FATA Temporarily Displaced Persons Emergency Recovery Project (P154278) Implementation Support Mission (November 21-25, 2016)

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized FATA Temporarily Displaced Persons Emergency Recovery Project (P154278) Implementation Support Mission (November 21-25, 2016) I. Introduction Aide Memoire A World Bank 1 Implementation Support Mission for the Bank financed FATA Temporarily Displaced Persons Emergency Recovery Project (TDP ERP) Project was carried out from November 21 to 25, The objectives of the mission were to: (i) assess progress on achievement of targets against each component, the roll-out of One-Stop-Shops and the Results Framework; (ii) review performance against operational systems, procedures, governance and fiduciary controls under the project; and (iii) discuss the future strategy for implementation of program. The mission held meetings with the management and technical teams of Economic Affairs Division (EAD), National Database and Registration Authority (NADRA), FATA Department of Health (DoH) and FATA Disaster Management Authority (FDMA). The mission was joined by a DFID team 2 with the objective of learning about the project and exploring the possibility of investing alongside the Government of Pakistan and Bank in support of the program. EAD was briefed at the end of the mission, which concurred to the mission findings. The wrap-up meeting was chaired by the Joint Secretary EAD and was attended by relevant staff from Project Management Unit, NADRA, FDMA and DoH FATA. EAD has cleared the public disclosure of this Aide Memoire in accordance with the Bank s policy on access to information. Summary of recommendation and decisions is attached in Annex-A. The next Implementation Support Mission is planned from March 20-24, II. TDP ERP Project Overall Implementation Status 3 Project Summary Summary Ratings Approval dates August 26, 2015 Project Development Objective Satisfactory Effectiveness Date December 22, 2015 Implementation Progress Moderately Satisfactory Signing Date September 23, 2015 Financial Management Moderately Satisfactory Closing Date February 28, 2019 Procurement Moderately Unsatisfactory Net Commitment US$(IDA) US$ 75 m Project Management Satisfactory Amounts Disbursed to date US$ m Counterpart Funds N.A. M&E Rating Moderately Satisfactory Overall Implementation Risk High The mission noted considerable progress on all key milestones agreed during the last mission. The leadership of EAD was commended for their critical coordination role in deployment of six One-Stop-Shops (OSS) despite the complex nature of the project and adverse situation on ground. Considering the successful operationalizing of the existing OSS and to expedite delivery of benefits to the rapidly repatriating population, the government plans to deploy all 15 OSS by January 2016 was also appreciated. More than 65,000 cases for LSG and 21,000 for Child Wellness Grant (CWG) have been processed as of November 15, Suggestions/recommendations from the last mission were proactively pursued by the PMU and NADRA with a considerable streamlining of the program, however, a few areas of concern remain, for which attention would be required. These include: (a) weak communications/mobilization due to delays in engaging the communication/mobilization firm which is apparently affecting quality of delivery of the CWG; (b) delay in hiring of required Operations Review and Beneficiary Survey firms hampering effective and systematic 1 World Bank Team: Lucian Bucur Pop (Sr. Economist/Task Team Leader), Amjad Zafar Khan (Senior Social Protection Specialist), Ali Qureshi (Social Protection Specialist), Dr. Aliya Kashif (Health Specialist), Akram El-Shorbagi (Senior Financial Management Specialist), Khalid Bin Anjum (Senior Procurement Specialist), Salma Omer (Senior Social Development Specialist), Rahat Jabeen (Environmental Specialist) and World Bank Consultants (Sumaira Sagheer and Jamal Afridi) 2 DFID: Ali Naqvi (Governance Adviser), Razi Latif (Resilience Adviser), Seamus Mac Roibin, Mazhar Siraj (Social Development Adviser) and Shumaila Rifaqat (Governance Adviser) 3 Detailed status of legal and dated covenants may be seen at Annex-B 1

