannot. This landscape analysis should be updated at least annually so that ICF can
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adjust its range of products and geographical focus as circumstances evolve and change. ICF’s comparative advantage should be clearly articulated in a way that sets out the key strengths and expertise that it has vis-à-vis other providers of IC support services. It should define how ICF adds value. ICF, where possible, should work with and leverage the input of its corporate contributors in structuring and developing projects. A model for this may be the infrastructure facilitation project in South Africa that involves one of the corporate contributors. When structuring projects the participation of the private sector (both local and, where appropriate, international companies) in both the design and implementation should be clearly articulated and defined. There should be clear priorities, limits and ranges on the mix of projects by, inter alia, (i) project area, (ii) size, (iii) duration, (iv) cost sharing and co-financing, (v) individual country limits, (vi) geographical concentration, (vii) country income mix (low, low-middle and middle), (viii) project duration and (ix) regional versus country. Project Implementation ICF’s monitoring and evaluation should look more closely at the whole project and not just the parts financed by ICF. In particular reports the focus is on the ICF part of a project that has been funded and less on the project as a whole. Changes to a project scope should be approved by ICF and documented. Priority Areas ICF should focus on the three priority sectors that were the focus of the Review: (i) Property rights and contract enforcement, (ii) Business registration and licensing and, (iii) Taxation and customs. The other five current priority areas (and in particular financial markets) would become impact areas whereby in designing projects the likely benefits/impacts in these other sectors should be identified and taken account of in the formulation of key performance indicators. Geographical Focus ICF should undertake more project identification marketing in Central Africa 1 where it has to date undertaken no individual country projects. ICF should consider removing North Africa as a region where it operates. If, however, it is decided to continue with the region then the different priorities in that region should be identified, and consideration should be given to hiring at least one project officer who is a national of one of the countries of that region. Organisational Structure and Staffing ICF should create more project officer positions so that directors and managers are less involved in the detailed work of project processing, implementation and the preparation of impact assessment reports. While this may appear to increase costs, over the medium term the overall average staff cost should be reduced. A new position, manager of strategy, should be created, the job description for which should include: o Drafting strategic plans that should, inter alia, identify the priority areas, countries/regions and new products that ICF should focus on over a five year period. o Undertaking focused/targeted country diagnostics that should identify in countries and regions the parts of the IC landscape where improvements will generate the maximum benefits for private sector competitiveness and which should be the focus of ICF interventions. As much as possible, ICF should liaise with and capitalise upon diagnostic work undertaken by Contributors, donors and other development agencies to avoid
1 Angola Cameroon, Central African Republic, Chad, Republic of Congo, Democratic Republic of Congo, Equatorial Guinea, Gabon, Sao Tome and Principe.
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duplication. ICF should keep diagnostics as short and practically focused as possible. Efficiency and Value for Money (VfM) There needs to be an assessment/analysis of ICF’s cost structure and delivery model to see whether the ICF cost as a percentage of project disbursements can be reduced. The driving factor should be assessing the VfM of all of ICF’s significant costs. If ICF is to have a medium to long term future then the appropriateness of being based in Dar es Salaam should be reviewed. Lessons Learnt and Knowledge Management ICF needs to set up systems and databases that capture lessons learnt and best practice in its areas of operation. Initial project assessments, due diligence and board reports should have sections that show how lessons learnt and the application of best practice standards have been taken into account in project design, structuring and proposed implementation.
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1. Introduction Maxwell Stamp PLC has been contracted to undertake an Independent Review of the Investment Climate Facility for Africa (ICF). This report represents the output of work done, which was undertaken during the period October 2012 to January 2013. 1.1 Context and Objective of the Study The Investment Climate Facility for Africa was designed with a seven year lifespan, from 2007 – 2014, to improve the business climate across Africa. However, the possibility of extending this lifespan beyond 2014 was discussed during the Annual General Meeting in September 2011 in The Hague. An Independent Review was carried out in 2009 in order to make a preliminary assessment of the emerging impact on the investment climate of projects supported by ICF, and in August 2012 the Investment Climate Facility for Africa (ICF) issued terms of reference (ToRs) for a second Independent Review of ICF, addressing the necessity and meaningfulness of a potential prolongation of ICF beyond its original lifespan. The objectives of this Review are listed in the terms of reference as an assessment of: The aggregated outcome and impact of ICF; The relevance and sustainability of ICF, to facilitate future funding decisions by current and potential contributors; The efficiency and effectiveness of ICF and recommendations on how this could be improved. Maxwell Stamp PLC was subsequently selected to undertake this Review in a contract signed on the 16th of October 2012. The evaluation has been undertaken by a team of Maxwell Stamp consultants comprising Andrew Danino as Team Leader and Charles Vuylsteke as Senior Evaluation Expert. In London, the project management team comprises David Joiner, the Project Director and Sophie Medert, the Project Manager. Following the inception report, this draft final report has been prepared based on visits to the ICF offices in Dar es Salaam, field visits to Cape Verde, Ethiopia, Rwanda, Senegal and Zambia and extensive interviews and desk review undertaken by the Maxwell Stamp Team (MST). 1.2 Context of ICF The Investment Climate Facility for Africa (ICF) was launched in 2006 and became operational in July 2007. The “sponsors” of ICF were African Governments, a number of public sector contributors including AfDB, DFID, IFC/WB, KfW, the Netherlands, the Republic of Ireland, Norway, and the Republic of South Africa, and private sector contributors, including Anglo American, Coca Cola, Celtel, Standard Bank and Unilever (see full list in section 4.1.1). The purpose was to focus exclusively on the removal of barriers to private investment in Africa. The aim in creating ICF was resource mobilisation for accelerated investment climate (IC) action. ICF was designed to be a unique new tool that would focus (i) on the implementation of reforms already formulated but not enacted, and (ii) process improvements in areas of the public sector such as, inter alia, commercial courts, business registration, taxation and customs that would make it easier for private companies and enterprises to operate. ICF’s institutional format is that of a Public-Private Partnership (PPP) in the form of a Trust. Its Board of Trustees (BoT), equivalent to a board of directors, is composed of public and private sector individuals with a wide range of experience and expertise gathered in government, development financing, industry, banking and commerce who were selected to contribute to ICF’s penetration in key investment climate areas. The defining PPP approach was expected to allow ICF to support reforms which otherwise would not have been adequately targeted. It was setup with a lifespan limited to seven years, at the end of which it was to be dissolved. In view of this period, which finishes at the end of 2014, the Contributors are asking if ICF should
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continue to exist, and in such an eventuality, what changes should be made to its strategy, operations, and areas of focus.
1.3 Structure of the Report The report has been divided into two main volumes and one annex section: after this introductory chapter, Volume 1 – Main Report proceeds with a chapter on the Review methodology and a summary of the work undertaken. Chapter three contains the analysis at the project/programme level. It starts with a review of the ICF project cycle which is followed by an analysis of the portfolio and a field visits synthesis of the 6 case studies. Chapter 4 gives information on the evaluation at facility level, including an overview of the origin and history of the ICF, an assessment of ICF’s governance, their organisational structure and staffing, ICF’s objectives and strategy, including their specific thematic focus, an overview on ICF’s business model, an analysis of ICF’s efficiency and VfM and their operations. Chapter 5 then includes the conclusions that the MST draws from their analysis, whilst Chapter 6 includes recommendations for ICF’s Governance, operating structure, strategy and business model, operating procedures, ICF’s project development process, implementation, monitoring and impact assessment, as well as general efficiency and possible scenarios for post 2014. Volume 2 – Case Studies includes the six prepared case studies of the projects as listed above. The annex section at the end of Volume 2 includes supplementary backup data, including a list of the people and organisations consulted, information and other research material which was compiled and assessed during the course of the assignment and which supports the overall findings contained in the Independent Review. It should be noted that the depth of the Review was limited by the budget for the assignment. As set out in the Maxwell Stamp technical and financial proposals dated August 2012, field visits were limited to no longer than three working days. Also, it was not anticipated that the ICF would have no review/analysis of the investment climate advisory service landscape in which it operates, which extended the scope of the Review as originally planned. In doing so, it was only possible to do enough to have an appreciation of the key features of the landscape to enable conclusions to be drawn and recommendations made. It is also noteworthy that no planning or other work has been undertaken by ICF management or the Board of Trustees for ICF post 2014. Again, this Review can only provide a broad analysis of these issues and provide some general recommendations as to the factors that need to be considered by African Governments and Contributors in making a decision on renewing ICF’s mandate and providing further funding.
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2. Methodology and Work Undertaken
2.1 Methodology of the Review The study was undertaken over a 3.5 month period (October to January). It focused on addressing the five key questions in respect to the DAC evaluation criteria (Have the right things been done? Have things been done well? What results have been achieved? How to the results compare with an alternative intervention to achieve the same objective? How could things be done better in the future? Are the results sustainable?). Efficiency, for example, was assessed together with value for money by reviewing the inputs and by a review of the process of screening and selecting projects. Effectiveness and impact was assessed by stakeholder consultation and project visits. The Review is based on an evaluation of institutional documents and project files, operating and financial data, and interviews with ICF staff and representatives of donor organisations, corporate contributors, government agencies, implementing organisations, private sector representatives and beneficiaries. It includes a review of the organisation’s operational performance as well as an independent assessment of selected projects, focusing specifically on resulting outcomes. Through field visits and interviews, the MST received valuable cross cutting data and inputs, which contribute towards the approach/methodology used to address the key questions as outlined in the ToRs. The Review commenced with a first visit to the ICF offices in Dar es Salaam by the MST from 21 to 29 October 2012. Following this, an inception report was prepared and approved by the IRG in November 2012.
Case Studies and Field Visits: The criteria for the selection of the six projects visited are set out in the table below.
Table 1: Case Study Project Selection Criteria Coverage by Priority Area: 2 Projects in Taxation and Customs; 2 projects in Property Rights and Contract Enforcement; 2 Projects in Business Registration and Licensing; Only completed Projects were considered, and are covered by Project Completion Reports so that assessments of the entire projects can be made; Include one Regional Project; Where possible, projects that have been replicated in other countries; Where possible, impact assessment reports have been prepared that enables MST to assess not just the project but also the Impact Assessment Methodology.
Table 2 below sets out the six projects selected. It should be noted that: The Rwanda project covers two priority areas. The projects in Senegal and Zambia were two-phase projects whereby the Government’s satisfaction with the initial projects led to follow up ones, both phases of which have been completed. The project in Cape Verde appears to have led to several projects in other countries by referral due to its demonstration effect.
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Table 2: Projects Selected for Field Visits
sing
Country / Project Name
Region IAR
customs
Business
licen
Language
contract
Country size
Taxation and
enforcement
registration and Property rights and Cape Verde Business Life Cycle Services x P S N
Modernisation of Tax Ethiopia x E L N Authority Rwanda Invest Climate Rwanda x x E S Y Project GAINDE Paperless Trade - Phase I Senegal x F S N GAINDE Paperless Trade - Phase II Modernisation of the Judiciary - Phase I Zambia x E S Y Modernisation of the Judiciary - Phase 2 West & Central OHADA Uniform Acts Reform x F R N Africa I Language: E - Anglophone, F - Francophone, P - Lusophone Country size: L - large, R - regional, S -small IAR - Impact assessment report: yes/no
It should be noted that because of the small number of completed projects and the need to comply with the selection criteria, the six selected projects cannot be considered as statistically representative. Nevertheless, MST believes that the six project case studies as a whole provide a good insight into the ICF portfolio and how ICF operates. Following the selection of projects, MST undertook field visits to Cape Verde, Ethiopia, Rwanda, Senegal and Zambia, which took place during the two weeks starting 19 November 2012. In undertaking the field visits and drafting the case studies, a key challenge was that of the attribution of outcomes and impacts to projects. Investment climate projects, in general, pose significant challenges in determining outcomes and impacts that can be directly attributable. The scope of the Review did not allow for the type of economic analysis that can identify outcomes and impacts that are indirect but significant2. Given the limited duration of the field visits the key ways for MST to attribute outcomes and impacts were: Meetings with stakeholders (see below for a description of how they were selected). Although mainly anecdotal, such views can be insightful especially where a project has only recently been completed and the outcomes/impacts are only beginning to appear. An example of a pertinent stakeholder is a prominent banker or executive of a bankers’ association who can comment on how much more likely banks are to increase lending in response to an
2 ICF itself has no methodology or system for such analysis. In the case of the Rwanda project, ICF has commissioned consultants to undertake an economic analysis that is still to be finalised.
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improvement in contract resolution through the introduction or improvement of commercial courts. Where available, documentary evidence. As an example, in Senegal increases in the revenues of GAINDE from increased volumes of imports and exports indicate that more trade has occurred as a result of the ICF supported clearance system.
In selecting stakeholders to be interviewed in the field, MST requested ICF to work with clients to set up meetings with a range of stakeholders. The following list of potential stakeholders was used. The objective was to obtain as wide a range of views as possible both at the project and at the general investment climate levels. It was important to have both interested parties (those directly involved in the projects) and third parties that could provide impartial views. Table 3: Stakeholders and Interested Parties to be Interviewed At Project Level Principal project beneficiary; Project “champion”; Other project parties: Steering Committee members (Government counterparty), Consultants and implementation Agency; Indirect beneficiaries (e.g. the Port Authority in the case of a Customs reform Project; Customs Administration, Banks (particularly in Projects with impact on SME access to finance); Private sector representative organisations such as Traders’ Associations; Chambers of Commerce, Employers’’ Federations, Bankers’ Associations, Private Sector Foundations; Co-financiers; Consultants who prepared the Project Completion Report.
Meetings with Other Stakeholders and Private Sector included: Local offices of ICF contributors; Agencies with an interest in investment climate issues; Large corporates, in addition to banks.
Presentation of Preliminary Findings On the 18th of December 2012, a presentation was made to contributors (as represented by the IRG), senior ICF management and Trustees in London at the premises of Maxwell Stamp PLC, with the purpose to present preliminary findings, conclusions and recommendations and seek comments, feedback and input for the final report. The Review methodology involved, inter alia: Desk review of institutional documents (including governance charters, strategic plans and procedures manuals), project tracker and project excel files, individual project files, operating and financial data. It included BoT published (annual reports and data on ICF website) and unpublished information. During the field visits interviews were held with key stakeholders, notably: o Principal and indirect project beneficiaries; o Business and private sector representative organisations, including chambers of commerce; employers’ federations, bankers associations and private sector foundations; o Co-financiers and local offices of ICF contributors; o Representatives of the private sector (corporates, banks); Structured telephone interviews with Trustees and Contributors, all of whom were invited to be interviewed. Prior to the interviews, lists of detailed questions were provided by e mail.
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2.2 Work Undertaken The following summarises the work undertaken by the MST: Pre-visit desk review of documents (a list of documents reviewed is attached at Annex 3). This included: o The ICF’s preparatory and constitutive documents, including the Gleneagles Communiqué (G-8 Summit)- July 2005; Consultative Draft for ICF’s Business Plan- October 2005, including the proposed ICF Business Model; proceedings of Meeting with Potential Donors- Reflective Notes- March 20, 2006; and the Trust Deed – 17 April 2007- for the incorporation of ICF; o Annual reports of the ICF; o ICF Strategy for the Years 2010 to 2014; o Amended Governance Charter (draft prepared on 14 July 2011); o Procedures documents including: Project Procedures Manual - June 2011; Impact Assessment Methodology and Scoring; ICF M&E Risk Assessment Tool; and Project Completion procedures; o A list of all projects undertaken, with detailed information including location, dates, size, beneficiaries, main objectives etc.; o Project completion reports and all project cycle documents for the 6 clients in the 6 countries that the MST will visit; o The previous Independent Review of ICF conducted in 2009; o Details on staffing (length of employment, programme affiliation); o Reports (Summaries) of ICF sponsored Investment Climate Summits (May 2010 and May 2012) including Summary of Investment Climate Trends (2008-2011); o Recent surveys/publications relevant to investment climate support, including International Finance Institutions- Development through the Private Sector- 2011 (a joint report of 31 multilateral and bilateral development finance institutions). Inception visit to the ICF offices in Dar Es Salaam by the MST from 21 to 29 October 2012. Inception report dated November 2012. Field visits to Cape Verde, Ethiopia, Rwanda, Senegal and Zambia, which took place between 19 November 2012 and 1 December 2012, to the following projects. o Cape Verde - Business Life Cycle Services; o Ethiopia - Modernisation of Tax Authority; o Rwanda - Rwanda Invest Climate Project; o Senegal - GAINDE Paperless Trade - Phase I; GAINDE Paperless Trade - Phase II; o Zambia - Modernisation of the Judiciary - Phase I; Modernisation of the Judiciary - Phase 2; o West & Central Africa - OHADA Uniform Acts Reform I. Post field review visit to ICF between 1 and 4 December 2012. Telephone interviews with Trustees and contributors. Presentation of preliminary findings to contributors (as represented by the IRG), senior ICF management and one Trustee in London at the premises of Maxwell Stamp PLC3. A list of participants can be found in Annex 4. A full list of the people and organisations consulted can be found as Annex 2. It should be noted that cross-cutting issues such as gender and environment have not been addressed as they were not part of the ToRs.
3 The meeting involved participants who physically attended the meeting and others who were connected in a teleconference.
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3. Analysis of ICF at Project/Programme Level The purpose of this chapter is to analyse ICF at the project/programme level. It considers what ICF does and how it does it. The analysis begins with a review of the ICF project cycle going from origination through project approval to implementation and finally the preparation of impact assessment reports. There is then a review of ICF’s project activities starting with the applications that it receives and followed by a review of the portfolio of projects that ICF has approved and funded. The chapter ends with a synthesis of the six field visit reports/case studies contained in volume two of the report.
3.1 Project Cycle - Initiation to Impact Assessment
3.1.1 Overview Two manuals (the May 2010 Operating Policies and Procedures Manual [OPPM] and the June 2011 Project Procedures Manual [PPM]) set out the procedures for the ICF project cycle which is illustrated below. The diagram illustrates the process cycle that is shown in two phases. First there is the development phase that runs from origination through processing/due diligence to approval and the signature of a project agreement (PA). Second there is the implementation/assessment phase that begins with the PA and involves the actual implementation of the project through to completion and, two years after completion, the preparation of an impact assessment. Procedures for the project development phase are set out in the OPPM, while the more recent PPM focuses on implementation and assessment. Graphic 1 – Project Process Map
ICF has three distinct departments covering the life cycle of projects: Projects Development - responsible for origination through to PA. Projects Implementation - responsible for implementation from the PA through to completion. Impact Assessment – responsible for the preparation of impact assessment reports (IARs). Before considering the project cycle steps it is useful to look at the processing times and the implementation periods for projects. The table below covers the six year period from the launch of ICF to November 2012. It is based on data provided by ICF in its Application Tracker spread sheets for the 474 projects that have gone from application to PA and the 21 of those that have reached
4 It should be noted that the application tracker and projects under implementation spreadsheets are not linked. Consequently there are discrepancies between the two spreadsheets.
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completion. Processing times for IARs cannot be usefully commented on as only one IAR (Zambia Judiciary Phase 1, which is the subject of a field visit report in Volume 2) has been completed. Other IARs have been started but are yet to be finalised.
Table 4: Processing and Project Completion Periods 2006 to 2012: Application BoT to Application to Agreement to to BoT Agreement Agreement Completion (Days) (Days) (Days) Days Months Quickest Project 10 1 31 319 10.5 Quickest Quarter (average) 50 28 111 499 20.5 2nd Quarter (average) 107 61 186 787 25.9 3rd Quarter (average) 209 88 291 1047 34.2 Longest Quarter (average) 529 161 641 1275 41.9 Longest Project 913 468 996 1492 49.1 Overall average 217 83 300 881 29.0 No of Overall Project Applications: 47; No of Approved Projects up to Nov 2012: 21 It can be seen that it takes an average of 217 days (7.1 months) from the application date to approval by the BoT, with half of the projects having been approved within 107 days (3.5 months). The average processing time is more than twice as long (217 days compared with 102 days) as disclosed in table 6 of the 2009 two year Review that dealt with the period up to mid-2009. It is noteworthy that 75% of projects were approved within 209 days (6.9 months) while the slowest quarter of applications took an average of 529 days (almost 18 months), two and a half times as long. The difference to the results as shown in the Nexus report from 2009 may indicate that project complexity for a number of more recent projects is greater or that ICF’s capacity to process projects quickly has been limited/constrained by the small number of staff in project development. The longer time may also be due to ICF dealing with more clients that move more slowly due to a lack of readiness and implementation capacity. After approval, it has taken an average of 83 days (2.7 months) to negotiate and sign the project agreement, with half of the projects taking no more than 61 days (2months). The Nexus report disclosed an average period of 55 days (1.8 months) until 2009 to reach a signed PA, 33% shorter. Despite the increase in the time for a PA to be drafted and signed, 2.7 months would still appear to be an indication of efficiency. The overall development phase from application to PA takes an average of 300 days (9.9 months), 70% longer than the average of 177 days (5.9 months) cited in the Nexus Report. Again it is striking that 75% of projects reach PA in no more than 291 days (9.6 months), while the remaining 25% took an average of 641 days (21 months), more than twice as long. Project completion periods vary from as short as 10.5 months from the date of signature of the PA to a maximum of more than four years, with an average for the 21 projects completed to date of 29 months, just under 2.5 years, with half of the projects completed in 26 months. As noted in the field visit reports, projects tend to overrun their implementation timetables rather than under-run them. A brief review, including comments, of each of the steps in the above project cycle diagram is set out below.
3.1.2 Origination Projects can come to ICF in a number of ways, of which the most important are: Through promotion, including road shows, when ICF is hoping to develop projects for the first time in a country;
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Through agencies and ministries in countries where ICF has already funded projects; Through agencies and ministries in countries that have contacts in countries where ICF has funded projects that can be replicated. The Senegal GAINDE and Cape Verde Business Life Cycle Services projects have attracted interest from a number of other countries interested in replicating them. This is an increasingly important source; Through ICF Trustees who through their other activities put sponsors of potential projects in contact with ICF. This was the case for two of the four projects visited by MSP (Rwanda Investment Climate Project - RICP- and Zambia Judiciary Modernisation). This was particularly important in the early years of ICF; Through follow-on phase 2 projects. Some projects may be planned as having 2 phases (P1 - pilot and P2 rollout) such as Senegal GAINDE and Zambia Judiciary Modernisation. Others, such as the three follow-on projects for RICP, may be necessary to undertake components not originally planned; Through general promotion through the ICF website (the Ethiopia Tax Modernisation project came out as a result of a web search by the Government for donors) and seminars such as the Investment Climate Summit held every two years; Through regional projects, which tend to be submitted by regional organisations such as the OHADA tax harmonisation project in francophone East, West and Central Africa. ICF has a standard application form that can be accessed on its website which sets out the information that must be submitted on a potential project, including: (i) Purpose and nature, (ii) Implementation details, (iii) Project cost and funding plan (ICF, government, co-financiers), (iv) Participation of both the private sector and government, (v) Likely project champion who will drive implementation, and (vi) Risks and how they will be managed.