2 feedback from the field and assessment of program outcomes; (c) the large gap between the disbursement and withdrawal of Emergency Recovery Grant (ERG) transfers by the TDPs which may lead to delays in reimbursements to the government from the Project; and, (d) delays in processing of grievances that may lead to a loss in confidence of beneficiaries in the project s grievance redress mechanism. The rating for Implementation Progress is "Moderately Satisfactory" as clear measures to rectify these issues shall be undertaken by the recipient 4. The rating for Procurement was downgraded to Moderately Unsatisfactory due to delays in critical procurement activities that have had a bearing on the project performance. III. Key Messages and Recommendations i) Management and Coordination: The mission commends the leadership of EAD, NADRA and FATA Secretariat which was critical for the deployment of six One-Stop-Shops (OSS) despite the complex nature of the project and security situation on the ground in the agencies. The mission appreciates EAD, NADRA and NBP for their swift action to correct the course and clear backlogs. Further improvements in internal management processes and faster decision making, particularly for timely completion of procurement actions will be appreciated. It is further recommended that the third party Operational Review and Beneficiary Survey firms be deployed in the field sooner to ensure that regular feedback from the operations come in for timely course correction and better understanding of the project outcomes. ii) Communication and Mobilization: Though the initial uptake of the program in the 6 OSS is remarkable but there are gaps during subsequent visits to avail the Child Wellness Package. This gap apparently is due to inadequate communication as the Communication/Mobilization firm which was part of the program design is yet to be hired. Mission recommends that the communication firm be hired February 15, iii) Disbursement and funding gap: As of May 28, 2016, a sum of US$ million has been disbursed under IDA Credit No PK, and the undisbursed balance is US$ 72 million. Based on estimates, the total program cost for the entire caseload is $182.2 million. The financing gap is $107.2 million. The mission was informed that the government has successfully secured $20 million in funding from development partners. Any request for additional financing by the Bank will be assessed once actual disbursement under the project reaches 80%. iv) Grievance Redress: 10,128 appeals were lodged by NADRA. Only 29% have been resolved thus far. A considerable proportion of these are reportedly pending beyond the 30 day resolution deadline prescribed in the Operations Manual. EAD noted that bottlenecks were being analysed. It is recommended that FDMA enhance coordination with PAs to clear the backlog as soon as possible. v) Fiduciary: The mission noted that verification of reimbursement of NBP invoice was through an inhouse developed system. The input to the system was manual based on excel sheets received from NADRA and NBP which leaves the data open to possible manipulation. For effective control it was suggested that EAD will explore the possible solution(s) for cross checks and propose a solution with estimated cost by January 15, Until such actions are implemented, an independent review by the EAD internal auditor will be carried out before any payments are made to ensure that payments are in accordance with the NADRA portal information. As the role of the internal auditor is critical, it is also suggested that the incumbent for this position should be technically qualified to ensure that proper audit procedures and controls are maintained. 4 Detailed Agreed Actions may be seen at Annex-A 2

3 IV. Progress against Project Component Activities 5 (a) Component 1: Early Recovery Package for Temporary Displaced Persons i. Progress on return: A total of 336,042 families are expected to return to their respective agencies. As of November , 253,237 TDP families have returned (verified by FDMA) and the remainder shall continue to be repatriated through to June ii. ERG Reconciliation: In order to streamline the process for verifications of ERG beneficiaries and ensure transparency, NADRA developed an MIS module to automatically reconcile FDMA provided beneficiary lists with biometrically verified beneficiaries who visited a designated OSS. Based on data shared by FDMA, 182,247 TDPs received ERG payments. Of the 53,000 TDPs verified by NADRA at OSS, it was found that 36,288 beneficiaries had received the return grant (PKR 25,000) and 34,480 TDP households had received the transport grant (PKR 10,000). The payment information for the remaining 30-32% could not be reconciled. The mission noted that EAD is probing further to ascertain the causes and has sought a report from FDMA to analyse the gap and share with the Bank an Action Plan for rectification of the issue by December 31, iii. LSG: Performance under the component has remained strong. 50% of project targets under the component have been achieved within six months since the inauguration of the first two OSS. As of November 15, 2016, six OSS are operational and have served 60,963 beneficiaries. Despite curfews and barriers to access, EAD, NADRA and the PSP have managed to show impressive performance. The mission noted lags between the first and subsequent payments three instalments of the LSG. The lags were caused by an error in the PSP s system which had since been resolved. The PSP informed that the entire backlog has been processed and payments made to all beneficiaries. (b) Component 2: Promoting child health in selected areas of FATA i. Overall performance: The mission was pleased to note that considerable progress has been made since the last implementation support mission in June The initial teething issues have been resolved to a great extent. It was encouraging to note that data of the health awareness raising session is flowing in from the operational OSSs. The data of the health services being availed such as routine immunization and screening of children under two years of age for malnutrition is also available. The uptake of health services (vaccinations and screening of children for malnutrition) at the OSS is encouraging. Approximately 71% of all beneficiaries that received the first Health Awareness Session voluntarily opted to avail the Child Wellness Package. The uptake ratio following the second Health Awareness Session was even higher at 78% which shows slightly improved messaging during the awareness sessions. * As of November 20, Updated Results Framework is attached at Annex-C 3

4 The low rates of uptake at Spinwam, Sarwakai and Razmak are due to continuing security measures and curfews that constrain accessibility to sites, particularly for LHVs. The Department of Health has taken measures at Sarwakai and Razmak to provide accommodation at or in the vicinity of OSS for staff members. This measure led to an improvement in performance at these locations. Further details are available in Annex D. ii. iii. iv. Representation and interpretation of data: The mission had extensive discussions with EAD and NADRA on how to improve representation of information pertaining to Health Awareness Sessions (HAS). Based on discussions with EAD, the task team shall work with the M&E specialist to improve reporting formats and arrangements for data collection. A critical area that needs to be addressed is the monitoring and supervision by the DOH staff from the FATA secretariat to support smooth implementation of the program. For this purpose, the task team shall continue to work with EAD, NADRA and DoH to augment the Department s capacity. The hiring of the Operational Review firm is absolutely essential to provide a third party s view on evaluation of operational processes which will further enhance the project monitoring. Similarly, the Beneficiary Assessment exercise will provide a more in-depth understanding of how the program has benefitted the TDPs and if there are any additional services that the program can enhance in the subsequent phases of the program to meet their expectations. The mission recommended that both these firms should be placed in the field as soon as possible so as to sense the pulse of operations and program beneficiaries. Communication/Mobilization: The numbers of families have attended the first HAS are 17,063 but it has been observed that the number for the second HAS drops significantly to 1,635 which means that only 10% of the families who attended the HAS-1 came back to attend the HAS-2. The project has not been formally launched by the Government and procurement of a Communications/Mobilization firm is still pending. Based on meetings with with stakeholders, it was clear that the uptake of CWG may immensely benefit from an effective communications and mobilizations campaign. This may be further validated through data and reports that shall be received from the Operations Review firm. In addition, it is recommended that EAD provide a report by December 31, 2016, with details on the number of beneficiaries that were scheduled to attend the second session of HAS versus the actual number along with the suggested way forward to ensure that this gap is minimized. Referral of Severely Acutely Malnourished (SAM) cases: A critical issue to be addressed is the appropriate referral of the children under two years of age that are identified as SAM (severe acute malnutrition). It was agreed that DOH will undertake a quick assessment of available health facilities where the SAM cases can be referred (i.e. Outpatient Therapeutic Programs (OTPs), stabilization centres or paediatricians at DHQ or THQ level) to ensure that these children are treated properly. The Bank s health team shall assist EAD PMU and DoH teams establish contact and coordinate with other agencies and donors providing relevant health services in the region. 4