3.1.3 Initial Screening ICF at the management team level undertakes an initial assessment to see whether, inter alia, a project fits within its mandate and the information in the application form shows the project to be credible. Attached at Annex 1 is ICF’s new project ranking chart that contains 10 project criteria, compliance with which are rated on a 1 to 5 scale. There is also the issue of a country having to be a signatory to the Africa Peer Review Mechanism (APRM) although exceptions have been made: a project in Liberia was approved before it became a signatory to the APRM. If a project passes this initial screening then the sponsor is asked to submit a full proposal, which ICF may provide help in drafting through the use of technical consultants that it funds. While ICF works with government officials to help plan a project, responsibility for the final proposal rests with the sponsoring agency/ministry.
3.1.4 Due Diligence Section 5 (Project Development) and Appendix V (Project due diligence criteria) of the OPPM set out the due diligence process that follows from the information provided in the application form: Project Description - It is essential that a project clearly articulates goals that will produce a significant positive impact on the investment climate within a reasonable period. The goals should be reasonable and appropriate to the country/regional environment and take account of the challenges to change that exist. Government Commitment - Assessing this is very difficult, especially when ICF is undertaking its first project in a country. The ICF management and staff have often sought guidance from ICF Trustees who have wide political and business experience at the most senior levels across the continent to make the judgement as to whether there is sufficient government commitment. Project Champion - There has to be a senior individual with the authority and determination to implement a project. A good example of a strong project champion was the Chief Justice in Zambia who made modernisation a priority and was prepared to confront inertia and scepticism among his fellow judges.
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Private Sector Involvement - Given that private sector participation in its projects is what differentiates ICF from other providers of investment climate advisory services, ICF requires a letter of support from the “private sector” to be included with the proposal. These letters are often from business associations. There has also to be private sector participation in project steering committees. Logical Framework (Logframe) - When objectives have been set, a logframe is drafted. The key performance indicators5 (KPIs) in the logframe should as far as possible capture the planned project outcomes. The use of World Bank Group Doing Business indicators as KPIs may be appropriate although their scope and compatibility (in particular how they are compiled) with what a project is trying to achieve needs to be carefully considered. Implementation Plan - The plan should contain clear project milestones and be realistic in terms of the time required. Procurement is an area where projects get delayed often because of the bureaucracy in government procurement agencies that have to sanction the purchase of equipment and services. Project Budget - Like other project financiers, ICF has to ensure that the items of expenditure necessary to implement the project have been included and are realistic. ICF also adds a contingency, typically 15%, to allow for cost overruns and items that have not been anticipated. Funding Plan - ICF does not have formal rules on cost-sharing requirements. As a guide, ICF will cover up to 75% of total project costs with 25% from the sponsoring agency/ministry. There have however been exceptions approved by the BoT, in Phase 1 of the Zambia Judiciary Modernisation project, for example, the mix was 83% ICF and 17% GoZ. It is important to note that the ICF and government funding commitments are allocated to specific project costs, so that in effect there are two budgets: an ICF budget and a Government budget. Also, there are no ICF rules on in what form (in-kind and/or cash) government contributions will be made. The projects reviewed by MST indicate that there is usually a mix of the two forms. Risk - both internal (project management, availability of counterparty funding, procurement) and external risks (commitment of government and private sector stakeholders and the project/economic environment) are assessed with ratings of high, medium and low for both probability of occurrence and likely adverse impact. If required6, ICF uses consultants to examine technical aspects of proposed projects.
3.1.5 Board of Trustees Approval While projects can be approved by the CEO (up to $2 million), and the BoT Investment Sub- Committee (up to $5 million), all decisions must be ratified by the BoT that meets quarterly. Board papers tend to be concise, typically no more than six to eight pages.
3.1.6 Project Agreement A standard agreement has been developed that is relatively short. Key areas in the PA are: Project objectives and targets - this includes the KPIs and logframe; Project costs and financing - this sets out which items are to be financed by ICF and which by government; Contributions from ICF and government; Criteria for staffing the project management team (PMT and the establishment of the steering
5 KPIs are: (i) Long term - denoted as impacts that arise beyond the project itself such as the creation of new enterprises and jobs, increases in exports and tax revenues, and (ii) Short to medium term - denoted as outcome indicators in the log frame template. Most of them can be achieved at the completion of the project. 6 In the case of the Ethiopia Tax Modernisation project, for example, ICF judged the project submitted by the Ethiopian Revenue and Customs Authority to be sufficiently comprehensive not to require the use of a technical consultant for the due diligence. In contrast, for the Zambia Judiciary Modernisation Phase 1 project, ICF funded consultants to prepare a detailed due diligence report.
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committee - including private sector participation; Detailed project implementation schedules; Detailed disbursement schedule and milestones; Detailed budget. In short, the PA is a checklist for project implementation and disbursements by both, ICF and government.
3.1.7 Implementation The PPM sets out detailed procedures and rules for the disbursement of funds to projects, project implementation and completion. Following signature of the PA, the responsibility for the project is turned over to the project implementation department. The objectives section of the PPM requires that there is “strict compliance with the ICF Agreement” during implementation. Specifically, the project has to have proper financial management and regular audits of project expenditure. Areas of note include the need for: A project budget with milestones7 against which ICF disburses. The budget also shows the planned government disbursement. Compliance with ICF project procurement guidelines8 that requires Quality and Cost-Based Selection (QCBS) unless single sourcing can be justified. The preparation and regular updating throughout implementation of a project risk matrix 9. The following table lists the project documents that must be submitted by clients to ICF.
Table 5: Project Documents from Clients
quarterly narrative progress report10 30 days after quarter end quarterly financial report annual narrative progress report 45 days after year end annual financial report 60 days after project end completion report
Asset management (section 4.4 of the PPM) requires that there are two sets of fixed asset registers, one for fixed assets11 purchased with ICF funds and the other for funds with government and other funding sources. Moreover, tag numbers must be assigned to each movable and unmovable fixed asset purchased with ICF funds. This separation of assets is good for tracking and control over how ICF funds are spent in a project. It can, however, mean that the focus of monitoring and evaluation tends to be on what ICF is financing and not the project as a whole. As well as the PPM, the Financial & Accounting Manual sets out in detail the project accounting and reporting required of clients.
7 The comprehensive project milestones and procurement requirements are set at project initiation level (development), and adjusted as necessary at the outset of the implementation phase. 8 ICF Procurement Guidelines for the Selection of Consultants - 2008 and ICF Procurement Guidelines: Selection of Suppliers for Goods & Supplies - 2008. 9 ICF’s March 2011 risk assessment tool considers four types of risk: operating, management, governance and financial control. Each type of risk is measured on a five point scale: 5 - Lack of the control (Control Unavailable); 4 - Control Available but Poorly monitored; 3 - Control Available but needs improvement, 2 - control Available Well Monitored, Share Best Practices, and 1 - Control available and perfectly monitored. 10 The quarterly report requires, inter alia, (i) progress on meeting milestones, and KPIs (ii) procurement and (iii) Issues and Problems that may affect project implementation. 11 Fixed assets comprise land, machinery/equipment office and IT equipment. Buildings, patents, trademarks and copyrights are excluded from the scope of ICF funding.
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3.1.8 Completion Within two months of completion the client has to submit to ICF a project completion report (PCR) that provides a review/history of implementation of the project. It includes costs (actual versus budget), milestone achievements (actual versus planned), details of the PMT and SC, lessons learnt and finishing with conclusions and recommendations. After reviewing the PCR, ICF’s Implementation department visits the client and prepares a concise version that is the formal review of a project. As part of this Review there is an audit of the project financial statements for the funds that ICF has disbursed. It is of note that ICF project files do not appear to have audited financial statements for costs for the whole project. The internally drafted PCR is submitted to the BoT for approval.
3.1.9 Impact Assessment ICF’s Impact Assessment Methodology was approved at the Contributors Forum on 27 September 2011. Impact assessment reports (IARs) have to be prepared when two years have elapsed from the completion date. The impact assessment process is an opportunity to analyse in detail the project from inception to completion with the project beneficiary and other stakeholders. The main goals of the IAR are to: Ascertain results and assess the effectiveness, relevance, impact, sustainability and efficiency/ Value for Money (VFM). These correspond with the DAC criteria12. Draw lessons learnt that can be applied in the design and implementation of other ICF supported projects. The starting point in the IAR process is the project logframe, including the key performance indicators and project objectives. The findings of the impact assessment will determine if the planned results were actually attained based on the KPI achieved, actual costs and actual duration of project. It helps to compile the necessary information regarding the accomplishments of a project: expected as well as unexpected outputs and challenges and facilitating factors that were encountered during the life cycle of the project. ICF has adopted a rating grid, including various questions to be answered in five assessment categories, to give out points, for which the rating of 5 is the highest and 1 the lowest13. The table below shows the IAR questions for each of the five assessment categories taken from the methodology.
Table 6: ICF Impact Assessment - Rating Grid
1. Relevance Has the project addressed the main issues/priorities of the business community? Does the project help to address challenges faced by the project beneficiary? Does the project have high political commitment? 2. Effectiveness Were the project objectives attained? Were the initial plan in terms of duration, costs and activities achieved? Were there any unplanned factors that facilitated the attainment of project objectives? Were the unexpected challenges that constrained the attainment of the project objectives resolved successfully? Has it been possible to resolve the challenges?
12 OECD -Development Assistance Committee (DAC) Working Party on Aid Evaluation 13 Ratings: Rated 5: If all evaluation criteria and target KPIs have been achieved at 100% and project is rated as being highly successful. Rated 4: A majority (75% or more) of the evaluation criteria and target KPIs have been achieved to large extent and project is rated as being successful. Rated 3: 50% of the target KPIs and the evaluation criteria have been achieved and project is rated as satisfactory. Rated 2: Less than 50% of the target KPIs and the evaluation criteria have been achieved and the impact is not sufficient to make a difference. Project is rated as less than satisfactory. Rated 1: Most of the target KPIs and the evaluation criteria have not been attained and project is rated as being a failure.
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Table 6: ICF Impact Assessment - Rating Grid
3. Efficiency/Value for Money Compared to previous similar projects, has the present project performed better in the use of financial and other resources? Has the project been completed according to expected duration? Has the project been completed within budgeted costs? Has a tender been done to select the various suppliers needed for the project? Have there been in-house skills or resources that have been used to carry out project components? Is the project complementary to the other projects funded by other organisations? 4. Impact Were expected project achievements attained as planned in terms of target value / timing? Were there additional positive project achievements that were not planned? How effective was the strategy put in place to mitigate the impact of any unexpected negative side effects? Has the project served as a catalyst to encourage the project beneficiary to pursue other reforms? Have the lessons learnt from the completed project been integrated internally by the project beneficiary? Has the project served as a catalyst to other stakeholders to pursue reforms? 5. Sustainability Does the project beneficiary have enough financial resources to continue the initiative? Does the project beneficiary have the necessary skills to manage the new initiative? Has the new initiative been adopted and used by the stakeholders? Has the initiative been further improved or given a wider scope? Is there any existing technical assistance support from external parties? Will the strategy adopted reinforce the sustainability of the initiative?
Two of the six projects that were the subject of field visit reports, Rwanda Investment Climate Project (RICP) and Zambia Judiciary Modernisation Phase 1 (ZJM), have been the subject of IARs. From those two reports, it would appear that in applying ratings, ICF staff and consultants supporting them include only limited/superficial evidence/analysis to support such ratings. It does not appear that sufficient attention is given to what the project has actually achieved. The ratings grid should be seen as an aide for the IAR process and not as the output of the IAR preparation. Below are MST comments on the ZJM and RICP IARs. Regarding the ZJM IAR14: First, was Phase 1 a suitable project on which the DAC criteria (Relevance, impact, efficiency, effectiveness and sustainability)15 could be tested? The fact that Phases 1 and 2 together formed in reality one project, with Phase 1 being the pilot phase and Phase 2 the main rollout of the project, would indicate that it is not possible to answer the DAC criteria solely by reference to Phase 1. Moreover, the pilot nature of Phase 1 means that its actual impacts on the business environment would be too small to identify and measure. Second, the IAR was prepared while Phase 2 was still being implemented. This complicates further the challenges of undertaking an evaluation. Third, the timescale for benefits/impacts of a project such as the modernisation of a judicial system is longer as they are indirect. The benefits of an investment climate enhancing project with more direct benefits, such as, for example, the streamlining/modernisation of a customs
14 IAR approved by BoT on 29 May 2012. 15 DAC criteria - Principles for Evaluation of Development Assistance - Development Assistance Committee of OECD
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system like GAINDE in Senegal, causing faster clearance of imports and exports and greater customs revenue generation, appear more quickly. In short, it would appear that Phase 1 was not the most appropriate project to have chosen to try out the new IAR methodology. Regarding the RICP IAR16, a more comprehensive IAR is being undertaken involving stakeholder surveys to determine impacts to the Rwandan economy. This followed a review by the BoT of the IAR that requested another economic analysis to confirm the findings of the first study.
3.1.10 Comments Neither the OPPM nor the PPM set limits on concentration by priority area, type of country (low, low-middle and middle income), region, regional versus country specific projects. There is though a 20% limit for portfolio concentration in any single country that was set by the BoT. As evidenced in the PCR, the focus of project implementation is on the part of the project funded by ICF and not the whole project. IARs fall into two categories – those where ICF staff with consultants assess outcomes, impacts etc (e.g. Zambia Judiciary) and those where a full economic assessment of impacts is undertaken (e.g. RICP). In both cases, the IARs themselves lack a strong analysis of the DAC issues and tend to involve assigning rankings according to the questions in the IA rating grid (table 3).
3.2 ICF Portfolio Analysis The following ICF project review is based on an analysis of applications to ICF for funding schedules and the disbursement schedules that ICF uses to track projects through the project cycle. Before looking at these two elements, it is important to make the following comments: Projects must meet ICF’s eligibility criteria which can be summarised by what may be characterised as the “3 Cs” and the “3 Ss”: o Commitment - from government; o Champion - there must be a project champion driving the project; o Capacity/capability - of the entity responsible for implementation; o Strategic impact on investment climate; o Speed of implementation, typically no longer than two years; o Sustainability of the project. There do not appear to be any formal, written procedures for project selection (priority area, country [low income, post conflict, middle income…], regional, concentration limits etc.) to guide ICF staff in deciding which applications to accept and process and aid the BoT in their approval and oversight role. There have been changes in the strategic focus of ICF over the 2006 to 2012 period as discussed in section 3.3 below. Although ICF’s Strategic Framework 2007 sets out a move from an opportunistic approach to projects in the early, start-up phase to “Proactive ICF generated programmes”, it is difficult to see whether this change of approach has actually occurred. The tracking systems are maintained on excel spread sheets that do not appear to be linked. There are for example projects shown in the Applications Tracker that do not appear in the project disbursement schedules, and vice versa. ICF does not have a project database system17 where projects are entered once and tracked throughout the project cycle from application to IAR.
16 IAR presented to BoT on 25 September 2012 but not approved. BoT requested additional work by a second firm of consultants to support estimates of economic benefits. 17 Awaiting confirmation from ICF.
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3.2.1 Analysis of ICF Applications Tracker18 In the chart below are shown project applications by priority area for the period 2005 19 to November 2012. Only the three priority areas for the MSP Review (property rights and legal, business registration and taxation and customs) plus two others (infrastructure and financial markets) are shown individually with the rest of the applications grouped under “other”. Applications were received from 29 countries. Graphic 2: Project Applications by Priority Area
It can be seen that: Applications peaked in 2009, since when they have declined. There appears to be a decline in ICF productivity in the subsequent years, although this could also be due to the limited available funds that ICF has. The mix of applications has changed. In the early years there were a large number that were outside the mandate of ICF. Over the last two years, 35 of the 53 applications (66%) were in the three priority areas indicating that there is now a good understanding among applicants of what projects ICF can fund. Property rights and legal is the biggest priority area for application (34% of applications) in 2011 and 2012. The following chart shows the mix between regional20 project and individual country applications. The country share has risen from 15% in 2005 to 92% in 2012 as awareness of ICF has spread across the continent. Nevertheless, regional projects can have a wide impact and high development returns for the amounts invested.
18 Two excel workbooks are maintained: (a) 2005 to 2011, and (b) 2012 -. 19 It should be noted that in 2005 before ICF was launched when it was being managed/developed by SBP, a South African consulting firm, there were 15 applications all of which were rejected. 20 A regional project is one in which two or more countries are involved.
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Graphic 3: Mix Country vs Regional Applications
Within Africa there are significant differences in the number of applications and approvals as the chart21 below shows. Three regions: East, West and a lesser extent Southern Africa, account for nearly all the individual country applications. There were only seven applications and no approvals from three countries in Central Africa, and just three applications and one approval from two countries in North Africa. This raises the issue of how a small organisation operating from Dar es Salaam can cover the whole African continent, especially North Africa, given the lack of direct or easy air links, as well as cultural and economic differences. It is of note that donors and development agencies often divide the continent into North Africa and Sub-Saharan Africa. ICF’s role in North Africa remains unclear. Graphic 4: Regional Applications and Approvals
21 For the purposes of the chart the five regions comprise the following countries: Central Africa - Angola Cameroon, Central African Republic, Chad, Republic of Congo, Democratic Republic of Congo, Equatorial Guinea, Gabon, Sao Tome and Principe; East Africa - Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia and Uganda; North Africa - Algeria, Egypt, Libya, Morocco, Sudan, Tunisia and Western Sahara; Southern Africa - Angola, , Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, , Tanzania, Zambia and Zimbabwe; West Africa - Benin, Burkina Faso, Ivory Coast, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo.
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The chart below shows the mix of approved, rejected and pending applications. ICF approvals peaked at 17 in 2009 before declining dramatically to six in 2010 and only five in 2011. The rejections in recent years may increase when the majority of potential projects shown as pending do not in fact go through to approval. It is noteworthy that there are currently 40 projects pending of which 28 relate to the last two years. The fact that there are seven projects from 2009 and five from 2010 still shown as pending indicates that ICF is prepared to wait for a deficient application to be reworked. Graphic 5: Applications – Approved, Rejected and Pending
The next table compares the number of applications from the top 10 countries with the number of projects approved in them. Tanzania is by far the largest applicant with 25 proposals to ICF (10% of the total) but only four projects (16%) were funded. This large number may in part be due to ICF being located in Dar es Salaam. In four of the 10 countries there were no project approvals22 despite a large number of applications having been submitted (Ghana (10 applications), Kenya (9), South Africa (9) and Uganda (8)). This is surprising given that all these countries have dynamic private sectors. Rwanda and Zambia, in contrast, each submitted 10 applications and had six and four projects funded respectively. Also, Mauritius had three of its five project applications approved. Part of the explanation for the concentration in Rwanda, Senegal and Zambia is that a number of the recent projects were of a follow on, or phase 2 character.
Table 7: Top 10 Countries by Applications Country No Approved Tanzania 25 4 16% Burkina Faso 11 5 45% Senegal 11 4 36% Ghana 10 0% Rwanda 10 6 60% Zambia 10 4 40% Kenya 9 0% South Africa 9 0% Uganda 8 0% Nigeria 7 1 14% Other Countries 64 20 31% Regional 70 10 14% Total 244 54 22%
22 A project in Kenya (Kenya Single Window) was signed in late 2012 and one is under appraisal in South Africa.
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3.2.2 Portfolio It is now necessary to analyse the portfolio of projects to which ICF has actually provided or committed to provide funding. The following table shows the committed value of the 53 projects23 at $91.4m of which $57m had been disbursed. Half of these projects (26) had been completed24. In 16 countries25 ICF had projects that were country specific.
Table 8: Portfolio Highlights at 30th June 2012 Committed Disbursed No $m Approved 53 91.4 62% Completed 26 40.2 86% Under Implementation 27 51.2 43%
The graphic below shows the spread of the portfolio across the continent based on total country commitments. Four countries stand out in terms of portfolio concentration: three in West Africa (Burkina Faso, Senegal and Sierra Leone) and Rwanda in East Africa. As already noted, there is a tendency for ICF to continue to undertake projects in countries where they can be successfully implemented and where follow on or phase two projects arise, which is the case in Burkina Faso, Senegal and especially Rwanda. Graphic 6: Project Distribution
By priority area, or theme, the next chart shows that the three areas that are the focus of the MST Review ((i) property rights and contractual enforcement, (ii) business registration and (iii) taxation and customs) dominate the portfolio with 83% of the committed amount. ICF is, however, increasing its footprint in financial services with several SME focused projects currently being processed.
23 Project number 54 was committed after 30 June 2012. 24 Only 21 shown as completed in application tracker 25 Kenya became the 17th country with the signature of a project agreement in late 2012.
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Graphic 7: Priority Areas
The regional distribution of implemented projects shown in graphic 8 reveals the strong portfolio concentration in three regions: West (45% of commitments), East (31%) and a lesser extent in Southern Africa (16%), followed by multi-country projects (7%). There are two possible or likely reasons for this concentration: In Central African countries there is a lack of projects that meet ICF’s 3 Cs and the 3 Ss eligibility criteria. In North Africa, the ICF is more likely to establish itself as a credible provider of investment climate advisory services. However it would have to devote time and resources that it cannot spare given its small size. Graphic 8: Regional Distribution
3.2.2.1 Comments There do not appear to be any formal, written procedures for project selection. ICF continues to support projects in an opportunistic way rather than through strategic choice. ICF focuses on countries where it can be confident of successful project implementation. The portfolio is concentrated in four countries, three in West Africa (Burkina Faso, Senegal and Sierra Leone) and Rwanda in East Africa. Whilst regionally ICF is strong in West and East Africa and to a lesser extent in South Africa, it has almost no footprint in Central and North Africa. ICF’s role in North Africa is unclear.
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In four of the top 10 countries for applications there were no project approvals despite a large number having been submitted, including Ghana, Kenya, South Africa and Uganda. The tracking systems are maintained on excel spread sheets that do not appear to be linked. 3.3 Field Visits Synthesis ICF undertook field visits to six projects. Brief profiles of which are set out below: 1. Cape Verde Business Life Cycle Services project was undertaken to enhance the legal framework, streamline procedures, and automate administrative processes in order to reduce time and costs for business processes, with a focus on business creation and licensing. 2. Ethiopia Tax Modernisation Project set up on a pilot basis the first electronic filing of tax returns and the creation of a call centre for taxpayers to be able to contact the Ethiopia Revenue and Customs Authority (ERCA). 3. Rwanda Investment Climate Project was the first to be processed and approved by ICF and comprised three components, that are de facto three separate projects: o Component 1 - Commercial justice and dispute resolution for which the principal element in this component was the setting up commercial courts and providing them with digital audio recording of court proceedings and the installation of an electronic record management system. o Component 2 – Business registration reform to streamline and speed up the registration of new businesses and establish other business related registers. o Component 3 – Land registration reform that complemented work being carried out under the DFID Land Tenure project and involved the creation of a computerised land registry. 4. Senegal - GAINDE Paperless Trade Phases I and II designed to streamline and reduce the time for imports and exports through the introduction of a single window for electronic customs systems Dakar seaport and airport. 5. Zambia Modernisation of Judiciary Phases I and II involved the automation of court proceedings through the use of digital audio recording of court proceedings and the installation of an electronic record management system. This was similar to Component 1 of RICP. 6. OHADA 1 (an inter-governmental organisation for the harmonisation of business law in francophone Central, West and East Africa set up by 16 states in 1993) involved supporting a programme of several uniform acts at various stages of development. The table overleaf sets out the main findings from the field visit reports in Volume 2 of this report in the context of the five key evaluation questions. Following the table there is a synthesis of the six reports with a focus on looking for lessons about how ICF operates and the outcomes/impacts of these projects. Geographically, MST visited two projects in East Africa, one in Southern Africa and two in West Africa; OHADA is a regional organisation (though its Secretariat is based in Central Africa) and part of OHADA related interviews occurred in West Africa. There were two projects in the taxation and customs priority area, three in property rights and contractual enforcement and two in business registration26. One project, RICP, had components in both property rights and business registration, and the OHADA Project has components in property rights and contractual enforcement, as well as in business registration27.
26 Zambia Modernisation of Judiciary Phases I and II is considered as one project as is Senegal - GAINDE Paperless Trade Phases I and II 27 ICF categories OHADA as a property rights and contract enforcement project as the business registration element relates to drafting laws.
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Table 9: Summary of Findings from Project Field Visits Country Ethiopia Cape Verde Rwanda Senegal Zambia Regional Region East West East West Southern Cent./West/East Modernisation Rwanda GAINDE I GAINDE II Modernisation Modernisation Business Life OHADA Uniform Project Title of Tax Investment Paperless Paperless of the of the Cycle Services Acts Reform I Authority Climate Project Trade Trade Judiciary Judiciary Phase n/a n/a n/a 1 - Pilot 2 1 - Pilot 2 1 Property rights Property rights & Tax & Business Tax & Tax & Property Property Priority Area Business business Customs Registration Customs Customs rights rights Registration registration Follow on Projects Underway No No Yes No No No No Yes Impact Assessment Report No No Yes No No Yes No No Application 26/3/09 23/9/08 21/11/06 23/11/07 8/1/09 30/05/2008 12/10/09 18/2/09 Board of Trustees 4/5/10 9/6/09 9/5/07 27/2/08 6/3/09 22/8/08 27/7/10 2/7/09 Project Agreement 18/6/10 6/7/09 28/5/07 2/5/08 14/4/09 29/11/2008 26/11/10 2/7/09 + 1/7/11 Scheduled Completion Sept 2011 Dec 2010 June 2010 March 2009 Sept 2011 End 2009 April 2012 March 2010 Actual Completion June 2012 Oct 2010 March 2011 March 2009 March 2012 March 2010 June 2012 November 2011 Months: early late Late 9 Early 2 Late 9 On time Late 6 Late 3 Late 2 Late 20 Actual project duration - 24 13 46 10 35 16 19 26 months Budget ICF funding $m - % of $1.70m 74% $1.80m 77% $8.97m 42% $0.53m 50% $3.70m 76% $0.50m 83% $2.10m 65% $1.11m 52% budget Total project budget $m $2.30m $2.35m $21.08m $1.05m $4.87m $0.60m $3.22m $1.94m Actual project cost $m $1.92m $2.01m $25.01m - $ 5.791 $0.73m $4.61m $2.15m Cost (overrun)/under run % 17% 14% (19%) - 19% (22%) (44%) 11% Due diligence consultants used No Yes Yes Yes [Yes] Yes Yes No Strong but not Government Commitment Strong Modest Strong Strong Strong financially Influence of Project Champion Strong Strong Strong Strong Strong Strong Strong Strong Private sector participation No Strong Strong Strong Strong No No Strong - design - implementation Minimal Strong Strong Strong Strong Yes Yes Strong
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Table 9: Summary of Findings from Project Field Visits Country Ethiopia Cape Verde Rwanda Senegal Zambia Regional Replicability No Yes No Yes Yes Yes Yes No KQI - Relevance of Project & Large Large Large Large Large Large Medium ICF - financial role Non-financial ICF role - design None Low good Large Good Medium Good Low Non financial ICF role - Small Good Medium Good Medium Good Good implementation Good below Good below KQ2 - Efficiency Good Very good Very good Moderate - Cost overruns Unclear budget budget KQ3 - Effectiveness Partial Achieved Achieved Achieved Achieved Partial Partial - Outcomes KPIs achieved Likely to be Starting to Very likely- too - Impacts Not evident Evident Evident Not evident small appear early N/A - Strategic for KQ4: How do the Results Project was business No credible Strong for Strong for n/a - process type Compare with an Alternative an extension n/a - process type assignment creation & alternatives trade trade assignment Intervention of existing functioning system Model for Sustainable Sustainable Wider tax other Land component financially & financially & base + countries & complemented a Sierra Leone and Rwanda Applies to 16 KQ5: Sustainability model for model for increased source of DFID land interested. countries other other tax revenues other ICF programme countries countries projects
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The following synthesis/analysis begins with the findings as they pertain to the five key questions and is then followed by a review of adherence with the most important ICF project selection criteria. KQ1: Have the Right Things Been Done? (DAC Relevance) Were the ICF projects amongst the most relevant for improving the investment climate in the countries/regions where they were being implemented? In making this assessment it is important to note that ICF does not undertake country or regional diagnostics to identify in which areas of the investment climate environment the maximum development impacts could be generated through reform programmes. It is therefore difficult to judge whether the projects ICF has chosen were in fact those that would generate the maximum “development bang for the buck”. Nevertheless, we can judge four projects as having met this bang for the buck criterion: Cape Verde, Rwanda, Senegal and OHADA. The two where there are doubts are the Ethiopia and Zambia projects. In the case of Ethiopia e-filing of tax is likely to make only a marginal improvement in the investment climate, while there are more critical areas that could have been addressed such as business registration and permits. In the case of Senegal- GAINDE and Cape- Verde Business Life Cycles, the project unlocked major constraints. ICF’s role or additionality which is assessed in two ways: financial and non-financial. o Financial Role - in all six projects ICF’s financial role was necessary for the project to go ahead. In two projects (ERCA in Ethiopia and OHADA) it is clear that ICF’s primary role was that of a provider of funds. In neither project did ICF contribute to the project design. OHADA staff stated that the Project was started with IFC and that ICF “embarked on a train already rolling”. Moreover, ICF was approached at the suggestion of IFC. If ICF had not been there, OHADA would have approached other sources of funding. For the GAINDE project in Senegal the client noted that ICF’s financial value-added was particularly important as no major other donor was interested in, or capable of, supporting this Project, as it did not fit in with their eligibility criteria. NOSi, the agency responsible for the project in Cape Verde, remarked that the project was a perfect fit with ICF’s financing criteria. o Non- Financial Role - ICF’s non-financial role was more varied and its contribution may occur prior to approval in the design of a project and subsequently during implementation. The six projects all noted how much quicker and easier the approval process was compared with other donors. In the case of ERCA the process from the appraisal visit to signature of the project agreement took three months. According to ERCA it would have been at least a year with a donor. As a proxy for the contribution to project design it is possible to differentiate between: projects where ICF’s due diligence involved agreeing milestones and disbursement schedules based on a business plan/application that was considered to be complete and where it was not necessary to appoint technical consultants (2 of the 6 projects). projects where ICF appointed technical consultants and participated in the project design, as was the case with RICP, Zambia Judiciary and GAINDE. In the implementation phase of projects the value added/contribution of ICF varied considerably. In the table above this has been rated as very good (ICF played a critical role in implementation), good (important role), medium (limited but valuable) and small (primarily limited to ensuring that disbursement milestones attained). The ratings were based on interviews with the project management team and steering committee members. There were a number of positive comments that were made about ICF’s implementation role, in particular, that ICF: Responds quickly to communications from clients, in particular when there are problems that require urgent action. Focuses on the attainment of measurable project milestones and disbursements. It wants the project to get done as soon as possible. It maintains pressure to adhere to the project schedule.
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Is more hands-on during implementation but less bureaucratic than other donors. Has strict but clear and transparent disbursement conditions, strict requirements and rules. Stands out as private sector oriented and thus pragmatic. Insists on competent project management and is prepared to ask for changes in the team composition. Requires the creation of a steering committee on which there is private sector participation. Has a capacity to listen and provide practical advice. Was, in the case of GAINDE, “steering the Steering Committee”. When necessary it was flexible and accommodating. Has managers up to the CEO who are prepared to get involved in the practical aspects of implementation and contribute in meetings to resolve implementation problems. “Lives the Project” according to NOSi. There were though concerns/frustrations expressed by most of the clients about the frequent change in ICF staff responsible for implementation which requires having to re-explain issues. In the case of the Government of Rwanda (GoR) which while generally complementary about ICF’s nevertheless noted that ICF could be inflexible on (i) changes to project implementation schedules that may be necessary due to changing circumstances, and (ii) procurement issues, on which GoR rated other donors as more pragmatic. KQ2: Have Things Been Done Well? (DAC Efficiency, Effectiveness) Have ICF activities been managed efficiently and are they cost-efficient? Do the outputs represent good value for money? How effective are the ICF’s operational and governance procedures? It is important to note that in ICF reports the focus is on the ICF spend on a project as a percentage of the committed budget. In very few cases is there an overspend by ICF. This is, however, different from the overall project budgets. For the purpose of efficiency, MST has looked at the overall actual amount spent (ICF + government + co-financiers) compared with the project budget. In two projects, Cape Verde and ERCA, there were overall under spends (14% and 17% respectively). In the case of RICP the 19% overrun related to the land registry component and arose as a result of the extension of the project beyond Kigali. In the Zambia Judiciary project there were overruns in both phases (22% and 44%) that were funded by the client. It should be noted that these changes/expansions in scope do not appear to be agreed in writing with ICF. Overall ICF does a reasonable monitoring job in ensuring that projects are efficiently implemented. It could though focus more on projects a whole. In this context it is noteworthy that ICF only requires completion audits of the amounts that it disburses to ensure that the money has been used as intended. As part of looking at overall efficiency the whole project spend should be audited and the reports reviewed as part of the project completion process. Section 4.5 below contains an analysis of ICF’s overall efficiency and value for money (VfM). It considers ICFs operating costs, productivity and benchmarks the Trust against comparator organisations/agencies. KQ3: What Results Have Been Achieved? (DAC Effectiveness, Impact) Do ICF reforms make it easier to set-up and operate a business? What has been the impact of ICF on the investment climate of the country (ies) in terms of increased investment, entrepreneurial activity, job creation? Why do these components succeed whilst others do not? In looking at the results that have been achieved it is important to consider for each of the three types of projects the challenges and timing delays in moving through the project logframe from outputs through to outcomes and finally impacts. Summarizing, it can be said that:
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With property rights and contract enforcement projects (RICP components I and III, Zambia Judiciary and OHADA) the link between outcomes in terms of greater efficiency of judicial systems, new commercial laws and land registries is indirect and relates to greater confidence in companies/entrepreneurs to invest and banks/financial institutions to lend/invest. This improved confidence is due in large part to improved perceptions of the contractual environment – banks, for example, being willing to lend more because they feel that collateral pledged against loans can be seized and sold if necessary. This change in perception and a change in investment and lending activity is difficult to predict and attribute to an ICF project and is likely to be evident, measurable only in the medium term. Taxation projects such as ERCA may be important but a more efficient, transparent tax system in itself is unlikely to be a determining factor in investment decision by a company entrepreneur. Attribution of jobs and new investment is therefore difficult to identify and measure. An improved customs system such as GAINDE if it really achieves significant improvement in the speed and cost of clearing imports and exports may have rapid benefits for importers, exporters, the port and airport cargo operators as well as enhanced customs revenue for government. Identification and attribution of impacts will be easier. Business registration and the setting up of efficient business registers makes it easier to establish new companies and can facilitate, as in Cape Verde, the transition of informal businesses to the formal sector. There is, however, the challenge of going from registration to actual start-up, a problem that has been seen in Rwanda where despite the one day business registration process there are still major administrative approvals before start-up. Also, in a number of countries, investment licences are easily granted and the amounts approved publicised but the actual amounts actually invested may be much smaller. Attribution of new jobs and investment to faster, cheaper business registration processes is also not easy. It should be noted that three of the projects (ERCA, Zambia Judiciary and OHADA had completion dates in 2012. It is therefore only possible to consider outcomes for such projects. The following major findings on outcomes and impacts should therefore be considered alongside these limitations. In Senegal, there is already increased trade (imports and exports) as a result of the GAINDE system significantly shortening clearance times. Government customs revenues have increased markedly. In Ethiopia, the impacts for the e-taxation system are expected to be modest because of other investment climate challenges. Moreover, e-payment of tax bills, which is necessary to completely streamline tax for taxpayers, is dependent on the banks introducing e-banking (unlikely before 2014). In Zambia there is in the legal profession, a perception of an increase in the speed and transparency of commercial dispute resolution28. It should be noted, however, that other investment climate constraints/challenges that impede private sector activity, such as the difficulty in registering collateral, make future impacts difficult to predict. Rwanda was rated in the 2011 World Bank Doing Business rankings as the best reformer in Africa and the second most improved country overall. Its performance over the period of the project is impressive with it having risen from an overall ranking of 158 in 2007 to 48 in DB2012 before falling slightly to 52 in DB2013. While there have been impressive changes to the investment climate in Rwanda, there are to date only mixed signals as to whether there has been a significant increase in private sector activity. A 2012 UNCTAD report on foreign investor perceptions of Rwanda identifies a number of issues that Rwanda still has to address if it is to attract significant amounts of FDI. In Cape Verde a significant numbers of enterprises transferred from the informal to the formal sector and access to finance has improved.
28 According to data collected by Doing Business 2013, enforcing a contract still takes 471 days, costs 38.7% of the value of the claim and requires 35 procedures.
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KQ4: How do the Results Compare with an Alternative Intervention to Achieve the Same Objective? (DAC Relative Effectiveness, Impact, Cost/Effectiveness) What other approaches could have achieved ICF’s objectives more effectively/efficiently? None that can be discerned. Do ICF projects complement reform programmes? The nature of the ICF projects (implementation of reforms and process oriented improvements to the investment climate) makes it difficult to identify alternative approaches that could have been employed. The ICF projects complemented reform programmes in: Zambia where there is the medium term multi-donor Access to Justice Project. In particular the case management systems may be used by the police and public prosecution agencies. Rwanda where component III dovetailed with the DFID land mapping project. KQ5: How Could Things be Done Better in the Future? Are the Results Sustainable? (DAC Sustainability) Have ICF projects catalysed other reforms? Sustainability – GAINDE is the best example of a financially sustainable project as it is a profitable company that does not require additional government funding. Replicability –All six projects are being or are capable of being replicated. Of these, three have attracted considerable interest: GAINDE has caught the attention of other countries interested in installing similar system. Burkina Faso, Ethiopia, and Kenya for example, have contacted GAINDE. The Cape Verde project has attracted a lot of interest and made a presentation at the ICF investment summit in Arusha (May 2012). Candidates for replication include several countries in the region. Zambia’s electronic case management system has been visited by judiciaries in Rwanda and Sierra Leone. Below are comments on other factors which relate to compliance with key ICF eligibility criteria. Private Sector Involvement: o During design – this occurred in the Cape Verde and Rwanda projects. o During implementation – there is the formal involvement of private sector representatives in the steering committees. In ERCA, the involvement was minimal. By contrast in the Cape Verde, Rwanda and Zambia projects there was a greater involvement from stakeholders such as bankers associations as well as chambers of commerce. Government Commitment: In all projects there was strong government commitment evidenced in high level officials being involved in project management and steering committees. Influence of Project Champion: In all six projects there were strong individuals/agencies who had the authority and willingness to drive projects from design through to implementation. A good example was the Chief Justice in Zambia who pushed through automation of the justice system in the face of scepticism from his fellow judges who said that they were too old to use computers. Follow On Projects: These related to projects that involved tidying up and completing unfinished parts of the original ICF supported projects. Project Duration: ranged from 13 to 36 months, the latter was a three year project, normally the maximum duration approved by ICF, that was late in implementation due to start up delays. The major reasons for implementation taking longer than planned are delays: o setting up project management teams and steering committees. o in procurement due to bureaucratic, time consuming government procurement rules. o in the mobilisation of technical consultants for implementation. It can be stated, that ICF needs to be more realistic in setting project implementation schedules that take account of implementation challenges.
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4. Evaluation of ICF at Facility Level 4.1 Origin and History The purpose of this Section is not to provide a “historical” overview per se, and thus will not recapitulate the detailed sequence of initiatives, preparatory work events and efforts that went into the creation of ICF29, nor on the wide recognition that an improved investment climate in Africa was a cornerstone of economic growth, of which ICF and the Contributors are more than aware. Rather, it is expected to serve as analytical background for understanding ICF’s performance and the possible refinement of ICF’s business model. As such, it focuses on the core purposes of ICF and the expectations placed on it30. 4.1.1 ICF’s Creation The Investment Climate Facility for Africa (ICF) was launched in June 2006 and its CEO was appointed in March 2007. The ICF became operational soon after its establishment in Dar es Salaam. The speed at which ICF became operational is recognised in several reviews as remarkable with the first Project - Rwanda Investment Climate Project - being approved by the BoT in May 2007. The supporters of ICF are African Governments, and development partners31 that included a number of public sector Contributors including AfDB, DFID, IFC, Ireland, KfW, Norway, the Netherlands, and South Africa, as well as development partners that included private sector “Corporate” Contributors, active in Africa, namely Celtel/Zain, Coca Cola, Royal Dutch Shell, SABMiller (SAM), Sasol, Standard Bank, Anglo American and Unilever. The purpose is to focus exclusively on the removal of barriers to private investment in Africa. As stated in Gleneagles32, the aim in creating ICF was resource mobilisation for accelerated investment climate (IC) action. The ICF was created as a direct response to the resource mobilisation strategy of NEPAD. The initiation of ICF should be seen in the framework of the NEPAD private sector strategy which had a particular focus on: domestic entrepreneurs; promoting foreign direct investment and trade; and developing small and medium enterprises, including the formalisation of the informal sector. 4.1.1.1 Comments Great expectations were placed on the ICF initiative, as “adding value to the continent’s investment climate and governance from growth”. The initiative was aligned with NEPAD 33 and the NEPAD sponsored APRM34, and was endorsed by African Union Heads of State. It was referred to as the “AU/NEPAD Investment Climate Facility for Africa (ICF)”. This broad African political support constitutes a key element of African ownership of ICF, which will be discussed further below.
29 Which are covered in extenso in Review of the Investment Climate Facility for Africa, Final Report, 20 November 2009 30 Sources used were, not exclusively: The Gleneagles Communiqué- G8 Summit- July 2005, referred to as “Gleneagles”; The Consultative Draft containing a Business Plan for ICF, dated October 2005, designed as an information memorandum for the potential investors from the Donor Community and the Private Sector, referred to as “Consultative Business Plan 2005”; supporting documentation for the Meeting with Potential Donor Investors, March 2006 (referred to as “March 2006); Interviews with Trustees and Contributors. 31 Terminology varies between various constitutive documents and current presentation on ICF’s website, the latter being retained in this paragraph 32 Gleneagles involved G-8 endorsement led at that time by the British prime Minister with considerable development efforts by DFID and other donor support. In March 2006 DFID stated: “ICF is not a UK initiative, rather an African initiative that the UK has agreed to support.” 33 See also the Commission for Africa Reports 2005 and 2010 34 ICF was to focus its efforts, although not exclusively, on the countries that had accepted the NEPAD/APRM process. APRM- see http://www.nepad.org/economicandcorporategovernance/african-peer-review-mechanism/about
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ICF’s intended role included raising the profile of investment climate reform among African Governments, as well as the donor community. Its defining features included blending Official Development Assistance (ODA) and private funding. Active participation of the private sector in its operations was a strong expectation, as it was seen that donor governments and the private sector should coordinate their efforts to unleash entrepreneurship in Africa. In this sense, ICF was expected to be a unique new tool. Under the approach for “Phased Growth of the ICF”, ICF would have a defined seven-year life span. A target figure of US$550m over seven years was mentioned in the preparatory constitutive documentation, while seeking US$110m for the first phase. After year seven, the Facility was expected to wind down. The details of the exit phase would be defined in the Trust Deed.