5 v. Incentives for DoH Staff: In agreement with the Department of Health, EAD was supposed to provide compensatory allowance to the field health staff, which is still pending approvals and needs to be expedited. vi. vii. Data Entry for CWP: NADRA provided handholding and On-Job-Training to DoH staff to build capacity while ensuring that all data is entered accurately in the MIS. NADRA will continue to provide support till the DoH staff can manage on their own. ESMP: The mission was pleased to note that considerable progress has been made since the last implementation support mission in June Based on reports provided, medical waste was disposed in compliance with EPI guidelines and those in the ESMP. DoH agreed to continue exploring safer options for disposal of medical waste than those enshrined in the ESMP. It was agreed that all DoH staff members would be provided gloves and masks immediately. A project ESMP compliance report was sought alongside the next Project Report due on February 15, (c) Component 3: Strengthening program management and oversight i. Delays in hiring of required firms: Since commencement of operations, temporary arrangements have been undertaken to smooth over operational requirements, however, the Operations Review, Communication/Mobilization and Beneficiary Survey firms are essential for the efficient implementation of project activities. Substantial delays on hiring these firms has become a major concern. The lack of these key firms compromises operational performance, project oversight and assessment of program outcomes. EAD and NADRA shall examine the approval processes that are responsible for delays and submit propose actions to minimize delays. It was agreed with the mission that EAD will share revised timelines to complete the procurement actions of the Communication and Beneficiary Survey activities by December 20, ii. Capacity building of staff: The project has been effectively building capacity of the project staff: Despite NADRA s efforts, the team noted that further improvement in quality of HAS was required. For this purpose, DoH agreed with the possibility of assigning a trained Lady Health Supervisor to supervise and observe the health care delivery staff at the OSS and to provide hands on training to the newly appointed staff and/or provide refresher trainings so as to ensure that appropriate information is provided to beneficiaries and that all steps under the operational guidelines are being followed in spirit. In addition, the quality of the HAS and the service delivery is maintained through capacity building of relevant staff. vi) OSS site location: The OSS at Spinwam was not located at a health facility due to security concerns and lack of an appropriate facility in North Waziristan. The establishment of a safe facility in North Waziristan in itself is a commendable feat, however, due to non-optimal location, implementation of component 2 at the site faced numerous operational hurdles, including but not limited to access issues 5

6 for DoH staff particularly LHVs, inadequate space and facilities. This resulted in a low ratio of women and children approaching the OSS and utilizing the Child Health Package. The uptake of the Child Wellness Package at Spinwam OSS was recorded at 35% as compared to the project average of 71%. Once these operational issues were detected, the government decided to manage the situation by diverting beneficiaries to Razmak OSS and the soon to be established Mirali OSS. EAD, NADRA, FDMA and FATA DoH would need to enhance coordination to ensure that appropriate locations and health facilities are identified for all establishment of all remaining OSS. vii) Grievance Redress: 10,128 appeals were lodged by NADRA. 54% of these are reportedly pending beyond the 30 day resolution deadline prescribed in the Operations Manual. Out of total lodged grievances, 98% were appeals. In terms of complaints, 81% complaints remained unaddressed beyond the stipulated resolution time. In addition, no appeals from Kurram Agency have been resolved thus far. OSS Appeals Lodged Appeals Resolved Appeals pending Appeals pending > 30 days Sarwakai 2,253 1, Spinwam 2,559 1,040 1,519 1,243 Razmak Dogra Milward Lower Kurram 3,089-3,089 2,190 Total 10,128 2,883 7,245 5,487 Complaints Lodged Complaints Resolved Complaints pending Complaints pending > 30 days NADRA NBP DoH FDMA Total Under the project, FDMA has been supported with additional staffing (20 persons) hired to assist in follow up of cases. During the meetings between the mission, EAD, NADRA and FDMA, it was discussed that there is a need to re-assess the amount of time that should be allowed for resolution of appeals given the cumbersome process and revise the guidelines accordingly. Following this, the mission noted that the project must communicate a realistic time frame to the appellants and requested EAD, NADRA and FDMA to provide a report on the same. I. Integrated Fiduciary Assessment 6 i. Disbursement: The mission noted that as of November 30, 2016, an amount of US $ 4.70 million has been processed by the World Bank as an advance against the TA Component 3 managed by NADRA and US $ million for grants under the Components 1 and 2 to the EAD-PMU DA. ii. Accounting and financial reporting: There has been no change in the accounting and financial reporting systems since last Mission held in May 2016, government s cash basis of accounting system is used in the EAD. Separate books of account have been kept for the FATA TDP-ERP on internally developed computerized accounting software using cash basis of accounting system. The mission agreed with the PMU FMS that necessary SOPs will be developed for the accounting and reporting on the project activities including reconciliation of cash transfers to Service Provider (National Bank of Pakistan) 6 Detailed IFAS is attached at Annex-D 6