4.1.2 ICF - a Unique Tool for IC Interventions Set up in March 2006, the following expectations should be highlighted: Active participation of the private sector. Private sector participation was meant to include not only the private sector and donor money at a ratio of 1:10, but principally it meant partnering with the domestic private sector and with the corporate investors or Contributors. In March 2006, the corporate investors made a submission35 to the ICF Board indicating the need for ICF to be a proactive change agent, including the creation of best-fit coalitions. The role/contribution of the corporate investors was proposed to be: o bring the skills, insights, practices and principles of business to bear upon the way it operates and solves problems; o the source of the above being the corporate investors themselves and “local businesses who choose to become partners in ICF projects”; o for the above purposes, the corporate investors proposed to work with the “ICF Secretariat” and the interested board members to develop a protocol defining the nature of the non-financial resources and assets that corporate investors and business partners will be expected to make available to ICF, and the process for their deployment. These would include for example: i) initial engagement of best informed managers in the issue/host country selection/project definition process; ii) secondment of managers/specialists onto reform task forces; iii) deployment of project evaluation and management techniques including approaches to political and project risk assessment and mitigation; due diligence, etc. iv) development of fit-for-purpose reporting, KPIs and M&E structures; v) use of “market research” techniques and value and quality assurance review processes vi) other. To be structured and governed along private sector principles: flexibility, responsiveness, results-oriented approach. To be based in, and run from, Africa, in addition to the above-mentioned high level political African support. To ensure synergies with other programmes, to complement but not compete with, nor duplicate. Obstacles were encountered in translating these expectations into reality. What has materialised and what has not? A large number of basis expectations have materialised, amongst which: To be structured and governed along private sector principles: flexibility, responsiveness, result-oriented approach. ICF has demonstrated its execution capacity, which several Trustees
35 “Framing the Business Model of the ICF, Submission by the Corporate Investors to the ICF Board”, Meeting of the Board of Trustees, 20 March 2006
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and Contributors have highlighted in interviews. African ownership: To be based in, and run from, Africa, in addition to high-level political African support. MST learned during field visits and through interviews with several Trustees, that ICF has a listening and coaching capacity, which was highlighted as different from some other donors. ICF’s independence has also been mentioned in several interviews as an element of ICF’s uniqueness.
4.1.2.1 Comments The question whether ICF’s strategies have been calibrated to meet the expectations is referred to in section 4.4 below. ICF has to an extent indeed involved the domestic private sector in its operations as examined in the case reviews. However, some corporates and donor contributors believe that private sector participation has not been sufficiently demonstrated. One expectation however did not materialise, at least not to the extent envisioned. Namely; the role/contribution of the ICF corporate investors. Four Trustees interviewed believe that the original idea to leverage corporate investors was “naïve”. The issue was also raised by one corporate investor that the corporates have not leveraged their investment in ICF. On the other hand, one of the Trustees indicated frustration among corporate contributors that ICF had not leveraged them sufficiently, and a public contributor finds that ICF has not sufficiently challenged the corporates to contribute.
4.1.3 ICF as Part of the IC Scene The question is raised as to the continued validity of initial expectations in the light of a changing investment climate scene. A strategic definition of ICF’s relevance and comparative advantage is made difficult by the absence of an analysis by ICF (i.e. ICF Management and the BoT), or by both ICF and the contributors, of the Investment Climate support services landscape- focusing on what traditional “donors” cannot do, which in turn would reinforce the need for an ICF type tool. 4.1.3.1 Comments It is difficult to understand how ICF can best fill in gaps in the investment climate support “market” without a clear strategic analysis of who does what and where, together with an analysis of trends in the provision of such services. It is for example clear that the EU, several IFIs, and a number of bilateral sources have in recent years decided to increase their focus and support for investment climate, having recognised the large potential impacts across the continent from a more competitive investment climate. The evolution of the Investment Climate landscape is discussed further in Section 4.4 below.
4.1.4 Issue of ICF’s Continued Existence The evolution of ICF must include consideration in respect of ICF’s future, as requested by the TORs under Key Question 5. And naturally, given the efforts that went into making ICF an IC player with a footprint in Africa, the contributors are asking that this Review answer the question as to whether ICF should be capitalised upon: “Should the ICF continue to exist, and in which case what changes should be made to its strategy, operations and areas of focus?” (Key Question 5). The format, under which ICF should operate, should the contributors decide to continue to fund ICF beyond 2014, is broadly a question of: ICF’s performance, progress, and achievements; refinement of its strategic approach, which is dealt with in Section 4.4 This Section aims at summarising the current situation from an institutional point of view. The options presented in the constitutive documents (Consultative Daft October 2005) provided that in Phase 3: Nov 2012- Oct 2013: The Exit, the affairs of ICF would be wound down in a manner
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defined by the Trust Deeds. The Trust Deed of 17 April 2007 provides that: “upon dissolution of the Trust ...dispose of the assets ... or to such organisation whose purposes are similar to the purposes of this Trust”. These options were very limited. The DFID Annual Review of ICF (2012) of Feb 2012 requested that the BoT and ICF Management would define a strategy for ICF’s exit or continuation, which seems never to have been done. MST understands that ICF’s Management and the BoT consider that the 2010-2014 Strategy is a sufficient roadmap for ICF’s future. ICF, in its presentation of “Comparative Advantage” on its website lists as the first advantage: “Restricted life span: ICF is a facility to catalyse change and, as such, is committed to making a substantial and lasting impact in just seven years of operation. Unlike other organisations, ICF’s ultimate aim is to become obsolete, leaving governments to implement reforms without the support of a facilitator. In short, the options for ICF that were set at inception were limited to: Simple dissolution with allocation of assets and liabilities Placement of ICF’s role into another organisation These two options do not appear to be productive/useful approaches. Placement of ICF’s operations in another organisation (presumably an existing IFI or bilateral “donor”) appears to negate the very comparative advantage envisaged by ICF’s special model of being able to operate rapidly with a minimum of bureaucracy. Simple dissolution of ICF negates the option for capitalising on ICF’s experience, for the benefit of African IC reform acceleration. The likely consequences, conceptually and institutionally, arising from the dissolution of ICF are: The difficulty for ICF’s creators to explain doing away with a facility with ICF’s footprint in Africa that is perceived as successful – due in part to its business model. The waste of the effort that went into developing ICF and the acquired experience and unique expertise that it has developed. This includes the work of the high-level public and private sector organisations and parties have invested themselves in ICF, ranging from the African Union and NEPAD to the Contributors and the Trustees. A political dimension would include the all-African ownership that was the subject of such a broad endorsement (see above). ICF’s operations are likely to be seriously handicapped in the next two years, unless an urgent decision is made as to its continuation or not. For instance, it appears difficult to bring on board a new CEO under such uncertainties. Additional considerations include: Other options for capitalising on ICF’s value added such as housing ICF in an existing agency. In theory, other agencies could adopt intervention windows replicating ICF’s model and comparative advantage. In practice, this option might raise numerous questions- if that had been considered an avenue, ICF would not have needed to be created in the first place. Dissolving a relatively successful facility, if not an institution, raises the strategic considerations of terminating an African led initiative considered important by the African business community and the public sector as well. Table 10 below illustrates views gathered from interviews with Trustees in relation to the seven-year lifespan of ICF.
Table 10: Observations of Trustees There is a need to institutionalise ICF. A 7-year lifespan is not healthy. ICF’s high staff turnover is partly due to the uncertainties of a 7-year lifespan. The future horizon for ICF needs to be at least 10 years. It would be a “tragedy” to stop an African initiative, particularly as it has demonstrated its execution capacity. Post-2014 has been discussed at BoT level, but no “paper” in this respect was ever
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Table 10: Observations of Trustees presented. A most important feature of continuation ought to be consolidation (as opposed to dilution). The latest Trustee to join the BoT in August 2012, Mrs. Evelyne Tall, COO of ECOBANK and Group Executive Director, placed the matter in the following perspective: ECOBANK’s Board approved the membership to the BoT as a strategic decision, as a result of careful analysis of ICF’s methods, transparency efficiency, and management and BoT. ECOBANK, present in 33 African countries, placed its name and confidence in support of ICF. If ICF was not to be continued, this Trustee and ECOBANK would not have accepted such appointment.
4.1.4.1 Comments It is unclear as to how much consideration of the issue of ICF’s continued existence there has been with ICF at the level of the BoT36. MST has not been informed of the options/scenarios which ICF and the BoT may be considering. The DFID 2012 Annual Review of ICF contains a recommendation that ‘The most important next step must be for the ICF Management and Board of Trustees (BoT) to agree an exit or extension strategy for 2014’.
4.2 Governance The next section highlights the advantages (optimality) of ICF’s institutional structure, with a focus on its defining PPP model and special private sector orientation, the governance of ICF, with a focus first on the BoT‘s specific role and contributions, taking into account the views obtained from the Trustees as well as their institutional relationship with the Contributors and the institutional issues that may influence ICF’s continued existence. The “body” of current governance instruments is indicated in the footnote below 37. The draft Amended Governance Charter (draft dated 14 July 2011) is not reviewed38. The ICF Strategy 2010-2014 undertook to introduce governance strengthening actions, but the MST has not received any further information in respect of this undertaking.
4.2.1 ICF’s Institutional Structure ICF is incorporated in Tanzania by a trust known as the Investment Climate Facility for Africa Registered Trust. ICF’s Structure has the following apparent advantages: a Public-Private Partnership (PPP) structure that enables ICF to draw on the combined experience of the public and private sectors; being set-up in the form of a Trust, with a fiduciary role that is accountable to African and other high-level stakeholders and to ICF’s investors, while being independent from its Contributors; a lean structure able to respond rapidly because of low levels of bureaucracy and independence from Contributors; no external impositions or agenda and ability to develop its own vision.
36 Though it was raised at the IRG/MSP Meeting in London on 18 December 2012 37 Sources used are, not exclusively: The Trust Deed dated 17 April 2007 (hereinafter referred to as the Trust Deed 2007); The initial ICF Governance Charter (undated but assumed to be March 2007) (hereinafter referred to as Governance Charter 2007); The Amended Governance Charter dated (undated in its cover page, except a date of July 14, 2011 which appears to be the draft date,- adoption date unknown) (hereinafter referred to as Governance Charter 2011); Code of Ethics (undated) (hereinafter referred to as Code of Ethics); Section on Governance in the ICF- Strategy for the Years 2010 to 2014 (referred to as Strategy 2010-2014); All documents referred to in the Section 4.1 38 ICF and several Contributors have asked for this document not be reviewed
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4.2.1.1 Comments The PPP structure should, and has, enabled ICF to function in a manner that is different from other development actors, particularly at the level of implementation of projects which is characterised by rapid response and private sector-like business practices. There is an inherent contradiction in the set-up of ICF, which ICF has dealt with remarkably: o on the one hand ICF was not intended to be set up as a permanent institution and has a finite 7-year lifespan; o nevertheless, in order to fulfil its fiduciary responsibility, it had to be equipped with many, if not all, the ingredients of a full-fledged institution such as: o a Governance structure that includes a full-fledged board of directors, in the form of the Board of Trustees (BoT); o detailed operational procedures; o substantial control mechanisms; o while not a formal Compliance Function39, at least some ingredients thereof, like the Code of Ethics; o full audited financial statements, and related audits. It is indeed remarkable that a temporary organisation has equipped itself, within a short duration, with all the attributes of an “institution” rather than a temporary trust. This is considered a unique feature of ICF. While further consolidation of its structure could be envisaged should ICF become a permanent institution or one of a longer duration than the initial seven year period, ICF nevertheless has done the ground-work for the purpose. Has the PPP format been a strong advantage? The PPP or public-private model has been an advantage in terms of being able to function along private sector output-oriented practices. The expected outcome of bringing to bear the combined experience and knowledge of ICF’s stakeholders is less clear.
4.2.2 Governance of ICF ICF has adopted a unique governance model in several respects. On the one hand, the Board of Trustees (BoT), as the governing body of ICF has the classical fiduciary duty of being responsible for ensuring that ICF operates properly and effectively, and is ultimately accountable for all activities of the “organisation” (while in fact being a temporary trust). It meets every three months (usually in person three times and once by teleconference) to decide and review overall strategic direction and policy of ICF, as well as to approve a set category of ICF projects for financing, and to monitor the overall performance of the “organisation” and its management team. The responsibilities of the Trustees and their expected involvement and contribution, as well as the specific tasks and responsibilities were stated under the Trust Deed and are clearly defined. By corporate standards, the Governance Charter 2007 and the Trust Deed 2007 contain the basic elements of a suitable governance framework in respect of matters such as: BoT - appointments, responsibilities, tasks and responsibilities, conflicts of interest, role of Chairmanship, delegations of authority, and sub-committees; Composition of ICF Management;
39 The term “Compliance Function” is taken as a generic term, used both in private financial institutions and in IFIs and bilateral financial development institutions (banking codes in most OECD countries use the term “Compliance Function”, and it is adopted mutatis mutandi by many if not most IFIs and development agencies. The governance context of development organisations has evolved strongly in respect of integrity, transparency, anti-corruption and anti-money laundering, use of off-shore financial centres (OFC), management of reputational risk, and other such risks which have become the minimum standard. This evolution aims at zero tolerance in these fields. It has become an unavoidable element of good governance. Information can be provided on the Compliance Function at various IFIs, bilateral development institutions, and special funds. While a Compliance Function is formally absent, it may be noted that ICF has managed to steer its affairs clear of any form of reputational damage.
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Internal financial control, reporting and audit; The role of the Annual General Meeting. But its suitability under a different institutional framework would need to be revisited as to adherence to prevailing governance standards in a modern corporate governance framework (compliance function, internal audit, independent evaluation unit responsible to the Board, and other elements). The Governance Charter 2011 further deals with the role of the Contributors’ Forum and other institutional relationships with the contributors, which are addressed in Section 4.2.3. Based on its independence from contributors, the BoT has been able to function along private sector guidelines. Its composition is designed to ensure a depth of sector and geographic expertise/experience, including public and private sector, which can be infused into ICF activities and operations. The BoT is close to an optimal mix of business, government and development backgrounds and expertise. Two aspects deserve consideration: the limited number of francophone Trustees, and (should the focus on North-Africa be maintained) the absence of a Trustee from that area. The current composition of the BoT with a short summary of key experience is shown in table 8.
Table 11: Board of Trustees Name Key Experience Nationality Gender Appointed Neville Isdell (Co-Chair and Chair of Chairman Coca-Cola Irish Male Dec 2010 the Board) HE Benjamin Mkapa (Co-chair and chair of Ex-President Tanzania Tanzanian Male 20 Mar 2006 Int’l Relations) Former Minister for Overseas Lynda Chalker Development & Founder of British Female 20 Mar 2006 Africa Matters Banking and development Nkosana Moyo Zimbabwean Male 20 Mar 2006 banking William Kalema Industry and banking Ugandan Male 20 Mar 2006 Former Minister for Dipak Patel Commerce, Trade and Zambian Male 20 Mar 2006 Industry Sam Jonah Mining Ghanaian Male 20 Mar 2006 Johannes-Jurgen Development banking German Male 27 Nov 2007 Bernsen Wolfgang Kroh Development banking German Male 27 Sept 2011 Linah Mohohlo Central banking Botswanan Female 28 June 2011 Evelyne Tall Banking Senegalese Female 29 May 2012
The BoT has various sub-committees (evolution of sub-committees not covered at this stage), which include: Investment Sub-Committee (ISC); Audit/Finance Sub-Committee (FINCOM); Nominating Committee; Remuneration Sub-Committee.
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Three elements stand out as sui generis in the case of ICF’s BoT: the Trust Deed 2007 creates an Annual General Meeting (the AGM) of the Board of Trustees; the Governance Charter 2007 and the Trust Deed 2007 provide that ICF (under the Governance Charter 2007) and “The Settlor” (under the Trust Deed 2007) make appointments to the Board, indicating that the Trustees are collectively nominated by ICF’s donor organisations and two are nominated by ICF’s corporate investors40. the BoT, composed of 11 voting members comprising African business and political leaders as well as individuals strongly committed to Africa41, is expected to play an active role in the origination of ICF projects. 4.2.2.1 Comments The question has been raised42 whether for a relatively small “organisation” with only 16 staff, the Board of Trustees with 11 members would not appear to be large. For reasons indicated in the foregoing paragraph, the question of size of the BoT, should ICF be continued, needs to be considered carefully. In the specific case of ICF, the issue cannot be considered simply on the basis of relative size and cost considerations, but to a large extent on the basis of effective contribution by the Trustees, who do play an active role in project sourcing and assessment of government commitment through their judgement combined with high-level access. Also, as noted in 4.5 below, the BoT (together with its Sub-committees and the Contributors’ Meetings) has been a cost element at US$3.6m over the six year period of ICF, equivalent to 16% of total ICF expenses. Among Trustees interviewed there was an opinion that a smaller BoT with between seven and nine Trustees should be able to provide an appropriate level of governance. At the BOT Meeting on 25 September 2012 a “Revision of the Governance Charter and Trust Deed” was considered, and recommended that the BOT should have a majority of Trustees being independent to a minimum of 7 and a maximum of 9 Trustees. If and when this is reduction in size will happen it is not known.
4.2.3 Institutional Relationship with Contributors Unlike the draft Amended Governance Charter 201143, the Trust Deed 2007 and the Governance Charter 2007 treat the role of the Contributors in a limited way. Donor and private sector representatives would be members of the Investment Sub-Committee (ISC) and the Technical Advisory Committee (TAC) would draw on the expertise of corporate and donor investors. The role of the Contributors ICF’s governance has been a matter of discussion over the life of ICF, in particular with a view of capitalising better on the expertise and experience of both public institutional as well as corporate contributors. Leveraging strongly on the experience of the donor contributors would also be a guiding element in defining more narrowly ICF’s comparative advantage and “market niche”, in terms of ICF’s additionally to what donor contributors can achieve on their own without ICF. The Strategy 2010-2014, in its Governance Structure Section, notes that the BoT had agreed to reconstitute the Technical Advisory Committee (TAC) as the Contributors Forum (CF), with the CF
40 The draft Amended Trust Deed 2011, on which this report is not expected to comment, proposes to adopt the following mode: “The Board of Trustees shall have the power to appoint and remove Trustees. The Contributors to ICF (the Contributors) and Trustees shall propose to the Co-Chairs, who constitute the Nominating Committee, the names of individuals to be considered for appointment as Trustees.” The appointment of Trustees would become a matter of co-optation, which is one of the modes under which a trust can be made to function, rather than appointment by the “shareholders”. This feature would in effect grants ICF a large degree of independence from the agenda of ICF’s Contributors, public or corporate. 41 As well as an observer from NEPAD. The Trustees may appoint any organisation as an observer in any of ICF’s meetings or sub- committees- Amended Governance Charter2011. 42 See section 4.2.4 43 Which the MST is requested not to comment on. It is noted however that the Amendment would establish a Contributors’ Forum (CF) to meet annually after the Annual General Meeting to advise on strategies and various aspects of the activities of ICF. The CF would be complemented by the Contributors’ Briefing Sessions (CBS) which would perform the tasks referred to in Section 3.1.6 of the draft Amended Governance Charter 2011.
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electing a Chairman attending meetings of the BoT as an observer, “but with full participation”. “Sector task forces” with the participation of contributors would assist the ICF’s Management Team in developing and evaluating potential projects. The Strategy 2010-2014 further commits to enhance communications at two levels, the first being “maintaining a continuous dialogue with contributors at several levels”. 4.2.3.1 Comments The above-mentioned September 2012 BoT Meeting considered a “Revision of the Governance Charter and Trust Deed”, in which it was proposed to review the role of contributors in ICF’s governance, as well as specific recommendations in respect thereto. The recommendations made included acceptance of the proposal of an option for contributors to be represented on the BoT, such as by two Trustees. The outcome of these recommendations was not obtained, nor any view on the compatibility of this proposal with the BoT’s independence stated in ICF’s governance documentation - the recommendation was that a majority of the Trustees should continue to be independent. 4.2.4 Institutional Issues for ICF’s Continued Existence Should ICF continue post-2014 the following parameters will need to be addressed: What should be the time-horizon on ICF? Should ICF have a time-horizon of say, an additional 10 years (see above Trustee’s comment) or be institutionalised without a finite time-frame? Depending on the above choice, should it remain a temporary trust, or adopt a classical corporate structure? Would a corporate structure, in which contributors would have the authority of shareholders, reduce the inherent advantage of ICF being incorporated as a trust- being the large degree of independence as compared to a “classical” corporate model? The refinement of ICF’s institutional relationship with contributors should be undertaken in the light of the corporate relationship with contributors, as the case may be. 4.2.4.1 Comments Trustees’ and Contributors’ views on ICF's institutional set-up and governance may be summarised as follows: Four Trustees found ICF’s BoT too large, some advancing a size of possibly seven Trustees instead of the current 11. One Trustee strongly insisted on the role of the BoT in project sourcing. One Trustee insisted that high-level access of some of the Trustees made a contribution. One Trustee saw a major role of the BoT in terms of ICF visibility and promotion. The governance structure deserves to be revisited at this stage, but the uniqueness of ICF’s structure in terms of independence should be preserved. One Trustee considered it a unique feature that the quality of ICF’s BoT was a key ingredient of confidence of African business in ICF. Almost half of the Trustees considered that the current location of ICF was a challenge.
4.3 Organisational Structure and Staffing ICF’s organisational structure is shown below. Reporting to the CEO is the chief operating officer (COO), to whom six department directors and managers report. There are three operational departments (Projects Development, Projects Implementation and Impact Assessment) and three other departments (Finance, Legal and Administration and Communications). The most important changes since the Nexus Review in 2009 have been the appointment in October 2011 of a COO (as recommended by Nexus) and the creation of the Impact Assessment Department.
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Graphic 9: The Investment Climate Facility for Africa Trust - Organisation Chart October 2012
The Communications Assistant also performs duties of Receptionist and assists the Accountant.
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The COO was appointed to reduce the burden on the CEO of managing ICF in Dar es Salaam while at the same time having to travel extensively in Africa and Europe to promote and market ICF and liaising with contributors and other stakeholders. The job description44 states that the COO “will be responsible for enhancing the internal organisation processes that will allow ICF to deliver its annual plans and continue to grow and fulfil its mission…Ideally, experience and expertise should be such that the COO would be a strong candidate to succeed the CEO within 2 years”. The COO’s duties and responsibilities fall under four headings: Working with the Financial Controller, manage and oversee all financial and business planning activities. The COO is de facto the finance director. Working with the Projects Development Director, manage the selection and processing of projects from inception to project agreement. Working with the Director of Project Implementation, manage the implementation of ICF projects post project agreement up to project completion. Working with the Director of Impact Assessment on the preparation of IARs two years after completion. Currently because of the shortage of staff (as discussed below), particularly in project development and impact assessment, the COO is heavily involved in the development and processing of new projects acting as a project officer, as well as in impact assessment. This is consistent with a change of the accounting treatment of the COO’s salary and personnel cost in 2012, when 100% were charged to projects45. The job description of the director for impact assessment46 lists the duties and responsibilities which fall under four headings: Assessing the impact of ICF on the investment climate in Africa: Sharing Knowledge with Trustees, Contributors, Staff and all stakeholders in Africa: Benchmarking against Best Practices: Preparing completion reports for all projects supported by ICF.
4.3.1 Staffing Levels The chart below shows the staffing levels on a quarterly basis since 2007. It can be seen that there has been an increase of four employees since 2009 (from 11 to 15), if all positions were filled however, there would be 21 staff. Although the workloads discussed in section 4.5 below do not appear to be too heavy, the structure of the organisation as shown above is top-heavy for a small institution, there being one CEO, one COO, four director positions and seven manager positions, while there is only one project officer position in project implementation and a data analyst position in impact assessment. It should be noted that with ICF’s fixed term mandate until the end of 2014, it has become difficult to fill senior positions with suitably qualified people because of this uncertainty. It would appear that ICF does, however, offer salaries that are high enough to compensate for job insecurity.
44 Job description COO 18 February 2010 45 E mail from ICF dated 21 January 2013. 46 The position is currently vacant following the departure in December 2012 of the previous holder of the position who was a secondee from DEG in Germany.
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Graphic 10: ICF Staffing Levels
The table below shows staff turnover since 2007. It is important to note that three members of staff who joined and left were seconded from contributors. While the staff turnover levels have not been too high, of concern is the fact that only the CEO has been with ICF since the launch in 2007. Nine of the 16 staff, for example, have joined in the last 18 months, while only four have been with ICF since 2009.
Table 12: Staffing Levels and Turnover
2007 2008 2009 2010 2011 2012 Total Opening Staff 0 4 5 10 12 12 0 New Staff 4 2 6 4 3 6 25 Staff Leaving 0 -1 -1 -2 -3 -3 -10 Closing Staff 4 5 10 12 12 15 15 Turnover 0% 25% 20% 20% 25% 25% 40% Leaving/Opening
4.3.2 Comments Assuming that ICF continues beyond 2014, there is a need for a director or manager of strategy/planning who would, inter alia, be responsible for: o Developing a strategic plan that would set out how ICF would develop in terms of themes, countries, regions etc., and o Country diagnostics that would identify in countries where ICF operates or proposes to enter the areas where ICF can make the maximum impact on improving the investment climate. There is a long list of IARs to be prepared in 2013 and 2014 which will not be possible to achieve with only one project officer in the Impact Assessment department following the departure of the director in December 2012. If vacancies cannot be filled because of the uncertainty over the future of ICF, then long term consultants (with contracts of up to 18 months) should be hired in key areas such as impact assessment. It is clear that the organisation is too lean with currently only 16 members of staff. Interviews with Trustees indicated that a staffing level of around 25 would enable the organisation to serve better its clients across the continent. Any increase in staffing should be at the officer
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level since there are sufficient managerial and director positions, except the strategy manager/director mentioned above. Such an increase in staffing at the officer level would leave more time for managers and directors to focus on business development, client relations and quality control. The COO should not be required to be a project officer. He should be able to carry out fully the responsibilities in his job description.
4.4 ICF Objectives and Strategy47 The expectations for ICF at inception are partly covered by the Section 4.1. The model for ICF was expected to be a novel approach with the following characteristics, drawn from the Strategic Framework 2007. This is considered to be the defining starting point, since it is on that basis that most Contributors’ financial commitments were made. For the purpose of this analysis, the following key objectives were extracted (which are not exhaustive): 1. Draw upon combined knowledge/experience of funders, the BoT and broader stakeholders; 2. The private sector experience was to include that of the corporate investors who would be closely involved in its operations; 3. African ownership; 4. Engaging in high-impact flagship programmes; 5. Resulting in new economic activity; 6. Foster trade; 7. Bridging the digital divide (being a NEPAD priority); 8. Access to finance - especially SMEs. 9. In a first phase, to be demand driven, followed, in a second phase, by proactive ICF generated programmes. The Review is expected to answer the question whether this conceptual approach was appropriate and helped meet these expectations. The broad answer to that question is that most expectations were met, although questions arise in respect of expectation 1, and expectations 2 and 9 were clearly not met. However, this must be placed in the context set forth below.
4.4.1 Evolution of ICF’s Strategic Orientation The first step was the Consultative Draft containing a Business Plan for ICF, dated October 2005, together with annexes thereto, which was designed as an information memorandum for the potential investors from the donor community and the private sector. The Consultative Business Plan addressed the rationale for ICF, the phased growth, the expected areas of focus, and the role of ICF in these areas, the delivery model, monitoring, risks, structure and governance, and the financial model for the “AU/NEPAD Investment Climate Facility”. Following this, the Strategic Framework 2007 was developed and approved by the BoT in March 2007. While it is on the basis of the above-mentioned strategy that ICF was set up, it was developed without the input of the CEO, appointed at the very meeting at which this strategy was tabled. The strategy was later revisited48. But, as stated above, its relevance is reinforced by the fact that this was the basis for most contributors’ financial commitments. The Strategic Framework 2007 sets out “principles and themes within which the ICF operates”. The following few elements can be highlighted to summarise the evolution in objectives and approaches:
47 Principal sources used for this section were: The Consultative Draft containing a Business Plan for ICF, as well as Annexes thereto, dated October 2005, referred to as “Consultative Business Plan 2005”; A Strategic Framework for ICF Operations dated 2007 (referred to as Strategic Framework 2007); ICF- Strategy for the Years 2010 to 2014 (referred to as Strategy 2010-2014); Description of ICF Priority Areas ( http://www.icfafrica.org/icf/197/icf-priority-areas) (referred to as “8 Priority Areas”); ICF Annual Report 2011; Brochure- An Introduction to ICF, 2012 48 NEXUS Report: The strategy was revisited during the summer of 2008. See para 42.
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In complementing the work of other initiatives, ICF would identify gaps rather than duplicating efforts. Use of private sector expertise: “The private sector, and in particular corporate investors, will be closely involved in identifying priorities for reform and helping to make change happen.” Strong reconfirmation of African ownership. High impact of flagship programmes: “ICF will develop flagship programmes, with associated projects”. A proactive approach for the majority of ICF projects, including a strong role of the TAC. Programmes that focus on practical action and demonstrable change. Under the Strategic Framework 2007, the thematic focus is further refined, and was expected to be: Intra-African Trade - improving Africa’s import and export environment; Facilitation of business development and expansion; Facilitation of financial and investment environment. Still under the Strategic Framework 2007, the focus areas to address these themes would include taxation, customs, business registration and licensing, property rights, compliance, ICT 49 and infrastructure development, development of capital markets, increased access to finance for enterprises, access information on prospective clients, contract enforcement. Strong linkages between these themes are emphasised. Finally, the Strategic Framework 2007 envisaged two phases for ICFs portfolio development: A first phase would focus on grants, ICF adopting a reactive approach to third-party generated (implementation ready) projects. It was anticipated that “grant funding” would “constitute about a quarter of the overall ICF programme portfolio budget allocation in the longer term”. A second phase (“Moving into the second year of operations”), ICF operations should shift towards generating proactive task-force supported programmes. The role of the TAC and the corporate investors is emphasised. The ICF management team would develop these task forces. Over the first twelve-months, an initial group of task-forces would be mobilised: o Intra-African trade - led by Unilever and supporting the BAFFICA network; o Business Development and expansion - led by Shell Foundation, supported by Celtel; o Financial/capital markets - led by Standard Bank. An Appendix to the Strategic Framework 2007 lists eight standard selection criteria against which all proposals received by ICG would be evaluated (attached at Annex 1 is the expanded 10 point project ranking chart currently in use). A strategy paper submitted to the BoT in June 200850 placed emphasis on six themes: 1. facilitating intra-African trade; 2. facilitating business registration, development and expansion; 3. strengthening the financial sector; 4. developing infrastructure through public-private partnerships; 5. providing support to enhance negotiating capacity; and 6. mobilising resources from the diaspora. Items 4 and 6 were subsequently dropped. Item 4 appears extremely ambitious in relation to existing initiatives in this respect51. Item 6 on the other hand covers a field that is probably insufficiently covered, in comparison to its vast potential. The Strategy 2010-2014, developed by ICF in January 2010 then introduced the following new strategic orientations:
49 The Strategic Framework 2007 also states that “The theme embodies a NEPAD sectoral priority, i.e. bridging the digital divide, investing in information and communications.” 50 which was nor received by this team but is quoted in the NEXUS Report, para 42. 51 See existing initiatives such as PPIAF and the Guarantee Programmes of several organisations directed at this field.
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It reinforces the need to focus on projects that are concrete and produce significant impact in a short period of time. Responded positively in implementing recommendations of the 2009 two year Review. At four pages, it is a very succinct document, which interviews with some Trustees confirmed to be too vague, too static, and not containing measured objectives. The Strategy 2010-2014 contains several undertakings that are additional to earlier strategy papers including to comprise a focus of replication of successful experiences, for which ICF had by then acquired the necessary footprint, and to engage SMEs to a larger degree in developing specific action plans. It also recognises that an advocacy role is difficult to achieve, in view of ICF’s limited life-time. It further contains governance strengthening actions which are addressed in Section 4.2 Governance. It envisages the start of a second phase of fundraising in the first quarter of 2010. In terms of “Themes and Sectors”, the Strategy 2010-2014 sets the following: Intra-African trade – improving Africa’s import and export environment and improving and simplifying administration in order to facilitate cross-border trade. This includes: o Regional Integration: harmonising: i) Policies ii) Legislation iii) Regulation o Cross-border: i) Trade ii) Investments iii) Infrastructure o Customs modernization Facilitation of business registration, development and expansion, including supporting the appropriate local institutions. This includes: o Business Registration o Contract enforcement and property rights (judiciaries, attorney generals’ chambers, commercial laws, alternative dispute resolution) o Tax Administration Financial Sector, including the facilitation of financial and investment environment, including: o Harmonisation of policies and legislation o Increasing access to finance for enterprises: mortgages, leasing o Improving the regulatory environment for second and third tier institutions Infrastructure (PPPs), including: o Legal and regulatory frameworks o Support in concluding public-private partnership deals, with special emphasis on the energy sector In May 2012, the BoT endorsed a Recommendation on Sustainability of ICF Projects, emphasising key ingredients: commitment, awareness and capacity building. The current eight priority areas of the ICF are today defined as: Property rights and contract enforcement – focus of MSP Review Business registration and licensing – focus of MSP Review Taxation and customs – focus of MSP Review Financial markets Infrastructure facilitation Labour markets Competition Corruption and crime
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4.4.2 ICF’s Strategic Positioning as it Impacts Project Selection ICF’s project selection criteria include the main items stated below:
Table 13: ICF Project Selection/Eligibility Criteria 1. Government ownership of and commitment to the project, including significant counter party funding; 2. ICF activity must benefit the business community as a whole, or broad sectors or parts of the business community; 3. Existing comparative impact advantage of ICF; 4. The private sector must be engaged in the improvement process; 5. Any government applying for ICF support must subscribe to, or support, NEPAD’s African Adherence to the African Peer Review Mechanism (APRM).
Despite the strategy positioning stated in the preceding section, which describes ICF’s special role and uniqueness, the practical application of this strategic positioning on project selection criteria has not been clear. ICF Comparative Advantages as listed on its website are: Restricted life span: ICF is a facility to catalyse change and, as such, is committed to making a substantial and lasting impact in just seven years of operation. Unlike other organisations, ICF’s ultimate aim is to become obsolete, leaving governments to implement reforms without the support of a facilitator. Multiplier effect: ICF shares key learning’s from completed and on-going projects with other governments, corporates and development partners to multiply the pace and effectiveness of interventions across the continent. Focus on fundamentals: ICF’s projects deliver practical solutions to the basic fundamentals that hamper the growth of businesses, especially SMEs. By improving the basics on which these smaller businesses depend, ICF hopes to deliver profound long-term dividends for the economy. Sustainable reforms: All ICF projects are co-funded and implemented in partnership with the host government and the private sector to ensure reforms are sustainable long-term. Rapid intervention: ICF responds quickly to funding requests. The entire process from project application to agreement generally takes fewer than six months. Projects focus on delivering practical, results-oriented solutions in as short a time frame as possible. Private sector involvement: ICF’s experience shows investment climate reforms are faster and more effective when the private sector is involved. ICF works with Africa’s business community to identify priority areas for intervention and to help secure government support for reform. Measurement: ICF is committed to delivering tangible, measurable results. All projects are evaluated against pre-agreed targets and performance indicators. The practical significance however of these stated advantages in terms of project selection practices has not been further articulated. ICF comparative advantage appears to encompass several of its advantages, one of which would be ICF’s “uniqueness” in terms of rapid intervention capacity, and tangible results being achieved in a short time span, as well as an accelerator effect by strict insistence on well-defined milestones in project implementation52. Other elements, such as multiplier effect, focus on fundamentals, and private sector involvement are qualities of investment climate support that other agencies also strive at. Strict controls and measurement are also demanded from most
52 As stated from various interviewees in preparation of the case studies, see volume 2.
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donors. The “whole African“ nature of ICF, i.e. being on equal terms with the beneficiaries, emerges from the field visits as a defining characteristic that makes many beneficiaries prefer to deal with ICF than many other donors. One of the most important determining elements for selecting ICF interventions should be that it is better positioned than other donors to support certain reforms, i.e. that ICF has a demonstrated advantage over other donors in the areas that it operates. The core question of ICF’s strategic positioning vs. what other donors can do in the investment climate landscape has not been documented clearly to date. First, looking for instance at the IFC/WB Doing Business Fact Sheets for Sub-Saharan Africa53, many actions corresponding to ICF’s priority areas have been implemented with financing by other sources. Detailed comparisons would be required to understand in detail what these other providers of IC support services actually can provide. Such an in-depth analysis of the IC landscape is not possible within the scope and budget of this Review. Nevertheless the following brief review of the principal features and trends is necessary to understand ICF’s strategic positioning. Features and Trends in the provision of Investment Climate Advisory Services in Africa can be seen as: The World Bank and IFC have increased their support to investment climate. Two of the three pillars for IFC’s strategy in Sub-Saharan Africa54 are now (i) improving the investment climate, and (ii) enhancing support to small and medium enterprises (including access to finance). This support is driven by three broad strategic priorities55: o Fostering enterprise creation and growth by reducing barriers to business entry, expansion, and exit; o Facilitating international trade and investment by improving trade logistics systems, investment policies and regulations, and supporting more effective and transparent business taxation mechanisms; o Unlocking sustainable investment in key industries in fragile and conflict-affected states. The WB/IFC former FIAS56 has become the World Bank Group Investment Climate Department57. In Sub-Saharan Africa, IFC is strongly building-up its investment climate staff based in its regional offices in Dakar and Nairobi. IFC reported having now 69 staff and 50 long term consultants working on IC issues in Africa, together with 24 staff in Washington providing support58. A very extensive Evaluation of the European Union’s Support to Private Sector Development on Third Countries59 will soon be published. The EU is the largest grant donor for development, and its support for institutional and regulatory support, including investment climate projects, has vastly increased in recent years. The African Development Bank has expanded its private sector development assistance60, including through the Fund for African Private Sector Assistance61 which finances activities related to the areas of operations of ICF. Support to “access to finance” (including SME capacity building a sector in which ICF is currently working on two or three projects) has grown vastly as well. At this point no inventory of such actions is provided by the MST, but this “market” includes today many IFIs and DFIs. A
53 See www.doingbusiness.org 54 http://www1.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa 55http://www1.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa/advisory+services/investmentclimate 56 Foreign Investment Advisory Services 57http://www1.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa/advisory+services/investmentclimate 58 Video conference and telephone interviews with IFC on 4 and 11 December. 59 In which a member of this Review Team (MSP) is participating 60http://www.afdb.org/en/topics-and-sectors/sectors/private-sector-development/african-guarantee-fund-for-small-and-medium- sized-enterprises/ 61http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/fund-for-african-private-sector-assistance/private-sector- development/
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relevant survey is provided in the caption hereunder. In terms of literature and publications on investment climate issues the most important are probably: The “Doing Business”62 Fact Sheets for Sub-Saharan Africa63 contain data of investment climate reforms occurring recently, supported by various sources. A number of such reforms are very similar to those typically supported by ICF’s portfolio, and comparisons could be made as to who supports implementation of what in these fields. Various publications and surveys from/by IFIs/DFIs on private sector development and investment climate reforms, including, inter alia, documents in International Finance Institutions and Development Through the Private Sector, 201164 The detailed specific Case Reviews, prepared by MST revealed that the Projects all had a positive, though variable effect on the investment climate. They do, nevertheless, provide a puzzling spectrum of outcomes and impacts as illustrated in the six case studies in Volume 2 of this report. Specifically mentioned here should be: Senegal: GAINDE I and II- Paperless Trade and Cape-Verde: Business Life Cycles: High value added by ICF, described in the Case Review, namely: no other donor able to finance such Projects, acceleration factor through clear delineation of tight milestones, ICF requirements re Project Management (Steering Committee and Project Management Team, ICF building a replication factor, and other ICF value-added. OHADA I- Uniform Acts Reform: The above value-added features were not discerned in this Project- the other side of the “spectrum”. ICF’ role was one of a co-financier among several. All parties interviewed indicated that ICF joined into a project prepared jointly by OHADA and IFC. IFC steered OHADA to ICF in view of the ready availability of funding 65. If the core question should be what ICF has contributed that could not be contributed directly by another grant donor, the question was difficult to answer. In the view of one Trustee, OHADA I was an exception and was part of ICF’s learning curve. Moreover, in the case of OHADA II, recently undertaken and on-going, it appears that ICF had a clearer value-added. There could be a number of reasons for this unevenness. First it could be due to a weakness in identifying projects which will have the maximum impact on the IC. Second it could be due to ICF’s strategic positioning being insufficiently well defined. Another fundamental question is whether ICF is entirely demand driven, or whether ICF should pro-actively generate projects. In the 2011 Annual Report it is stated that “ICF’s core competence is in the identification, development and implementation of focused projects that deliver tangible measurable results upon implementation.” In the selection of projects however, ICF’s approach is to be demand driven. It is also found that ICF Management and Members of the BoT have proactively prompted demand. The Strategic Framework 2007’s envisaged a second phase (“Moving into the second year of operations”) during which ICF operations would “shift towards generating proactive task-force supported programmes” with the support of ICF’s corporate investors and the contributors could not be discerned in practice. A question could also be raised as to how ICF could, without the above-mentioned approach being implemented, be in a position to pro-actively generate projects without the staff capacity to identify priorities country by country. It is evident that ICF has to be more strategic and less opportunistic in the way it selects projects
62 Managed by World Bank/IFC 63http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Fact-Sheets/DB13/DB13SSAFactSheetEnglish.pdf 64 www.wbginvestmentclimate.org/publications 65 Another puzzling factor was that on the one hand, IFC regional staff consider that ICF’s value resides essentially in “cash for equipment” for electronic platforms and the like, but that ICF should have no role in Technical Assistance (TA) Projects which ICF does not have the capacity to prepare (unlike IFC), and that ICF should principally be a residual source for equipment financing in TA Projects prepared by other donors. On the other hand, the same office steers the OHADA Project, principally a TA project, to ICF for co-financing. Pressing the logic, one might wonder if IFC funding could not have gone directly to OHADA without transiting through ICF.
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particularly when it cannot fund all the opportunities it is presented with that meet its eligibility criteria to enable itself to a better strategic position. 4.4.3 Comments on ICF Strategy and Strategic Evolution The foregoing analysis leads to the following issues that are particularly relevant in deciding on ICF’s post 2014 future. ICF’s comparative advantage is frequently referred to in the various strategy and other documents reviewed by MST without being clearly defined. As already noted in section 3.1 above on the Project Cycle, there are no formal, written procedures for project selection (priority themes, geographical focus and concentration, etc.) beyond the new project ranking chart. The absence within ICF of documents showing an in-depth understanding of the investment climate support services landscape in Africa, showing who is doing what and how it is changing, is fundamental if ICF’s products and modus operandi are to have the maximum relevance. It is noteworthy that ICF does not appear to see the value of a strategic awareness. One Contributor interviewed said that ICF should be clearer about its strategic “niche”. Two Trustees commented that they were not convinced that the Investment Climate Summits organised by ICF helped to define its niche and role. Two other Trustees have emphasised this very point that the ICF market had changed considerably in recent years. A core question arising from the MST Review is whether ICF has made a contribution to the investment climate in Africa which goes beyond what ICF’s Contributors or other organisations active in improving the business environment in Africa can achieve on their own. There is no question that ICF has helped improve the investment climate in Africa. Nevertheless, it is difficult to quantify ICF’s value-added, or “additionality” originally expected from it. From the field visits the broad answer to ICF’s uniqueness and expertise lies in its ability to fund rapidly the implementation of reform programmes and improvements to processes that will enhance a country’s or region’s competitiveness. ICF is principally demand driven and reactive in the way it sources projects. There has not been a transition to “Proactive ICF generated programmes (idea generation for flagship projects)” set out in the 2007 Strategic Framework. The leveraging of ICF’s corporate contributors as envisaged in the original plans has not happened and represents a lost opportunity. Although ICF has eight Priority Areas the three areas that are the focus of this Review ((i) property rights and contract enforcement, (ii) business registration and licensing, and (iii) taxation and customs) account for 83% of commitments. As indicated above, the said three “Products” have impact on many elements of the other Priority Areas (which thus have become “Impact Areas” as indicated below). Of the other five areas there have been projects in two others ((iv) financial markets and (v) infrastructure facilitation) and none in the other three ((vi) labour markets, (vii) competition, and (viii) corruption and crime). It is now appropriate to ask whether ICF should formally focus on the three largest priority areas. In doing so it would be necessary to ensure that such a focus is consistent with the exiting demand in the “market” of investment climate support services in Africa. In labour markets, competition and crime it is not evident that ICF has a role to play in self-standing projects in these areas since it has had received very few applications and funded none of them. In the case of financial markets and infrastructure facilitation for the reasons articulated below it is clear that there are unlikely to be viable projects that ICF might have supported that would not be funded: o In financial markets, both multi-laterals (the AfDB, EIB and IFC) and a number of European bilateral, as well as the EU are heavily involved with much larger resources than ICF has. o The infrastructure facilitation area is supported by many agencies66, under PPP models or
66 See members of PPIAF http://www.ppiaf.org/page/about-us/partnerships/donors-0
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otherwise (leaving aside the specialised activity of PPP finance by the provision of Partial Credit or Partial Risk Guarantees by several organisations, or otherwise). The MST analysis of ICF’s project operations, and field visits to, and reports on, six projects demonstrate that even if ICF were to reduce to three the number of priority areas there would be wider benefits beyond the theme areas themselves. These wider benefits in what could be referred to as “Impact Areas” (that could be made part of project selection criteria) are summarised for each of the three priority areas: o Property rights and contract enforcement have strong impact areas in access to finance, principally for SMEs, facilitating the provision of collateral, reinforcing secured transaction frameworks, and encouraging banks to lend to SMES. o Business registration and licensing is a major driver of transfer of business from the informal to the formal sector. It also impacts on SME access to finance and on employment. It builds up civil society, allows for better social security, and has many other benefits as well. o Taxation and customs has been seen to have a major impact on Government revenue. In customs especially there is increased enterprise competitiveness, increased export opportunities, reduced costs, and further benefits highlighted for instance in the Senegal GAINDE Case review. Electronic platforms in these fields also impact on transparency, security and transparency, and reduction of corruption are among other benefits. Stakeholders in two of the Case Reviews (Senegal: GAINDE - Paperless Trade and Cape Verde: Business Life Cycles) strongly believed that ICF would have a major competitive advantage, and could achieve wider regional impact, acting as a platform for replicability of successful operations. It appears that ICF also made a strategic decision67 to focus on SME capacity building, and currently has three projects in this field in its current Project Development Pipeline. While there is an undeniable demand for SME capacity building, whether in management/accounting or the preparation of bankable business plans, or other essential areas, and this is indeed a very high demand field, it is also one field that is very broadly covered by several agencies. ICF’s competence and value-added is unclear.