7 and cash withdrawn by the beneficiaries from their accounts by December 25, The mission indicated that expenditure should be recorded in the books of the project only when the beneficiaries have withdrawn the funds from the participating bank. iii. iv. Financial Reporting and Disbursement: The first IFRs for the project was received on April and it was found acceptable and the second IFR is expected within December. While the report on disbursement will be used for tracking, monitoring and reporting expenditure in the IFRs, the forecast of funds will be based on the funds to be disbursed to the participating banks. In addition, reimbursements for ERG remain based on reports of actual withdrawals made by beneficiaries crosschecked with NADRA s lists of biometrically verified TDPs. The PMU management is required to provide explanation on variances exceeding 15% between what was requested in the IFRs and actual expenditures. Further, an online and real time business intelligence dash board will be used to track and disbursement of funds to eligible beneficiaries of FATA. The mission was informed that as of November 30, 2016 and after due verification process an amount of US $ million has been released to the National Bank of Pakistan on account of Livelihood Support Grant (LSG) and Child Wellness Grant (CWG). Further an amount US$ 11.8 million has been verified on account of Early Recovery Grant (ERG) paid by the Government of Pakistan to FATA Temporary Displaced Persons (TDPs). This amount will be claimed as reimbursement under retroactive financing in the IFRs due for submission. Internal control and internal audit: The mission noted that PMU finance team has adequately maintained proper segregation of duties and carry out monthly reconciliation of accounts. The payments to the Service Provider bank were made in accordance with the Provision of Services Agreement. The mission was informed that EAD has designated a Section Officer of the department as the project internal auditor who reports to the Secretary EAD. The internal auditor is mainly responsible for the review and authenticate project semi-annual IFRs submitted to the Bank. The mission suggested that the internal auditor must be adequately qualified in the field of accounting and auditing and have relevant experience to ensure control effectiveness, and disbursement of funds to eligible beneficiaries in accordance with the business rules provided in the Project Operational Manual. v. Management Information System (MIS): A detailed presentation was made on the MIS, developed internally on Microsoft Access, for verification of payments made under LSG and CWG to TDPs by Payment Service Provider (National Bank of Pakistan - NBP). It was demonstrated that data obtained from the NADRA portal is converted into Excel and compared with the NBP soft data provided in Excel. It was explained that under the current arrangements NBP first make the payments to FATA- TDPs after observing all the Business Rules and then submit its invoice along with soft data in Excel format to EAD-PMU for reimbursement of payments, excluding NBP fee which is borne by the GOP. It was further informed that NBP has not yet made its portal functional for FATA-TDPs. The mission appreciated the efforts made by EAD-PMU for the verification of reimbursement of NBP invoice through an in-house developed system. However, it noted that the current procedure is open to compromise as there is no direct linkage between NBP soft data in Excel and NADRA s portal. It was suggested for effective control that EAD team will explore possible solution(s) to this issue and provide the estimated cost by January 15, Until such actions are implemented, an independent review by the EAD internal auditor will be carried out before any payments are made to ensure that payments are in accordance with the NADRA portal information. vi. vii. External audit: The project financial statements for FY 2015/2016 for the funds managed by EAD, has been audited by the Auditor General of Pakistan. The audited financial statements and the audit report thereon along with the management letter must be submitted to the Bank within six months of the close of financial year. Procurement Planning: There is a significant lag in the planned and actual timelines of the activities. For instance the two key procurement activities for hiring services of firm for Operational review and Communication has substantial delays. The coordination between NADRA and EAD for planning the activities also needs attention. NADRA is requested to share the complete chronology of events on these 7

8 two activities highlighting the areas and reasons for delays. There are gaps identified during the mission meeting based on the delays per the approved procurement timelines. It is requested that both partners should discuss the need, timelines and estimated costs keeping in view the possible bottlenecks and time period for internal approvals before adding an activity in procurement plan. The variation between the estimated and actual cost of key consulting services is also significant which highlights the need for detailed market analysis. viii. ix. Procurement Process: There are significant delays in the procurement processes especially for the Consulting service activities. The two consulting service assignments (Operational Review and Communications) are delayed. The hiring of these two firms is also part of the legal covenants. Despite of the critical nature, the firms for these assignments are not yet on board. There are small Goods activities like Solar Refrigerators, IT equipment and Furniture through Shopping method which were cancelled and initiated multiple times due to unavailability of 3 responsive quotations. This indicates that RFQ is not being prepared properly as per the conditions of the available market. Shopping method is relatively simpler compared to other Procurement methods, however delays due to re-initiation of activities requires close attention for reasons and ensuring the timely conclusion. NADRA is requested to share a Monthly Procurement Management sheet, identifying the status and areas for any delays in the process with all stakeholders. The status should also be shared with the top management of NADRA and EAD. It is requested that appropriate actions should be taken immediately for any identified gaps and delays. It is also requested to share a list mentioning the physical and financial progress for all procurement activities. Fiduciary Performance Ratings: In view of the above, Financial Management performance rating has been set at "Moderately Satisfactory". The procurement rating is being downgraded from Moderately Satisfactory to Moderately Unsatisfactory keeping in view the delays on two very important activities with critical implications. 8

9 Annex-A: Summary of Decisions/Recommendations No. Decision/Recommendation Deadline Responsible 1. Next IS Mission: The next Implementation Support Mission is planned from March 20-24, EAD and NADRA shall examine the approval processes that are responsible for delays and submit a revised timelines to complete the procurement actions of the Communication/Mobilization and Beneficiary Survey activities shall be shared 3. EAD and NADRA shall complete the procurement process for the Communication/Mobilization and Beneficiary Survey firms 4. EAD shall provide a report with analysis on data, reasons behind 30-32% of TDPs payment information not being matched and generate an action plan to rectify the issue. 5. A mapping of OTPs or Stabilization Centers or accredited Pediatricians shall be shared with all DoH staff in One-Stop-Shops. The DoH shall assign a trained Lady Health Supervisor to supervise and observe the health care delivery staff at the OSS and to provide hands on training to the newly appointed staff and/or provide refresher trainings. 6. New reporting formats to improve reporting shall be completed in consultation with the Bank. Particular focus will be accorded to improvement in reporting pertaining to CWP. 7. EAD provide a report with details on the number of beneficiaries that were scheduled to attend the second session of HAS versus the actual number along with the suggested way forward to ensure that this gap is minimized 8. Bottlenecks on resolution of grievances shall be analyzed and share analysis to remove the delays. Also review the current timeframe for appeals resolution in the design in consultations with the PAs and incorporate in the revised grievance redressal guidelines 9. ESMP Progress Report shall be submitted alongside the Porject Report 10. EAD-PMU to draft SOPs for the project in line with the POM 11. EAD shall explore the possible solution(s) to automate reconciliation of payments between NBP and NADRA systems. 12. Send list of payments on all Procurement activities to Bank 13. Procurement Management Sheet to be shared monthly with all stakeholders. 14. Chronology of events for hiring of OR and Communication firm highlighting reasons for delays 15. Send list of Individual consultants confirming that they are hired as per guidelines (Eligibility and CoI) to Bank 16. Send Physical and Financial Progress on all procurement activities to Bank - World Bank December 20, 2016 February 15, 2017 December 31, 2016 January 15, 2017 February 15, 2017 December 31, 2016 January 15, 2016 February 15, 2017 December 25, 2016 January 15, 2017 December 25, 2016 January 5, 2017 December 21, 2016 December 25, 2016 December 25, 2016 EAD and NADRA EAD and NADRA EAD and FDMA DoH EAD, NADRA and DoH EAD and DoH EAD and FDMA EAD and DoH EAD-PMU FMS EAD NADRA-PMU NADRA-PMU NADRA-PMU NADRA-PMU NADRA-PMU 17. Updated Procurement Plan (with new prior review December 31, 2016 NADRA-PMU 9

10 thresholds)for next 12 months to be send for Bank s approval 10

11 Annex-B: Status of Legal and Dated Covenants Financing/Project Agreement Reference Section IV.B.1 (b) (i) of Schedule 2 to the FA Section IV.B.1 (b) (ii) of Schedule 2 to the FA Section I.B.1 of Schedule 2 to the FA Section I.B.2 of Schedule 2 to the FA Section I.C of Schedule 2 to the FA Section I.G of Schedule 2 to the FA Description Type Status Both the Implementation Agreement and the Agency Agreement, have been entered into by the respective parties thereto, all under terms and conditions satisfactory to the Association (Applicable to Category (2) for Cash Grants). The grievance redress mechanisms referred to in Section I.G.3 of the Schedule 2 to this Agreement and Section I.C.3 of the Schedule to the Project Agreement have been properly established and made operational, in a manner and substance satisfactorily to the Association. (Applicable to Category (2) for Cash Grants). The Recipient shall, not later than one (1) month after the Effective Date, establish and thereafter maintain, throughout the period of implementation of the Project: (a) an Steering Committee, chaired by EAD's Secretary, with power, functions, resources and composition acceptable to the Association, and to convene at least quarterly to provide overall operational oversight and decision making support for the TDPs Program and the Project; and (b) an Review Committee, chaired by EAD's Additional Secretary, with power, functions, resources and composition acceptable to the Association, and to convene at least monthly to provide implementation support and coordination of the TDPs Program and the Project. The Recipient shall maintain within EAD throughout the period of implementation of the Project, a Project Management Unit, responsible for the carrying out of the technical coordination and day-to-day implementation of the Project, which unit shall be provided with qualified and experienced staff, in sufficient numbers and under terms of reference satisfactory to the Association, as well as the necessary resources, powers and functions to comply with the Project 's fiduciary and safeguard requirements, in particular those related to the payment of Cash Grants. The Recipient shall ensure that the Project is carried in accordance with the provisions of the Project Operations Manual. The Recipient shall not amend, waive, suspend or abrogate any provision of the Project Operations Manual, whether in whole or in part, without the prior concurrence of the Association The Recipient shall carry out, and cause the DoHs and the Project Implementing Entity to carry out, Component 2 of the Project in accordance with the provisions of the Environmental and Social Management Plan. Disbursement Condition Disbursement Condition Covenant Covenant Covenant Covenant Complied with Complied with On Going. Complied with On Going. Complied with On Going. Complied with On Going. Complied with The Recipient shall establish, and cause the Project 11