4.5 Efficiency and Value for Money (VfM) ICF’s efficiency and VfM may be considered from two perspectives. First there are the costs of running ICF and how these compare with what is produced, primarily in terms of projects funded and their implementation. Second there is the efficiency/VfM of the individual projects supported by ICF that has been considered in each of the six projects visited by MSP and which is addressed in the six case studies in Volume 2 and in the field visits synthesis (section 3.3 above). As a starting point for the assessment of ICF’s operating efficiency it is useful to look at costs and project disbursements since October 2006 when ICF was established. The table below uses data taken from ICF’s audited financial statements up until 30 September 2012.
67 Possibly following the May 2012, the BoT endorsed a Recommendation on Sustainability of ICF Projects
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Table 14: Analysis of ICF Costs and Project Disbursements (in US$’000) Total Q3 30 Oct 06 (2006 to Sept 2011 2010 2009 2008 – 2007
2012) 2012 (15 mths) Initiation/Promotion 3,515 703 477 393 682 754 506 Monitoring & 3,643 713 1,232 1,013 485 200 - Evaluation + Impact Project related 7,158 1,416 1,709 1,406 1,167 954 506 expenses PRE/Project 13.5% 15.4% 9.7% 10.4% 14.0% 23.0% 273.5% disbursements Administration + Other Board, Fincom + 3,560 422 572 688 575 637 666 Contributor meetings Staff costs 5,226 516 1,224 1,116 907 1,064 399 PR/Communications 1,516 144 320 266 248 430 108 Office rent, telecoms 2,233 208 306 284 521 429 485 etc Professional fees 741 5 80 88 225 139 204 Finance 546 246 101 91 82 26 - Business summits 704 422 28 254 - - - Fundraising costs 426 57 133 86 8 112 30 Non Project Related 14,952 2,020 2,764 2,873 2,566 2,837 1,892 Expenses NPRE/Project 28.2% 21.9% 15.7% 21.3% 30.9% 68.4% 1022.7% Disbursements Total Expenditure 22,110 3,436 4,473 4,279 3,733 3,791 2,398 Total Exp/Project 41.7% 37.3% 25.3% 31.7% 44.9% 91.5% 1296.2% Disbursements Total staff costs 9,803 1,740 2,320 2,056 1,623 1,577 507 Project Disbursement- 52,999 9,224 17,645 13,492 8,308 4,145 185 clients Total Expenditure + 75,109 12,660 22,118 17,771 12,041 7,936 2,583 Disbursements Received from 107,262 4,247 2,750 34,630 20,881 18,945 25,809 Contributors
4.5.1 Comments On Efficiency and VfM Over the six years that ICF has been in existence it has received $107.3m 68 from contributors, disbursed $53.0m to clients and incurred costs of $22.1m.
68 The financial statements as of 30 September 2012 show a total of $109.1m the small difference may be the result of exchange differences as contributions from a number of European contributors are in euros and sterling
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For every $100 that leaves ICF bank accounts 29% is used to cover ICF expenditures and 71% goes to clients as project disbursements. The ratio of total ICF expenditure ($22.1m) to project disbursements ($53.0m) is 41.7%. This ratio was lowest in 2011 (25.3%) and 2010 (31.7%) when disbursements were at their highest. Unsurprisingly it was highest in the early years 2007 and 2008 when ICF was in its start-up phase. Project disbursements represent 58% of the $91.4m gross commitments to projects 69. While the two ICF Investment Climate Summits held in 2010 and 2012 were useful in raising ICF’s profile and provided an opportunity for countries to network on IC issues, they were also expensive, in particular the 2012 one that cost $422,000. The following table shows the ratios for the mix of expenditure occurring since 2006.
Table 15: Mix of Expenditure Total Q3 30 Oct 06 – (2006 to Sept 2007 2012) 2012 2011 2010 2009 2008 (15 mths) Initiation/Promotion 15.9% 20.5% 10.7% 9.2% 18.3% 19.9% 21.1% Monitoring & 16.5% 20.8% 27.5% 23.7% 13.0% 5.3% 0.0% Evaluation + Impact Total project related 32.4% 41.2% 38.2% 32.9% 31.3% 25.2% 21.1% Total staff costs 48.2% 53.7% 56.3% 51.4% 46.8% 48.7% 21.1% Board , Fincom + Contributor meetings 16.1% 12.3% 12.8% 16.1% 15.4% 16.8% 27.8% Office rent, telecoms 10.1% 6.1% 6.8% 6.6% 14.0% 11.3% 20.2% etc Non Project related 67.6% 58.8% 61.8% 67.1% 68.7% 74.8% 78.9%
It can be seen that: The ratio of project related to general expenses has been increasing each year, rising from 21% in the 2007 to 41.2% in 2012. While this is to be expected as ICF increasing its project volumes, the rise may also be in part due to a change in the accounting treatment of management and administration costs70: o In 2012, 20% of CEO costs were charged to projects and 80% to administration, compared with 100% to administration in 2011. o The COO cost in 2011 was charged 100% to administration, while in 2012 100% was allocated across projects. o In 2012, only 70% of legal & administration costs were charged under administration, the other portion was charged under projects, prior to this 100% were accounted under general administration. Staff costs have been rising more quickly than overall ICF costs, such that they accounted for 50.6% of the total in 2012, the average for the six year period representing at 44.3% almost half of costs. The cost of the BoT is significant at an average of 16.1% of total expenditure. This may be the result of having a board with 11 members who live in Africa, Europe and elsewhere for an organisation with 15 or 16 employees. As noted in governance (section 3.2) it is likely that the board from will be reduced from 11 to between seven and nine Trustees. ICF total staffing costs can be compared with the number of staff over the six year period as shown in the table below. While the methodology used in preparing the table is approximate, it is
69 The ratio is in fact higher if cost underruns on completed projects are factored in. 70 Email from ICF on 21 January 2013
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noteworthy that the average annual personnel cost was $176,00071. This indicates that salaries at ICF are relatively high.
Table 16: Salaries/Personnel Costs (in US$’000)
Total Q3 30 Oct 06 – (2006 to Sept 2007 ye 31 Dec 2012) 2012 2011 2010 2009 2008 (15 mths) Initiation/Promotion 1,489 490 343 321 210 125 0 Monitoring & 1,886 450 532 405 299 200 0 Evaluation + Impact Finance (70% fin costs) 382 172 71 64 57 18 - PR/Communications - 820 112 150 150 150 150 108 est Admin 5,226 516 1,224 1,116 907 1,064 399 Total Salary Costs 9,803 1,740 2,320 2,056 1,623 1,557 507 Average no of staff 9.67 14.25 11.50 11.50 10.00 8.00 2.75 Average cost per staff 176 163 202 179 162 195 184 $000 pa Sources: MST analysis The efficiency or productivity of staff is analysed in the following table.
Table 17: Staff Workloads and Productivity 2012 2011 2010 2009 2008 2007 No of new projects signed 12 4 8 15 9 8 No of approved projects per FTE 0.8 0.3 0.7 1.6 1.2 3.0 No of active projects in period per FTE 2.0 1.9 2.4 2.9 2.1 3.0 $000 $000 $000 $000 $000 $000 Budgets for new projects signed 22,368 7,044 9,846 33,605 12,705 11,474 New project budgets per FTE 1,443 515 804 3,537 1,694 4,297 Project disbursements per FTE 721 1,286 1,194 1,305 535 411 Expenditures on development, 115 127 135 124 124 55 implementation and M&E per FTE Source: ICF analysis and MST analysis FTE - full time employee It is noteworthy that: After increasing the volumes of new project approvals to a peak of 15 (committed value $33.6m) in 2009 there was a decline in 2010 and especially 2011 when only four new projects were approved (committed value $7.0m). There was a pickup in 2012 with 12 new project approvals (committed value $22.4m) due in part to follow on phase 2 projects in Rwanda, Zambia and with OHADA. Over the six year period disbursements have been less volatile which is to be expected given that they occur over the typical two to three year period of project implementation. The number of active projects per employee has declined from a peak of 2.9 in 2009 to 2.0 in 2012. This appears to be low.
71 In the absence of the salary costs for finance staff included in finance costs it has been assumed that 70% relates to staff. For PR/Communications an amount of $150,000 per year has been assumed for staff.
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4.5.2 Benchmarking Benchmarking ICF’s efficiency against donors and development agencies is difficult as there is very little quantitative information on the level of overhead costs in comparator organisations. The level of transparency in donor agencies and development organisations varies widely. Most of the research on efficiency and overhead costs is comparative with little quantitative data 72. An exception to this and still cited as the best attempt to quantify overhead costs across t he development spectrum from bilateral to multi-lateral and UN agencies is William Easterly and Tobias Pfutze’s 2008 paper “Where Does the Money Go? Best and Worst Practices in Foreign Aid.” 73. In 2012, Easterly and Claudia Williamson published a follow on paper “Rhetoric versus Reality: The Best and Worst of Aid Agency Practices”74. The principle findings from the 2008 paper75 were: There are five dimensions of best practice: o Transparency o Specialisation - measures the degree to which aid is not fragmented among too many donors, too many countries, and too many sectors for each donor. o Selectivity - measures the extent to which aid avoids corrupt autocrats and goes to the poorest countries. o Ineffective aid channels - measures the extent to which aid is tied to political objectives or consists of food aid or technical assistance. Overhead costs using two indicators: o ratio of costs (in two ways a) using total administrative budget and b) using only total personnel costs) to official development financing, and o official development financing per employee. “Multilateral aid agencies have significantly higher administrative budgets than bilateral aid agencies; this is explained entirely by higher salary budgets (which in turn are explained mostly by higher salaries and benefits per employee in multilateral agencies).” “There is tremendous variation across agencies, with the UN agencies typically having the highest ratios of operating costs to aid by a large margin…. The most extreme among the latter are UNDP and UNFPA, who actually spend more on administrative costs than aid disbursements (129% and 125%, respectively). UNDP also ranks last across all agencies recording the highest salary/aid ratio at 100%. “Australia, Italy, Japan, and Norway show the lowest overhead costs.” Regarding aid disbursements: o “Bilaterals have aid disbursements per employee about twice that of multilaterals. o Again, UN agencies are the lowest on the list, with as little as $30,000 in aid per employee from the World Food Program (WFP), and $70,000 per employee from UNHCR. o In contrast, Norway and Italy disburse above $10 million in aid per agency employee.” The 2012 Easterly Williamson paper has the following table grouping overhead costs in three categories: bilateral, multilateral and UN. Again the bilaterals score best and the UN agencies worst.
72 A good qualitative paper is: Aid Quality and Donor Rankings Stephen Knack, F. Halsey Rogers, Nicholas Eubank Policy Research Working Paper 5290, The World Bank, Development Research Group, Human Development and Public Services Team, May 2010 73 Easterly, William, and Tobias Pfutze - “Where Does the Money Go? Best and Worst Practices in Foreign Aid.” Brookings Global Economy and Development. June 2008. 74 William Easterly & Claudia R. Williamson* “Rhetoric versus Reality: The Best and Worst of Aid Agency Practices” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2058330 14 May, 14 2012 75 The paper notes the difficulties in obtaining reliable, comparable data - “the most novel data in this paper, and also the least trustworthy. Data on operating costs of aid agencies have not been widely available. Even our partial success in collecting the data has probably resulted in numbers that are not strictly comparable across agencies, because there does not seem to be completely standard definitions of concepts like “number of aid agency employees” and “administrative costs.” Also, some of these agencies have other purposes than granting aid, and the employees and costs of granting aid are not clearly separated out.”
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Table 18: Overhead Costs
Agency Average Score Bilateral Agency Admin Budget/ ODA or ODF 7.60% Salaries and Benefits/ ODA or ODF 4.51% ODA or ODF/ Staff $8.49 Multilateral Agency Admin Budget/ ODA or ODF 18.18% Salaries and Benefits/ ODA or ODF 7.64% ODA or ODF/ Staff $3.24 UN Agency Admin Budget/ ODA or ODF 45.57% Salaries and Benefits/ ODA or ODF 45.10% ODA or ODF/ Staff $1.22 All Agencies Admin Budget/ ODA or ODF 17.15% Salaries and Benefits/ ODA or ODF 11.72% ODA or ODF/ Staff $5.71
Another comparable benchmarking study was published in 2010 by a team led by Nancy Birdsall - “Quality of Official Development Assistance Assessment”76. It confirmed the findings of the Easterly papers. It noted that “the country donors with the smallest shares of administrative costs (4 to 5%) were the Republic of Korea, Australia, Germany, Portugal, and Spain. Those with the largest shares were Switzerland (18%), Austria (17%), and Finland (16%). The multilateral donors with the smallest shares were the EC (7%), the AsDF (8%), and the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) (8%). Those with the greatest share were the International Fund for Agricultural Development (IFAD) (17%) and the AfDF (12%).”
4.5.3 Comments on and Ranking of ICF Efficiency Even with the issue of comparability and using reliable data, it is evident that ICF is a relatively high cost organisation with a cost to disbursement ratio similar to that of a UN agency and a long way above multi-lateral and bilateral organisations. Project disbursements per employees are similar to those of multi-lateral agencies, in particular the regional development banks77.
4.6 Funding ICF’s funding received from contributors has been paid in over the six year period. The disbursement of contributions from individual contributors was subject to conditions set out in agreements that ICF negotiated with each of the 16 donor and corporate contributors78. Of the $148.5m committed, $25.8m (17%) was subscribed by the end of 2007, with significant amounts being paid in the 2008 to 2010 period. As the table below shows at the end of 2012 there was still $6.8m (5%) outstanding from three contributors.
76 Quality of Official Development Assistance Assessment Nancy Birdsall and Homi Kharaswith Ayah Mahgoub and Rita Perakis Brookings Institution and the Center for Global Development - 2010. Analysis based on (administrative costs)/(gross CPA) where CPA is country programmable aid. 77 Table 4 Easterly 2008. 78 These were in the form of grant agreements or letter of agreements. In them were, inter alia, articles setting out the purpose of the grant to ICF that referred to the 2007 strategic framework and required ICF to be managed and operated according to agreed policies and procedures. Some contributors specified particular conditions for disbursement such as, for example, the attainment of gender and geographic diversity.
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Table 19: Contributions – Committed, Paid-In and Receivable (in US$m) Paid in to 31 Exchange Contributor Committed Receivable Dec 2012 Differences African Development Bank 15.0 15 - Anglo American Plc 2.5 2.0 0.5 Celtel/Zain 1.0 1.0 - Coca Cola 2.5 2.5 - DFID 28.4 28.4 - IFC/World Bank 30.0 27.0 3.0 Republic of Ireland 2.8 2.8 - Federal Republic of Germany79 1st 15.0 15.0 - Commitment Federal Republic of Germany 2nd 18.5 18.2 - 0.3 - Commitment - Kingdom of Norway 1.6 1.6 Netherlands 20.2 16.5 - 0.4 3.3 Republic of South Africa 3.0 3.0 - Royal Dutch Shell and SF 1.5 1.5 - SABMiller 1.5 1.5 - Sasol 1.5 1.5 - Standard Bank 2.5 2.5 - Unilever Plc 1.0 1.0 - TOTALS 148.5 141.0 - 0.7 6.8
Looking forward post 2014 consideration could be given to developing other sources of funding apart from grants provided by Contributors. One possibility might be fees from the replication of projects that ICF has supported.
79 KfW is the agent for the Government of Germany
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5. Conclusions The conclusions presented below begin with those relating to ICF as a whole. These are then followed by conclusions that relate to the five Review Key Questions set out in the terms of reference. 5.1 General Conclusions ICF has achieved a remarkable amount in the six years since it started operations. It has approved 54 projects in 17 individual countries across Africa, as well as a number of regionally focused projects. It is indeed remarkable that a temporary organisation has equipped itself, within a short duration, with all the attributes of an “institution” rather than a temporary trust. This is considered a unique feature of ICF. It remains though a small organisation with only 16 staff. ICF comparative advantage appears to encompass: o Its “uniqueness” in terms of rapid intervention capacity, and tangible results being achieved in a short time span; o ICF’s rapid response capacity is often enhanced by the absence of any need for project beneficiaries to apply through various government channels, as is the case for most IFI and bilateral funding; o The “whole African“ nature of ICF, i.e. being on equal “accompanying” terms (listen and coaching) with the beneficiaries, coupled with being private sector oriented in the sense of being pragmatic in its responsiveness, emerges from the field visits as a defining characteristic that makes many beneficiaries prefer to deal with ICF than many other donors; o ICF’s insistence on milestones in project implementation is considered by several beneficiaries as having accelerated reforms; o ICF’s insistence on strong project management and oversight, usually with private sector representation, and ICF’s continuous engagement, keeps projects on track; o In certain cases, being able to finance elements that do not fit in what other donors typically are prepared to support; o Other elements, such as multiplier effect, focus on fundamentals, and private sector involvement, are qualities of investment climate support that other agencies also strive towards. Strict controls and measurement are also demanded from most donors. The leveraging of ICF’s Corporate Contributors as envisaged in the original plans has not happened and represents a lost opportunity. Amongst ICF’s eight priority areas, the three priority areas that are the focus of the Review account for 83% of commitments. In short, ICF’s actual and potential value added in the other five priority areas is more limited, and probably relates primarily to faster approval times. Nevertheless, by focusing on the three priority areas ICF would not be abandoning these other areas. Projects in the three priority areas should have benefits/impacts in the other five priority areas, especially financial markets (in particular for SME access to finance, but similarly for increased competition and reduced corruption).
5.2 KQ1: Have the Right Things Been Done? (DAC Relevance) Key issues to answer: Are the issues and themes addressed by the ICF the most relevant for improving the investment climate in the countries in which it works? Was the conceptual approach (PPP model, blending ODA and private funding, 7 year lifespan) adequate?
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At Facility Level Strategic Approach The Strategic Framework 2007, the basis of the grant agreements with most contributors, sets two phases for portfolio development. In the first, ICF would undertake projects “adopting a reactive approach”. A second phase “Moving into the second year of operations” was to have seen ICF operations “shift towards generating proactive task-force supported programmes”. This has not happened. Instead ICF has continued to operate in a reactive or opportunistic manner. This is shown by the absence of documents within ICF showing an in-depth understanding of the investment climate support services landscape in Africa. Analysing who is doing what and how it is changing is fundamental if ICF’s products and modus operandi are to have the maximum relevance. It is noteworthy that ICF does not appear to see the value of increased strategic awareness. The three priority areas that are the focus of the Review account for 83% of commitments. In areas such as labour markets, competition and crime it is not evident that ICF has a role to play in self- standing projects since it has received very few applications and funded none of them. Although ICF has supported projects in financial markets and infrastructure facilitation, it is unlikely that these projects could not have been funded from other sources. In short, ICF’s value added in the five non- priority areas is very limited, and probably relates primarily to faster approval times. Nevertheless, by focusing on the three priority areas ICF would not be abandoning these other areas. Projects in the three priority areas should have benefits/impacts in the five non-priority areas, especially financial markets (in particular for SMEs). Conceptual Approach The conceptual approach has helped ICF’s efficiency. Blending ODA and private funding has helped mobilise resources and heightened the private sector profile of ICF. The PPP structure per se has not been capitalised on to the extent laid out in the original vision, in terms of bringing to bear the experience of the Corporate Contributors. The structure of ICF nonetheless has allowed ICF to function along private sector approaches: flexibility, responsiveness, and a result-oriented approach. ICF sees its finite seven-year life as an advantage, but the uncertainties generated by this may also have been a handicap. Project Processing The Project Procedures Manual (PPM) only briefly deals with the project development phase and focuses instead on implementation and assessment. The ICF’s project ranking chart, while ensuring that projects meet ICF’s eligibility criteria, does not provide a method of choosing between projects on the basis of country, regional spread, medium versus low income country, priority areas etc. ICF’s comparative advantage or specific value-added has not effectively been applied as a project selection criterion. There are no portfolio concentration limits. At Programme/Project Level ICF Role and Relevance The field visits to six projects provided the opportunity to assess ICF’s role or additionality in two ways: financial and non-financial. The strategic relevance of the projects in improving the investment climate was also evaluated.
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In all six projects ICF’s financial role was necessary for the project to go ahead. ICF’s non-financial role was more varied and its contribution may actually occur prior to approval in the design of a project, as well as subsequently during implementation. ICF’s insistence on project management arrangements together with ICF coaching has been a measure not only of tight control, but also of effectiveness, particularly when project management included private sector participation. Strict adherence to contractual milestones has in several cases been an accelerator of implementation. In two projects it is clear that ICF’s primary role was that of a provider of funds. In these projects ICF did not contribute to the project design and played only a small role in implementation, primarily in focusing the clients on meeting milestones. In four projects ICF was involved in the project design and made significant contributions to implementation. MST was frequently told that ICF is more hands-on during implementation but less bureaucratic than other donors. Were the ICF projects amongst the most relevant? In making this assessment it is important to restate that ICF does not undertake country or regional diagnostics to identify in which areas of the investment climate environment the maximum development impacts could be generated through reform programmes. It is therefore difficult to judge whether the projects ICF has chosen were in fact those that would generate the maximum “development bang for the buck”. Nevertheless, we can judge four projects (Cape Verde, Senegal, Rwanda and Zambia) as having met this value for money standard.
5.3 KQ2: Have Things Been Done Well? (DAC Efficiency, Effectiveness) Key issues to answer: Have ICF activities been managed efficiently and are they cost-efficient? Do the outputs represent good value for money? How effective are the ICF’s operational and governance procedures? At Facility Level Efficiency and Value for Money (VfM) Over the six years that ICF has been in existence it has received $107.3m from contributors, disbursed $53.0m to clients and incurred costs of $22.1m. The ratio of total ICF expenditure ($22.1m) to project disbursements ($53.0m) is high at 41.7%. After increasing the volumes of new project approvals to a peak of 15 (committed value $33.6m) in 2009 there was a decline in 2010 and especially 2011 when only four new projects were approved (committed value $7.0m). There was a pickup in 2012 with 12 new project approvals (committed value $22.4m) due in part to follow on phase 2 projects in Rwanda, Zambia and with OHADA. The number of active projects per employee has declined from a peak of 2.9 in 2009 to 2.0 in 2012. This appears to be low. Assessing ICF’s efficiency by reference to multi-lateral, bilateral and UN agencies, is difficult because of a lack of reliable data and the issue of comparability. Nevertheless, ICF appears to be a relatively high-cost organisation with a cost to disbursement ratio similar to that of a UN agency and considerably higher than multi-lateral and bilateral organisations. Project Duration ranged from 13 to 46 months (the latter being a three year project, normally the maximum duration approved by ICF, that was late in implementation due to start up delays). The major reasons for implementation taking longer than planned are delays in start- up and procurement. Dar es Salaam is perhaps not an optimal location to be based, in the view of several Trustees and contributors. Direct air links are limited, attracting staff to work there is a challenge and the cost of living is making it uncompetitive.
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Organisational Structure and Staffing The structure of the organisation, as shown above, is top-heavy for a small institution, there being one CEO, one COO, four director positions and seven manager positions, while there is only one project officer position in project implementation and a data analyst position in impact assessment. It is clear that the organisation is too lean with currently only 16 members of staff. Interviews with Trustees indicated that a staffing level of around 25 would enable the organisation to serve better its clients across the continent. The temporary nature of ICF and related uncertainties were amongst the elements affecting staff retention. Governance There is an inherent contradiction in the set-up of ICF, which ICF has dealt with remarkably: o On the one hand ICF was not intended to be set up as a permanent institution and has a finite seven year lifespan; o On the other hand, in order to meet good governance standards, it had to be equipped with many, if not all, the ingredients of a full-fledged institution, including a large board of Trustees as well as the controls and procedures and reporting requirements of a much larger organisation. The BoT has a good mix of business, government and development backgrounds and expertise. Two aspects deserve consideration: the limited number of francophone Trustees, and (if the focus on North-Africa is to be maintained) the absence of a Trustee from that area. At Programme/Project Level It is important to note that in ICF reports the focus is on the ICF part of a project that is funded by ICF and less on the project as a whole. There were two projects (in Rwanda and OHADA) where there was an under-spend by ICF that was more than offset by a large overspend by the government counterpart. 5.4 KQ3: What Results Have Been Achieved? (DAC Effectiveness, Impact) Key issues to answer: Do ICF projects result in facilitating the set-up and operation of businesses? What has been the impact of ICF on the investment climate of individual countries and Africa as a whole in terms of increased investment, entrepreneurial activity, job creation? Why do these components succeed whilst others do not? At Programme/Project Level ICF Portfolio Analysis ICF continues to support projects in an opportunistic way rather than through strategic choice. Applications peaked in 2009, since when they have declined. There appears to be a decline in ICF project approvals in the subsequent years, although this could also be due to the limited available funds that ICF has. Three regions - East, West and to a lesser extent Southern Africa - account for nearly all the individual country applications. There were only seven applications and no approvals from three countries in Central Africa, and just three applications and one approval from two countries in North Africa. Tanzania has been by far the largest applicant with 25 proposals to ICF (10% of the total) but only four projects (16%) were funded. This large number may in part be due to ICF being located in Dar es Salaam. On the other hand, in four of the 10 countries there were no project approvals despite a large number of applications having been submitted (Ghana (10
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applications), Kenya80 (9), South Africa (9) and Uganda (8)). Four countries stand out in terms of the concentration of project commitments: three in West Africa (Burkina Faso, Senegal and Sierra Leone) and Rwanda in East Africa. Approved projects were concentrated in three regions: West (45% of commitments), East (31%) and to a lesser extent in Southern Africa (16%), followed by multi-country projects (7%). There are two possible or likely reasons for this concentration: o In Central African countries there is a lack of projects that meet eligibility criteria. o For North Africa, it would have been difficult for ICF to establish itself as a credible provider of investment climate advisory services without having spent a large amount of time and resources that it could not afford given its small size. Even with such an investment, it is unclear whether ICF has a role in this region. Field Visits It should be noted that of the projects visited, only in three cases (Cape Verde, Rwanda and Senegal) has there been more than a year since project completion. For the three others (Ethiopia, Zambia and OHADA) that were completed in 2012, it is too early for the impacts to become evident. The Cape Verde Business Life Cycles Project has resulted in the transfer of a significant number of enterprises from the informal to the formal sector where they have easier access to credit. Equally important, it has become a model for other countries in the region to replicate, and its catalytic effect is thus high. The impact of the Ethiopia e-taxation project is expected to be modest because of other investment climate challenges. The Rwanda Investment Climate Project has brought about a major improvement in Rwanda’s DB ranking. The tangible benefits in terms of new enterprises, investment and jobs have yet to materialise and may turn out to be modest. In Senegal there is already an increase in trade (imports and exports) as a result of the GAINDE system significantly shortening clearance times. The private sector has clearly become more competitive. Government customs revenues have also gone up markedly. The catalytic effect through demonstration and replicability is high. The Zambia Judiciary Modernisation Project has seen an improvement in the perception of the transparency and efficiency of the judicial system. The OHADA project is expected to have a major impact in the 16 countries when the new laws will all have been enacted. It was also noted that: In all six projects there were strong individuals/agencies (project champions) that had the authority and willingness to drive projects from design through to implementation. The level of local private sector involvement varied: o During design – this occurred in the Cape Verde Rwanda and Senegal projects. o During implementation – in all cases there was the formal involvement of private sector representatives in the steering committees. In ERCA, the involvement beyond this was minimal. By contrast in the Cape Verde, Rwanda and Zambia projects there was a greater involvement from stakeholders such as bankers associations as well as chambers of commerce.
80 A project in Kenya was signed in late 2012 and one is under appraisal in South Africa.
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5.5 KQ4: How do the Results Compare with an Alternative Intervention to Achieve the Same Objective? (DAC Relative Effectiveness, Impact, Cost/Effectiveness) Key questions to answer: What other approaches could have achieved ICF’s objectives more effectively/efficiently? Do ICF projects complement reform programmes? At Facility Level The ICF business model was a radical approach for contributors to make funding available for the rapid implementation of investment climate reforms and process improvements in the legal/judicial, taxation and customs systems that helped improve the competitiveness of the private sector. ICF’s structure, and mainly its independence, as well as private sector orientation of managers allowed ICF to follow private sector operating methods. Other approaches, such as subcontracting the management of ICF to a development agency or bank, are unlikely to have given it the flexibility to start as rapidly as it did and approve so many projects in six years. It should be noted that ICF’s private sector type operating model where it can process projects in as short a time as three months from appraisal to project agreement compares favourably with multi- lateral and bilateral agencies that take much longer, a year or longer not being unusual. Also, ICF focuses on implementation through the definition of detailed project milestones. Clients appreciate this hands-on approach which also differentiates ICF from multi-lateral and bilateral agencies. At Programme/Project Level The nature of the ICF projects (implementation of reforms and process oriented improvements to the investment climate) makes it difficult to identify alternative approaches that could have been employed. Other providers of IC services focus on policy, regulations and laws. The ICF projects complemented reform programmes in: o Zambia where there is the medium term multi-donor Access to Justice Project. In particular, the case management systems may be used by the police and public prosecution agencies. o Rwanda where component III dovetailed with the DFID land mapping project.
5.6 KQ5: How Could Things be Done Better in the Future? Are the Results Sustainable? (DAC Sustainability) Key questions to answer: Should ICF continue to exist and in which case what changes should be made to its strategy, operations and areas of focus? Have ICF projects catalysed other reforms? At Facility Level The conditions and requirements for a viable/sustainable ICF post-2014 are discussed in recommendations. At Programme/Project Level Sustainability – Several projects demonstrate strong sustainability, both in terms of the reforms themselves, and also in terms of the longer-term autonomy of the agency managing the project. GAINDE is the best example of a financially sustainable project as it is a profitable company that does not require additional government funding, and to an extent this is also the case in the Cape Verde project. Replicability – Three of the projects are being or are likely to be replicated: o GAINDE has caught the attention of other countries interested in installing similar
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systems. Ethiopia, for example, has contacted GAINDE. o The Cape Verde project has also attracted a lot of interest and made a presentation at the ICF investment summit in Arusha in May 2012. Candidates for replication include several countries in the region. o Zambia’s electronic case management system has been visited by judiciaries in Rwanda and Sierra Leone. Replicability has a catalytic effect on other countries in Africa. Direct catalytic effects are observed in GAINDE, as benefits impact on neighbouring countries whose import and export goods transit though Senegal, and as the broader logistical chain such as regional transport benefits as well.
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6. Recommendations It should be noted that: The recommendations should be read in the context of KQ5 - Should ICF continue to exist and in which case what changes should be made to its strategy, operations and areas of focus? Given the scope of the Review there was only a limited consideration of the strategic options and scenarios for ICF post-2014. If a decision is made by Contributors to finance and support ICF post-2014 then a business or strategic plan will need to be prepared that considers the various options available or possible.
6.1 Principal Recommendation It is clear that ICF has made a considerable contribution to improving the investment climate landscape in Africa over the last six years. ICF’s focus on (i) the practical implementation of IC focused reforms and new laws that can be implemented in a short time frame and which will lead to sustainable improvements in the investment climate, and (ii) process improvements in the public sector and judicial systems that make the private sector more competitive, is a niche that other donors and providers of IC support services were not and are still not serving. A specialised implementation competence and expertise has been developed that should be preserved and built upon. Accordingly, it is recommended that ICF be supported for a period of at least a further seven years and perhaps as long as 10 years. This recommendation is subject to changes being made in the way ICF operates and its governance structure.
6.2 Independence It is recommended that ICF remains as a stand-alone independent entity that maintains its operating independence from contributors. An option that was considered is whether to relocate ICF’s operations into another organisation (presumably an existing IFI or bilateral donor) in order to reduce costs. However, if this was to happen it would need to have a large degree of autonomy if its rapid response, low bureaucracy business model is to be preserved and enhanced. In reality this may be very difficult to achieve. Even if at the beginning ICF was given the necessary autonomy/independence, there is the risk that the IFI’s/bilateral’s more bureaucratic models, which were intended to be by-passed, would creep back into ICF, something that ICF management and BoT would need to resist. If ICF were to be burdened with more bureaucracy this could compromise its business model, particularly with regard to its agility and ability to process projects far more quickly than other providers of IC services are able. Moreover, if linked with another organisation ICF may be seen as less of a unique, independent African organisation and more like a traditional donor, bi- or multi-lateral initiative. In addition, if ICF remains independent the issue of the continuing appropriateness of the trust structure or a switch to a more private sector corporate structure with shareholders may need to be reviewed.
6.3 Strategic Plan post 2014 A detailed strategic/business plan is required to map out what ICF should do, and how, post 2014. It would set out the focus, goals and objectives for ICF in terms of, inter alia, priority areas, country and regional spread. It should build upon what ICF has achieved since 2007. Key areas in such a plan include (i) a detailed review of the IC landscape and how ICF fits with other providers of IC services over a five year period, (ii) the business model to be followed, including its role, value added and comparative advantage, and (iii) the financial model, including sources of funds and revenues that could go beyond simply relying on grants from contributors and include, for example, revenues generated from the replication of projects.
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6.4 Board of Trustees It is recommended that the proposal of the 25 September 2012 board meeting to reduce the BoT to between seven and nine Trustees be implemented as soon as is practical. This need not happen by the resignation of Trustees; rather it could occur through the non-reappointment or replacement of retiring Trustees. The BoT should have Trustees from all parts of the continent. If ICF wishes to continue to operate in North Africa there should be at least one Trustee from the region.
6.5 Project Origination and Processing ICF should become more strategic in the way it selects projects that it funds and supports. As a first step ICF should undertake an in-depth analysis of the IC support service landscape that analyses (i) other IFIs, donors and bilaterals and their activities, services and geographical spread, (ii) trends in the landscape, and (iii) ICF’s position. This landscape analysis should be updated at least annually so that ICF can adjust its range of products and geographical focus as circumstances evolve and change. ICF’s comparative advantage should be clearly articulated in a way that sets out the key strengths and expertise that it has vis-à-vis other providers of IC support services. It should define how ICF adds value. ICF where possible should capitalise on its PPP structure and work with and leverage the input of its corporate contributors in structuring and developing projects. A model for this may be the infrastructure facilitation project in South Africa that involves one of the corporate contributors. ICF should not fund or support projects that could be funded by other donors unless a strong ICF value added is identified and defined. When structuring projects, the participation of the private sector (both local and, where appropriate, international companies) in both the design and implementation should be clearly articulated and defined. There should be clear limits and ranges on the mix of projects by, inter alia, (i) project area, (ii) size, (iii) duration, (iv) cost sharing and co-financing, (v) individual country limits, (vi) geographical concentration, (vii) country income mix (low, low-middle and middle), (viii) project duration and (ix) regional versus country. The Project Procedures Manual (PPM): ICF should have detailed processes and procedures starting with origination through due diligence to project approval and the project agreement. The application tracker should state clearly the reasons for a project’s rejection.
6.6 Project Implementation ICF monitoring and evaluation should look more closely at the whole project and not just the parts financed by ICF. In particular reports the focus is on the ICF part of a project that has been funded and less on the project as a whole. Changes to a project scope should be approved by ICF and documented.
6.7 Priority Areas ICF should focus on the three priority sectors that were the focus of the Review: (i) Property tig hts and contract enforcement, (ii) Business registration and licensing and, (iii) Taxation and customs. The five other five current priority areas (and in particular financial markets) would become impact areas whereby in designing projects the likely benefits/impacts in these other sectors should be identified and taken account of in the formulation of key performance indicators.
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6.8 Geographical Focus ICF should undertake more project identification marketing in Central Africa 81 where it has to date undertaken no individual country projects. ICF should consider removing North Africa as a region where it operates. If, however, after a review of ICF’s value added it is decided to continue with the region, then consideration should be given to hiring at least one project officer who is a national of one of the countries in the region.
6.9 Organisational Structure and Staffing ICF should create more project officer positions so that directors and managers are less involved in the detailed work of project processing, implementation and the preparation of impact assessment reports. While this may appear to increase costs, over the medium term the overall average staff cost should be reduced. A new position, manager of strategy, should be created, the job description for which should include: o Drafting strategic plans that should, inter alia, identify the priority areas, countries/regions and new products that ICF should focus on over a five year period. o Undertaking focused/targeted country diagnostics that should identify in countries and regions the parts of the IC landscape where improvements will generate the maximum benefits for private sector competitiveness and which should be the focus of ICF interventions. As much as possible, ICF should liaise with and capitalise upon diagnostic work undertaken by Contributors, donors and other development agencies to avoid duplication. ICF should keep diagnostics as short and practically focused as possible.
6.10 Efficiency and Value for Money (VfM) There needs to be an assessment/analysis of ICF’s cost structure and delivery model to see whether the ICF cost as a percentage of project disbursements can be reduced. The driving factor should be assessing the VfM of all of ICF’s significant costs. If ICF is to have a medium to long term future then the appropriateness of being based in Dar es Salaam should be reviewed.
6.11 Lessons Learnt and Knowledge Management ICF needs to set up systems and databases that capture lessons learnt and best practice in its areas of operation. Initial project assessments, due diligence and board reports should have sections that show how lessons learnt and best practice standards have been have taken into account in project design, structuring and proposed implementation.
81 Angola Cameroon, Central African Republic, Chad, Republic of Congo, Democratic Republic of Congo, Equatorial Guinea, Gabon, Sao Tome and Principe.