12 Financing/Project Agreement Reference Section II.A.1 of Schedule 2 to the FA Section III.F of Schedule 2 to the FA Section I.B of the Schedule to the PA Section I.C.1 of the Schedule to the PA Section I.C.3 of the Schedule to the PA Description Type Status Implementing Entity to establish, and thereafter implement throughout the period of Project execution, an easily accessible grievance redress mechanism, satisfactory to the Association, with reception counters in each OSS, in order to address any complaints filed by Eligible TDPs, Eligible Beneficiaries The Recipient shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 4.08 of the General Conditions and on the basis of the indicators acceptable to the Association. Each Project Report shall cover the period of one (1) calendar semester, and shall be furnished to the Association not later than forty-five (45) days after the end of the period covered by such report. The Recipient shall, and shall cause the Project Implementing Entity to, establish, no later than one (1) month after the Effective Date, and thereafter maintain throughout the period of implementation of the Project, a system for the handling of procurement complaints, in a manner and substance acceptable to the Association, which system shall include, inter alia, the maintenance of a complaint database, a standard protocol setting forth triggers for carrying out investigations, and a sanctions regime. The Project Implementing Entity shall by not later than three (3) months after the Effective Date: (a) develop and thereafter implement, a beneficiary engagement and outreach campaign, satisfactory to the Association, for Components 1 and 2 of the Project in coordination with the FATA Secretariat; (b) establish under terms of reference acceptable to the Association and thereafter maintain, One-stop Shops; and (c) Contract the services of a firm, with qualifications and under terms of reference satisfactory to the Association, to carry out operational reviews of the Project, and to provide regular feedback and finding to the Review Committee. The Project Implementing Entity shall assist DoH in the carrying out of Component 2 of the Project in accordance with the provisions of the Environmental and Social Management Plan. The Project Implementing Entity shall establish, and thereafter implement throughout the period of Project execution, an easily accessible grievance redress mechanism, satisfactory to the Association, with reception counters in each OSS, in order to address any complaints filed by Eligible TPDs, Covenant Covenant Covenant Covenant Covenant On Going. Complied with An interim report for the first quarter was submitted. The project report shall be due on February 15, 2017 On Going. Complied with Partially complied with a delay. The hiring of the Communication firm has been initiated and are expected to be on board by January 31, 2017 On Going. Complied with The first report for the ESMP implementation shall be due on February 15, 2017 On Going. Complied with 12

13 Financing/Project Agreement Reference Section II.A.1 of Schedule to the PA Description Type Status Eligible Beneficiaries, and/or applicants therefor, regarding: (i) the eligibility criteria to access the Cash Grants and/or Child Wellness Services; (ii) any data error in the processing of applications and/or eligibility verification; (iii) any update of the applicants', Eligible TDPs' and/or Eligible Beneficiaries' personal data and/or documentation; (iv) the issuance/assignment of CNIC numbers and/or cards therefor; and (v) the timely and proper payment of Cash Grants and/or the provision of timely and quality Child Wellness Services. The Project Implementing Entity shall monitor and evaluate the progress of its Respective Part of the Project and prepare Project Reports for its Respective Part of the Project in accordance with the provisions of Section 4.08 of the General Conditions and on the basis of indicators acceptable to the Association. Each such Project Report shall cover the period of one (1) calendar semester, and shall be furnished to the Recipient not later two (2) weeks after the end of the period covered by such report for incorporation and forwarding by the Recipient to the Association of the overall Project Report. Covenant Completed. Compliance shall be reviewed each time through Implementation Support Missions 13

14 Annex-C: Progress against Results Framework (as of November 15, 2016) Project Outcome Indicators Beneficiary Families of Early Recovery Package (Number Sub-Type: Breakdown) - (Core) Number of families with children aged 0 to 24 months attending child health awareness sessions (Number) Number of fully functional One Stop Shops with access to MIS (Number) Intermediate Outcome Indicators Proportion of grievances attended within 60 days (Percentage) Beneficiary Families of Child Wellness Grant (Number Sub-Type: Breakdown) - (Core) Number of One Stop Shops providing child health services (Number) Proportion of beneficiaries satisfied with the Early Recovery Package (Percentage) Proportion of beneficiaries satisfied with the Child Wellness Package (Percentage) Public information campaign carried out as per the agreed communication strategy (Yes/No) Proportion of beneficiary families informed about their eligibility for the Child Wellness Grant (Percentage) Number of NADRA and stakeholder staff trained on the MIS Baseline Yr 1* (Progress up to November 2016) Planned Yr 1* Yr 2* Yr 3* End target* 0 36,228 (Return Grant), 34,480 (Transport Grant) 20,000 70, , , ,837 5,000 20,000 50,000 50, Baseline Yr 1* (Progress up to May 27, 2016) Planned Yr 1* Yr 2* Yr 3* End target* 0 28% 40% 45% 50% 50% 0 20,472 5,000 20,000 50,000 50, N.A N.A No No Yes Yes Yes Yes 0 N.A 25% 65% 85% 85%

15 Dissemination of monitoring and evaluation report on a semi- annual basis, within one month from the end of the previous 6 months (Number) MIS for enrollment and payments in place (Yes/No) Process evaluation of project cycle conducted (Yes/No) No Yes Yes Yes Yes Yes No No Yes Yes Yes Yes 15

16 Annex-D: Integrated Fiduciary Assessment Supervision (IFAS) FATA TEMPORARILY DISPLACED PERSONS-EMERGENCY RECOVERY PROJECT (P154278) IMPLEMENTATION SUPERVISION MISSION (NOVEMBER, 2016) Fiduciary: A comprehensive review of financial management and procurement arrangements in place was carried out for the period May 2016-November The review was conducted in accordance Bank s Fiduciary Guidelines. Economic Affairs Division (EAD) 7 of the Government of Pakistan (GoP) and National Data Base & Registration Authority (NADRA) 8 are the two implementing agencies. The details of the review are as follows. Key Project Data Disbursement IDA Credit Nr PK Approval Date August 26, 2015 Signing Date September 23, 2015 Effective Date December 21, 2015 Closing Date February 28, 2019 Approved Amount US $ 75 million Disbursement The mission noted that as of November 30, 2016, an amount of US $ 4.70 million has been processed by the World Bank as an advance against the TA Component 3 managed by NADRA and US $ million for grants under the under Components 1 and 2 to the EAD-PMU DA. The mission was informed by EAD PMU that an amount of US $ million has been utilized from the advance received and will be reported in semi-annual ending December 31, 2016 IFRs. Whereas, NADRA has incurred about US $ million expenditure as of September 30, 2016 from the IDA advance. Designated Account: The designated accounts have been established both by EAD-PMU and NADRA. Fiduciary Capacity Economic Affairs Division (EAD)-PMU Staffing: There has been no change in the financial management staffing since last mission held in May The project accounting section of PMU at EAD is headed by an experienced FMS, he is assisted by an accountant, cashier and a MIS person in maintaining Project s books of account and verification of payments to beneficiaries. The FMS reports to the project director. Budgeting: The mission was informed that FATA TDP-ERP annual expenditures pertaining to Components 1 and 2, based on the planned activities, is incorporated as a separate line item in the annual budget of EAD for FY 2016/ The EAD assumes the responsibility for donor coordination and reporting, and for managing fund flows to Payment Service Provider (NBP). The EAD will also provide a platform for project coordination with NADRA and key FATA government agencies, including the FATA Secretariat, Law and Order Department, Return and Rehabilitation Unit, Planning and Development Department, Department of Health (DoH), and FATA Disaster Management Authority (FDMA). 8 NADRA will provide all technical and operational support for field implementation of the project. NADRA s key responsibilities will be: (i) implementation of a comprehensive communications campaign; (ii) further development and maintenance of the project MIS; (iii) setting up and operation of OSSs; and, (iv) acquisition and subsequent verification of biometric data on-site. 16