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ANNEXES Independent Review of the Investment Climate Facility for Africa – Draft Final Report
ANNEX 1: Project Ranking Chart
New Project Ranking Chart – 10 Criteria A score of 1 to 5 is awarded for each criterion : 1=very low, 5=very high Prev. No. Project Criterion Ranking Above 1 Will the project produce a significant positive impact on the investment climate within a reasonable period? 2 Does the project set out clear goals, strategic objectives and actions, within realistic timelines? 3 Does the project have genuine and representative support and involvement from the local private sector? 4 Does the project have sufficient government/political support? 5 Does the project provide clearly defined, observable and measurable indicators against which performance and impact can be assessed? 6 Does ICF support complement existing donor programmes and fill a gap? 7 Will government and/or private sector contribute resources? 8 Does the project have a local champion(s) who will drive it forward? 9 Are the risks acceptable, and does the project have adequate risk assessment and mitigation strategies? 10 Will the project be properly supervised? TOTAL 0
64 Independent Review of the Investment Climate Facility for Africa – Draft Final Report
ANNEX 2: Meetings with Participants
1. ICF, Contributors and Trustees ICF Omari Issa, Chief Executive Officer Michael Makale, Chief Operating Officer Hubert Hourizene, Director, Projects Monitoring & Evaluation Josephine Makanza, Legal & Administration Director Bernd Tilemann, Director Impact Assessment Thecla Magashi, Financial Controller Neema Ndunguru, Project Manager Thomas Fugelsnes, Project Development Manager Eunice Urio, Communications Manager Agnes Mbowe, Office Manager Veronica Moorhead, Projects Officer Joseph Ssentongo, Data Analyst Rose Tairo, Accountant Deodatus Ngasa, Accountant Elizabeth Mwambulukutu, Communication Assistant
Contributors and Independent Reference Group (by telephone) Karin Derflinger, KfW Karl-Heinz Fleischhacker, KfW Geraldine Murphy, DFID Michael Blyth, DFID Kim Tran, Netherlands Ministry of Foreign Affairs Sean Hoy, Ireland Department of Foreign Affairs and Trade Frank Braeken, Unilever Plc David Bridgman, IFC WBG Maria Miller, IFC WBG Peter Ladegaard, IFC WBG Richard Morgan, Anglo American Plc William Asiko, Coca Cola
Trustees Neville Isdell, Co-Chair and Chairman of Board Benkamin Mkapa, Co-Chair and Chairman of International Relations Linah Mohohlo, Governor of the Bank of Botswana Wolfgang Kroh, chair of REGMIFA, former KfW Johannes-Jürgen Bernsen, former DEG Evelyne Tall, COO of ECOBANK and Group Executive Director
Other Ank Willems, First Secretary Economic Development, Netherlands Embassy, Dar es Salaam, Tanzania
65 Independent Review of the Investment Climate Facility for Africa – Draft Final Report
2. Meetings held for Project Reviews Cape Verde - Business Life Cycle Services Hubert Hourizene, Director Projects Implementation, ICF Carlos Santos, Executive Secretary of Unit of Coordination of State Reform (UCRE), Ministry of State Reform Jorge Lopes, General Manager, NOSi Ms. Maria Elisa Rodrigues, Consultora (in charge of the Project and member of the PMT), NOSi Francisco Lima Fortes, Executive Board Director, ADEI Filomene Victoria Fialho, Director General of Industry and Trade, Directorate General for Industry and Commerce (DGIC) João Almeida, Technician, DGIC Jailson Semedo, Technician, DGIC Luis Lopes, Technician, DGIC Oscar Mendeio des Reis Borges, Director of Economic Activities, DGIC António Pericles Silva, Executive Director, Novo Banco Marly Cruz, Executive Administrator, Novo Banco Maria de Lourdes Barros, Administrator, Citizens’ House Praia and entire network Oscar Santos, Vereador Economia e Finanças Municipais, Praia Municipality Virgilia Evora, Praia Municipality Humberto Santos de Brito, Minister, Ministry of Tourism, Industry and Energy Oscar Montero dos Reis, Ministry of Tourism, Industry and Energy Rosário Luz, Executive Director, Chamber of Commerce, Industry and Services Mônica Vicente, Gestora da Qualidade, Responsável do Licenciamento Comercial, Chamber of Commerce, Industry and Services Sofia Barbosa, Coordenadora, BCA Bank
Ethiopia – Tax Modernisation Girma G/Tsadik, Steering Committee Chairman, ERCA Dr. Mesfin Belachew, Steering Committee Member, MCIT Desta Lambebo, Steering Committee Member, MoFED Gebreyesus Guntie, Steering Committee Member Sintayehu Mitiku, Steering Committee Member, Project Management Consultant, Private Sisay Sahle, Secretariat, Steering Committee Member, ERCA Nuredin Mohammed, Steering Committee Member, MoT Yayehyirad Abate, Steering Committee Member, Ethiopian CoC and Sectoral Associations Hailie Mekonnen, Steering Committee Member, Project Director, ERCA Getachew Regassa, Secretary General, Addis Ababa Chamber of Commerce and Sectoral Association Dr Klaus Pfeiffer, Director AA office, KfW Addis Ababa Abdullah and Omar Bagersh, Owners, S.A. Bagersh PLC (Large Tax Payer) Bekele Arfour, Finance Manager, Hagbes PLC Rahel Getu, Finance Manager, Get-As International PLC Bethlehem Alemu, Finance Supervisor, United Insurance Company Emebert Birhanu, Finance Manager, Omedad PLC Sosinam, Director of E-payments, Commercial Bank of Ethiopia Mamo Esmelealem Mihretu, IFC Ethiopia
66 Independent Review of the Investment Climate Facility for Africa – Draft Final Report
Rwanda Investment Climate Project Kaliza Karuretwa, Director General in charge of Investments and Intellectual Property, Chairman of SC Odette Uwamariya, Governor, Eastern Province and Coordinator, RICP, previously project director RICP Alex Luberwa, Monitoring and Evaluation Specialist and Communication Officer Joseph Kamanzi Mpabuka, Procurement Specialist, PMU Judge Benoit Gatete, Head of the Commercial High Court Liberata Murebwariye, Chief Registrar, Commercial High Court Thierry Hoza Ngoga, LAIS Implementation Manager, National Land Center Yves Sangano, Deputy Registrar, Office of the Registrar, Rwanda Development Board Kanimba François, Minister of Trade and Industry Kalisa Karuretwa, Director General Investments and Intellectual Property, and Chairperson, RICP Steering Committee Richard Mugisha, Managing Partner, Trust Law Chambers, on SC Anne Gahongayire, Secretary General, Supreme Court, on SC Didier Sagashya, Deputy Director General, Rwanda National Resource Authority, NLC Ashani Alles, Programme Coordinator RICP, IFC Alex Luberwa, Monitoring and Evaluation Specialist and Communication Office, RICP Coordinating Unit MTI (now independent) James Nsemotmash, Rwanda Chamber of Commerce Joseph Akumuntu, Rwanda Chamber of Commerce Hashim Wasswa Mulangwa, PSD Adviser Kigali, DFID Mungwarareba Donatien, Director of Member services, Capacity Building and Entrepreneurship Promotion, Private Sector Federation – Rwanda Eva Paul, Project Manager, KfW Kigali Bejamin Attigah, Programme Manager, GIZ Jacky Mugwaneza, Executive Secretary, Rwanda Bankers Association Sanjeev Anand, Managing Director, Banque Commerciale du Rwanda Limited (BCR) (by phone)
Senegal - GAINDE Hubert Hourizene, Director Projects Implementation, ICF Ibrahima Nour Eddine Diagne, Managing Director, GAINDE Mamadou Gueye, Administrateur Directeur Général, Société Nouvelle des Auxiliaires de Transport S.A.(SNAT), Président de la Communauté des Acteurs Portuaires, CAP Dakar Binta Sow, Assistante de Direction, Batimat Goup Moussa Demba, Déclarant en Douane, Batimat Goup Mamour Dioum, Chef Unité Produit et Formation, Direction des Opérations, GAINDE Assane Sarr, Directeur des Opérations, GAINDE Ndiaye Racky Seck, Assistante Transit, PATISEN Patrice Aimé Faye, Déclarant en Douane, PATISEN Ousmane Doudou Wade, Adjoint Responsable Transit, PATISEN Mme Ndiaye Odette Preira, Shipping Agent, Senegal Handling Services (SHS) Mohamed Ngom, Shipping Agent, Sanou Ndiaye, Shipping Agent, SHS Moussa Mbodj, Clearing/Forwarding Agent, SHS Mme Gnagna Fall Gueye, Chef de Service, Customs Authority, Dakar Airport (Yoff) Abdourahmane Dieye, Chef du Bureau des Douanes de Dakar-Yoff, Customs Authority, Dakar Airport (Yoff) Charles Medor, Consultant for ICF PCR (Phase II), Spirale Consulting Mouhamadou Makhtar Cisse, Directeur Général des Douanes, Customs Authority
67 Independent Review of the Investment Climate Facility for Africa – Draft Final Report
Momar Ngary Ba, Directeur Commercial, Dakar Port Authority Maiko Miyake-Digbeu, Head of Investment Climate Advisory Services in West and Central Africa, World Bank Group Markus Faschina, Directeur du Bureau, KfW Dakar Marième Sall Mbengue, Chef Service Trésorerie, Responsable Financier Projet ICF, GAINDE Chimere Diop, Chairman of the Board of Administrators (was Director at APIX – Investment Promotion Agency of Senegal)
Zambia - Modernisation of the Judiciary Mathews Zulu, Deputy Registrar and Project Director P2, also Special Assistant (Legal) to the Chief Justice Charles Kafunda, Access to Justice Project Manager Michael Zulu, IT Manager Gastav Kabunda, Assistant Accountant Lekeshya Kaunda, Protocol Officer Mrs. Chilufya M. Phiri, Project Management Team Vincent Chileshe - P2 Financial consultant Justice Gregory S. Phiri, Steering Committee Chairman Lady Justice Lombe P. Chibesakunda, Acting Chief Justice (since June 2012) Justice Charles Kajimanga, Judge in Charge Commercial List Rhidah Mungomba, Technical Consultant Kuf Muyinda, Technical Consultant Justice Albert Mark Wood, Commercial High Court Judge Stephen Lungu, Lawyers Association of Zambia, Steering Committee Member David Chewe, Chief Executive, Bankers Association of Zambia (BAZ), Steering Committee Member Chris Kampamba, Chief Executive, Zambia Association of Chambers of Commerce and Industry (ZACCI), Steering Committee Member Suzanne Parkin, Private Sector Development Adviser, DFID Zambia Brendon Mulyata, Court Reporter Armanda Theotis Cherubin, Partner, Theotis, Mataka & Sampa, lawyers hired for ICF Impact Assessment Ngoi Kalamatila, Zambia Judiciary Webmaster & TRIM Administrator Dr. Stefanie Peters, KfW Lusaka Davies Chikalanga, Administrator, Access to Justice Project Roy Kapembwa, Senior Investments Promotion Officer, Zambia Development Agency (by phone)
OHADA Hubert Hourizene, Director Projects Implementation, ICF Professor Dorothé Cossi Sossa, OHADA Permanent Secretary Bagna, Project Director, OHADA Permanent Secretariat Atakora, Financial Director, OHADA Permanent Secretariat André Franck Ahoyo, Technical Assistant, OHADA Permanent Secretariat Lionel Yondo, IFC (Dakar) Regional West and Central Africa Théodore Anthonioz, IFC (Dakar) Regional West and Central Africa Markus Faschina, Directeur du Bureau, KfW Dakar Chimère Diop, Consultant to KFW, Chairman of the Board of the Senegal Investment Promotion Agency, and former Director at ICF Badiane Issa, Legal Department, SGBS (Société Générale de Banque, Sénégal) (by telephone)
68 Independent Review of the Investment Climate Facility for Africa – Draft Final Report
ANNEX 3: Principal Documents Reviewed
Documents ICF Procurement Guidelines for the Selection of Consultants - 2008 ICF Procurement Guidelines: Selection of Suppliers for Goods & Supplies - 2008. Review of the Investment Climate Facility for Africa, Final Report, 20 November 2009 Commission for Africa Reports 2005 and 2010 “Framing the Business Model of the ICF, Submission by the Corporate Investors to the ICF Board”, Meeting of the Board of Trustees, 20 March 2006 Amended Governance Charter 2011 NEXUS Report 2009 ICF Strategic Framework 2007 Aid Quality and Donor Rankings; Stephen Knack, F. Halsey Rogers, Nicholas Eubank Policy Research Working Paper 5290, The World Bank, Development Research Group, Human Development and Public Services Team, May 2010 Easterly, William, and Tobias Pfutze - “Where Does the Money Go? Best and Worst Practices in Foreign Aid.” Brookings Global Economy and Development. June 2008. William Easterly & Claudia R. Williamson* “Rhetoric versus Reality: The Best and Worst of Aid Agency Practices” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2058330 14 May, 14 2012 Quality of Official Development Assistance Assessment Nancy Birdsall and Homi Kharaswith Ayah Mahgoub and Rita Perakis Brookings Institution and the Center for Global Development - 2010.
Web Pages http://www.nepad.org/economicandcorporategovernance/african-peer-review-mechanism/about www.doingbusiness.org http://www1.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa http://www1.ifc.org/wps/wcm/connect/region__ext_content/regions/sub- saharan+africa/advisory+services/investmentclimate http://www1.ifc.org/wps/wcm/connect/region__ext_content/regions/sub- saharan+africa/advisory+services/investmentclimate http://www.afdb.org/en/topics-and-sectors/sectors/private-sector-development/african- guarantee-fund-for-small-and-medium-sized-enterprises/ http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/fund-for-african-private- sector-assistance/private-sector-development/ http://www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Fact- Sheets/DB13/DB13SSAFactSheetEnglish.pdf www.wbginvestmentclimate.org/publications http://www.ppiaf.org/page/about-us/partnerships/donors-0
Other Items Two excel workbooks are maintained: (a) 2005 to 2011, and (b) 2012 – Job description COO 18 February 2010 E mail from ICF dated 21 January 2013. Video conference and telephone interviews with IFC on 4 and 11 December. Table 4 Easterly 2008. Email from ICF on 21 January 2013 ICF financial statements as of 30 September 2012
69 Independent Review of the Investment Climate Facility for Africa – Draft Final Report
ANNEX 4: Attendance List Presentation of Preliminary Findings, 18th December 2012 The presentation was held at Maxwell Stamp PLC, AbboTs Court, Farringdon Lane, London EC1R 3AX.
No Name Organisation Attending
1 Omari Issa ICF yes Netherlands Min of Foreign 2 Kim Tran yes Affairs 3 Michael Blyth DFID yes
4 Chris Newson Standard Bank South Africa yes
5 Richard Morgan Anglo American join in by phone
6 B. Koma AFDB no
7 David Bridgman World Bank join in by phone
8 Karin Derflinger KfW join in by phone
9 Karl-Heinz Fleischhacker KfW join in by phone
10 Geraldine Murphy DFID yes
11 Sean Hoy Irish Aid join in by phone
12 Lynda Chalker BoT join in by phone
13 Andrew Danino MSP yes
14 Charles Vuysteke MSP yes
15 David Joiner MSP yes
16 Sophie Medert MSP yes
17 Joe Kendall MSP yes
70 THE INVESTMENT CLIMATE FACILITY FOR AFRICA (ICF)
Independent Review
Terms of Reference
1. Background
ICF was formally launched at the World Economic Forum in Cape Town on 1 June 2006, and became fully operational in July 2007. ICF’s primary objective is to improve the investment climate across Africa, nationally and regionally, in order to boost job creation, income growth and poverty reduction across the continent.
ICF has secured strong support from corporate and development partners who have all been receptive to ICF’s mission. Development partners include the governments of Germany, Ireland, Netherlands, South Africa and the United Kingdom, as well as the African Development Bank and the International Finance Corporation. The corporate partners include Anglo American, Coca Cola, SAB Miller, Sasol, Shell Foundation, Standard Bank and Unilever.
Established as an independent Trust, at arm’s-length from its funders, and drawing on its access to Africa’s political leadership as well as on donor and corporate networks and support, ICF aims to bring the skills, practices and principles of business to bear in helping African countries solve their investment climate problems. The ICF business model is to proactively mobilize best-fit coalitions of actors, or reform task forces, designed to achieve concrete change at regional or country levels. Securing reform is only part of the goal; the main part is for the reform process to catalyze greater investment, income and employment across the continent.
ICF was designed with a seven year lifespan as a facility to catalyze change, piloting best practice knowledge and supporting institutions across Africa to improve the business climate. However, during the Annual General Meeting held on 26 -29 September, 2011 in The Hague, the possibility of extending its lifespan beyond 2014 was considered. Such extension was conditioned on a number of factors, including the achievement of satisfactory performance over its remaining current lifetime, and demonstrating its ability to increase administrative efficiency. With the end of its initial lifespan approaching (2014), there is clear need to investigate the extent to which its primary objective has been achieved and the extent to which this has had an impact on boosting private investment, employment and income in Sub-Saharan Africa. Furthermore, the question needs to be addressed of whether there is a continued need for ICF in the future to justify extending its current lifespan.
After two years of operations in 2009 an independent Review was carried out in order to make a preliminary assessment of the emerging impact on the investment climate of projects supported by ICF. Drawing on the findings of previously undertaken reviews, a second Independent Review addressing the necessity and meaningfulness of a potential prolongation of ICF beyond its original lifespan now needs to be conducted. Laying the groundwork for future discussions on possible ICF strategy and operations post 2014 at the Contributors’ Forum to be held by the end of January 2013, this review should primarily focus on the overall impact ICF has had on the Investment Climate in Sub-Saharan Africa and present conclusions regarding a desirable extension of the current lifespan of ICF, or other approaches to achieving similar ends. The review will be supervised by an independent Reference Group.
2. Objectives of the Review
The Review is intended to provide ICF and its funders an assessment of:
- the aggregate outcome and impact of ICF.
- the relevance and sustainability of ICF, to facilitate future funding decisions by current and potential contributors.
- the efficiency and effectiveness of ICF and if applicable make recommendations on how this can be improved, including enhancing achievement of ICF’s objectives through other institutions.
3. Scope of the Review
The Review is aimed, primarily, at comprehensively addressing the following key areas:
i. Impact of ICF interventions on the investment climate in Africa on an individual country level and an aggregate level ii. Value for Money iii. Assessment of ICF’s thematic focus and ongoing relevance iv. Collaboration with others working in the area and options for improvement v. Cooperation with the private sector
In addition to the above, some effort will be made to cover areas such as identification of ICF’s core competencies vis a vis its current scope of operations; assessment of ICF’s operational capacity; analysis of sustainability of current funding arrangements, evaluation of the governance structure and assessment of stakeholder relations.
The Review will have a thematic as well as geographical focus. Thematically the review will be limited to ICF’s 3 biggest areas of intervention namely “business registration and licensing / property rights and contract enforcement / taxation and customs”. Regarding the geographical scope only countries that have had ICF interventions in these areas
2 will be considered including both large and small economies as well as Francophone and Anglophone countries.
4. Key Questions
The following key questions with respect to the relevant DAC evaluation criteria will be answered:
1. Have the right things been done? (DAC relevance) Are the issues and themes addressed by ICF the most relevant for improving the investment climate in the countries in which it works? Was the conceptual approach (PPP model, blending ODA and private funding, 7 year lifespan) adequate?
2. Have things been done well? (DAC efficiency, effectiveness) Have ICF activities been managed efficiently and are they cost-efficient? Do the outputs represent good value for money? How effective are the ICF’s operational and governance procedures?
3. What results have been achieved? (DAC effectiveness, impact) Do ICF reforms make it easier to set-up and operate a business? What has been the impact of ICF on the investment climate of individual countries and Africa as a whole in terms of increased investment, entrepreneurial activity and job creation? Which components of ICF's work have had the greatest impact on investment climate? Why do these components succeed whilst others do not?
4. How do the results compare with an alternative intervention to achieve the same objective? (DAC relative effectiveness, impact, cost/ effectiveness) What other approaches could have achieved ICF's objectives more effectively and efficiently? Do ICF projects complement other reform programmes?
5. How could things be done better in the future? Are the results sustainable? (DAC sustainability) Should the ICF continue to exist and in which case what changes should be made to its strategy, operations and areas of focus? Have ICF projects catalysed other reforms?
5. Skills and Qualifications
We are seeking a consultant (firm) with a minimum of 5 years’ experience in monitoring and evaluation methods and approaches. Furthermore the consultant should have
3 strong knowledge of investment climate issues, particularly in the African context, and be familiar with relevant studies and investigations on how to address them.
6. Information Sources and Methodology
The review will be carried out over a four month period beginning early September 2012. The final report will be presented no later than January 7th, 2013.
The consultants will be responsible for the detailed methodology design which will be part of the proposal and finalised in the inception report. We expect the following methods to be used: a) Face to face and telephone interviews with programme stakeholders, including: members of the project steering committee, government representatives and a range of private sector representatives that should range from small and medium sized enterprises to large multi-national companies. ICF will provide contact details at the consultants’ request. b) Case studies of approximately 6 ICF projects, illustrating the results achieved and the value for money of typical ICF projects.
The CEO of ICF will make available to the consultants copies of all documents they require in order to undertake the review. This may include:
- Project Termination Sheets - Annual Reports - Contributor Reports - Reports of previous assessments
7. Reporting
The consultants will report to an independent Reference Group. Timelines will be as specified in the proposal bid and agreed by the independent Reference Group. Deliverables will consist of an inception report and a final report. The inception report will confirm the evaluation questions and define how they will be addressed. The final report will consist of both a detailed report encompassing all of the elements listed in Section 3 above as well as an executive summary in Power Point format.
Copies of the final report shall be submitted to the Board of Trustees and subsequently to each of the ICF funders listed in Paragraph 1 above. The consultants will be expected to make a presentation to the ICF Board and Contributors in a special meeting.
4 8. Proposal
Proposals should be made in accordance with the guidelines attached at Annex A. Firms that are invited to bid are also listed in Annex A. Further information about ICF can be found at www.icfafrica.org.
Omari Issa Chief Executive Officer 2nd Floor 50 Mirambo Street P.O. Box 9114 Dar es Salaam Tanzania
Tel. +255 22 212 9211 Fax: +255 22 212 9210
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ANNEX A Proposal Guidelines
1. The bidder will propose the methodology for carrying out the Review and will provide details of team members as well as experience of undertaking similar work.
2. The proposal will also include a work plan and cost estimates for fees and reimbursable expenses.
3. The proposal should be submitted in English as follows:
a. Both a hard and soft copy of the proposal must be provided. b. The soft copy should be presented by e-mail to the following address: [email protected] Please note that the total size of the e-mail including all attachments should be less than 5MB. In addition, the soft copy should also be provided by CD or by USB stick. c. The hard copy must be printed on A4 paper and sent to the following address: Omari Issa Chief Executive Officer 2nd Floor 50 Mirambo Street P.O. Box 9114 Dar es Salaam Tanzania
4. The proposal must contain the following sections in the order listed a. Covering letter from authorized signing officer Statement that content of proposal is an accurate reflection of the bidder and the bidder’s capabilities Confirmation that the fixed price quote is valid for six months from the submission date deadline Details regarding the resource to contact in the event of any clarifications that may be required b. Bidder Overview Name and headquarters address of company Year company was established List of company senior management (names and titles)
6 Total number of employees Brief overview of company Company web site URL c. Bidder’s Qualifications and Experience (as they relate to this assignment) The Bidder must provide the following information with respect to its qualifications: Overviews of assignments which have involved conducting similar analyses and evaluations. These overviews should include the following: o Name and location (country) of client o Nature of the assignment and deliverables provided Detailed CV’s and associated material for all resources who will be involved in the project. At a minimum, these CV’s must include: o the last five (5) years’ work experience (including dates and companies worked for) o an outline of any international work experience of each candidate o the candidate’s educational background o yellow highlighted sections within the CV’s indicating specific work experiences or skill sets which are especially pertinent to the assignment List of countries in which the bidder as well as the individual candidates have worked. Any work in Africa should be highlighted. An understanding of the business models of donor-supported investment climate reform interventions is strongly preferred. d. Proposed Work Plan, Methodology and Critical Path The respondent must describe how it will proceed with the scope of the work. A brief and simple timeline/critical path, expressed in days, must be prepared outlining key dates and deliverables and identifying the individuals who are responsible for each completion target and deliverables. (Note: it is expected that the personnel identified in the proposal will be the resources assigned to the task. Any subsequent substitution of resources will require the Independent Reference Group’s approval). e. Confirmation of Deliverables Which Will Be Provided Written description of the deliverables to be provided to the Independent Reference Group Written confirmation of delivery dates for the deliverables
7 f. CV’s of Resources to be assigned Detailed resumes are to be provided for each resource who will be assigned to the project
5. Fixed price quotation
The respondent must provide a fixed price quotation. a. All quotations must be in US dollars and are to be valid for six months from the date of submission. b. Travel costs and in-country expenses are to be quoted separately
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6. Evaluation Criteria Any proposal that does not comply with the proposal guidelines outlined in 1 to 5 will be disqualified. A Quality and Cost-based (QCBS) method, comprising a two-stage procedure shall be adopted in evaluating the proposals. The technical evaluation shall be carried out first, followed by the financial evaluation. Firms shall be ranked using a combined technical/financial score.
Technical Proposal
The evaluation committee (independent reference group) shall carry out its evaluation, applying the evaluation criteria and point system specified below. Each responsive proposal shall be attributed a technical score (St). Firms scoring less than 70 points shall be rejected and their financial proposals returned unopened.
Technical Evaluation Criteria Maximum Points to be Allocated per Evaluation Criteria Company general experience, reputation and specific experience 15 points with respect to assignments of a similar scope and nature Qualifications and experience of resources assigned to and 40 points directly involved in the project. Prior experiences and Project team composition and their time allocated to the project key areas Proposed work plan, methodology and critical path 35 points Knowledge of the region 10 MAXIMUM POINTS TO BE AWARDED 100 points
Financial Proposal
The lowest financial proposal (Fm) shall be given a financial score (Sf) of 100 points. The financial scores of the proposals shall be computed as follows:
Sf 100 Fm F Final Ranking
Proposals shall finally be ranked according to their combined technical (St) and financial (Sf) scores using the weights (T = the weight given to the technical proposal; P = the weight given to the financial proposal; T + P = 1; T = 0.8 and P = 0.2)):
S St T Sf P
9 7. Proposal Submission
The technical and financial proposals (in two separate envelopes) should be sent by express courier to be received by ICF no later than 1400 local time on August 28th.
8. Contract Award a. ICF reserves the right to cancel this RFP process at any time. b. ICF shall attempt to notify the successful company by e-mail by September 4th or shortly thereafter. ICF has no obligation to notify unsuccessful bidders as to which company has been successful. c. Additional information regarding ICF can be obtained via its web site: www.icfafrica.org d. The successful bidder will be required to mobilize the identified project team and initiate the project within thirty (30) days of the award of contract.
Eligible Consultants In the event that a potential Consultant would like to submit a proposal, but needs to associate with one or more Consultancy groups in order to fully respond to the terms of the RFP, this is permissible. However, the bidding group must designate one Consultant as the primary interface and ICF will sign a contract and interface with only one designated Consultant. Under such circumstances, bidding groups comprised of more than one bidder must submit a letter signed by the authorized representative of each of the respective bidders confirming that they agree to be bound by the terms of a single contract signed by the designated bidder and that they are in agreement that the designated bidder will be responsible for allocating any payment made by ICF to the designated bidder.
Confidentiality All information and data used during the course of this assignment shall remain the property of ICF, and may be quoted freely by ICF and any of its funders. All information and data shall be subject to the terms and conditions of ICF’s standard confidentiality agreement which shall be signed at the same time as signing the contract. Consultants are required to declare potential conflicts of interests that may occur in any of the ICF countries; where consultants have similar projects in any of these countries, the consultants are required to specify how confidentiality will be maintained and conflicts of interest managed.
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