17 FM consideration in the Fiduciary Assessment Fund Flow Arrangements: A segregated Designated Account (DA) for the project has been opened by the EAD in accordance with the procedures laid down by the Finance Division, Government of Pakistan, for receiving IDA funding and is used for financing of cash transfers to the National Bank of Pakistan as a Payment Service Provider for releasing cash grants to all eligible beneficiaries of FATA. The account is jointly operated by two senior officials of the PMU. Payment of EAD PMU contracted staff s monthly salaries including incremental operating costs is made through Technical Assistance under Component 3. Accounting and financial reporting: There has been no change in the accounting and financial reporting systems since last Mission held in May 2016, government s cash basis of accounting system is used in the EAD. Separate books of account have been kept for the FATA TDP-ERP on internally developed computerized accounting software using cash basis of accounting system. The mission agreed with the PMU FMS that necessary SOPs will be developed for the accounting and reporting on the project activities including reconciliation of cash transfers to Service Provider (National Bank of Pakistan) and cash withdrawn by the beneficiaries from their accounts by December 25, The mission indicated that expenditure should be recorded in the books of the project only when the beneficiaries have withdrawn the funds from the participating bank. Financial Reporting and Disbursement: The first IFRs for the project was received on April and it was found acceptable and the second IFR is expected by December 15. While the report on disbursement will be used for tracking, monitoring and reporting expenditure in the IFRs, the forecast of funds will be based on the funds to be disbursed to the participating banks. In addition, reimbursements for ERG remain based on reports of actual withdrawals made by beneficiaries crosschecked with NADRA s lists of biometrically verified TDPs. The PMU management is required to provide explanation on variances exceeding 15% between what was requested in the IFRs and actual expenditures. Further, an online and real time business intelligence dash board will be used to track and disbursement of funds to eligible beneficiaries of FATA. The mission was informed that as of November 30, 2016 and after due verification process an amount of US $ million has been released to the National Bank of Pakistan on account of Livelihood Support Grant (LSG) and Child Wellness Grant (CWG). Further an amount US$ 11.8 million has been verified on account of Early Recovery Grant (ERG) paid by the Government of Pakistan to FATA Temporary Displaced Persons (TDPs). This amount will be claimed as reimbursement under retroactive financing in the IFRs due for submission. Internal control and internal audit: The mission noted that PMU finance team has adequately maintained proper segregation of duties and carry out monthly reconciliation of accounts. The payments to the Service Provider bank were made in accordance with the provision of the Provision of Services Agreement. The mission was informed that EAD has designated a Section Officer of the department as the project internal auditor who reports to the Secretary EAD. The internal auditor is mainly responsible for the review and authenticate project semi-annual IFRs submitted to the Bank. The mission suggested that the internal auditor must be adequately qualified in the field of accounting and auditing and have relevant experience to ensure control effectiveness, and disbursement of funds to eligible beneficiaries are in accordance with the business rules provided in the Project Operational Manual. Management Information System (MIS): A detailed presentation was made on the MIS, developed internally on Microsoft Access, for verification of payments made under LSG and CWG to TDPs by Payment Service Provider (National Bank of Pakistan - NBP). It was demonstrated that data obtained from the NADRA portal is converted into Excel and compared with the NBP soft data provided in Excel. It was explained that under the current arrangements NBP first make the payments to FATA-TDPs after observing all the Business Rules and then submit its invoice along with soft data in Excel format to EAD-PMU for reimbursement of payments, excluding NBP fee which is borne by the GOP. It was further informed that NBP has not yet made its portal functional for FATA-TDPs. The mission appreciated the efforts made by EAD-PMU for the verification of reimbursement of NBP invoice through an in-house 17

18 developed system. However, it noted that the current procedure is open to compromise as there is no direct linkage between NBP soft data in Excel and NADRA s portal. It was suggested for effective control that EAD should explore the possible solution(s) to this issue and provide the estimated cost for possible automation of data transfer by January 15, Until a proper solution is identified and implemented, an independent review by the EAD internal auditor will be carried out before any payments are made to ensure that payments are in accordance with the NADRA portal information. External audit: The project financial statements for FY 2015/2016 for the funds managed by EAD, has been audited by the Auditor General of Pakistan. The audited financial statements and the audit report thereon along with the management letter must be submitted to the Bank within six months of the close of financial year. National Database Registration Authority - NADRA Fiduciary Capacity Entity-wide approach has been adopted for assessing financial management system in respect of component 3 (Technical Assistance) of the project managed by NADRA. There is no significant change in the legal status or administrative set-up of NADRA since project appraisal. NADRA is established as an independent corporate body with requisite autonomy to operate independently including an independent Board of Governors. The Projects Department of NADRA is responsible for implementing the TA Component -3. The project is managed under the supervision of Chief Project Officer with three Deputy General Managers. The Director Internal Audit Department reports directly to the Audit Committee of the Board. Staffing: There has been no change in the staffing arrangements responsible for managing the financial management systems of the project. It is headed by an experienced and a qualified Director Finance, who is supported by Deputy Director Finance and two accounts assistance, all have relevant education and experience. The mission was informed that Regional Management Accountant (RMA) KP is responsible for tracking project expenditure incurred at field level in FATA. Budgeting: The Director Finance of the project informed that the TA Component specific budget for the entire life (3-years) has been approved by the Chairman, NADRA in consultation with the Project Director and his team. The review of TA approved budget shows that following budgeted costs have been charged against the TA Component managed by NADRA. The Project Director Finance shared a comparative statement showing budgeted expenditure under various heads and actual expenditure incurred for FY 2015/16. FM consideration in the Fiduciary Assessment Fund Flow Arrangements: A segregated Designated Account (DA) has been opened in US Dollars with National Bank of Pakistan by NADRA which is jointly operated by two authorized signatories. The project received an amount of US $ 4.7 million as an advance under the IDA Credit and US $ million has been utilized as of September 30, 2016 for activities under Component 3 (TA) NADRA is responsible for handling all agreed procurement, operational cost requirements for the ERG-TDP project including FATA Secretariat, FDMA, Department of Health and EAD operational costs. Accounting and financial reporting: The mission noted that there has been no change in the financial management systems since last mission held in May NADRA uses accrual basis of accounting in a computerized accounting system (Oracle Financials). The chart of accounts is adequate to cater to Project s financial reporting requirements. The General Ledger module is linked with the sub - modules comprising of: Receivables; Payables; Cash Management; Assets; and Payroll. Salient feature of the system are: Effective budgetary control; Automatic payment of vendors/suppliers invoices; Automatic 18