Implementation and Financial Management

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					            Title of presentation/theme

           Project Implementation &
             Financial Management
Dec 2010
 Overview
Guiding Principles
          This presentation is based on two guiding
          principles . . .
     1. INCREASE UNDERSTANDING of roles &
          responsibilities in project implementation
          &
     2.   Maximize project IMPACT to benefit rural
          poor




                                                       2
  Overview
 ESA FM Resource Pack Objectives

  To Demystify Implementation & Supervision, with
  particular respect to Financial Management
  It is expected to provide you with:

• A sound platform to engage in implementation
• To share multiple materials, perspectives & ideas
• An opportunity to refresh skills & develop new ones

Some sections may seem too detailed, too slow, or too cursory —
keep going!

                                                                  3
  Overview
 ESA FM Resource Pack Outcomes
. . .and the pack is expected to achieve various outcomes
  •     Provide a common foundation for people’s work in supervision—
        we expect that you will continue to build on this foundation
  •     Provide in-depth resources & materials that should support
        different roles
  •     Guidance on where to find additional support
  •     A measure of this pack’s success will be how many people seek
        out additional assistance, guidance & counsel

       Empirical evidence shows that there is a high correlation
       between excellent fiduciary standards & practices and
       overall implementation progress & results

                                                                        4
Overview
              Don’t get overburdened -
      organize beforehand for Implementation!




                                                5
Introducing Project Supervision

 “Whenever you are in
 doubt…recall the face of the
 poorest and weakest man who
 you have seen and ask yourself, if
 the step you contemplate is going
 to be of any use to him? Will he
 gain anything by it? Will it restore
 him to control over his own life
 and destiny?...Then you will find
 your doubts and your self melting
 away.”

                   Mahatma Gandhi


                                        6
Introducing Project Supervision

IFAD Action Plan
IFAD Action Plan is consistent with changes in international development
architecture from Paris Declaration of Aid Effectiveness & “One UN” agenda
...
    Harmonization & alignment
    Move towards: COUNTRY PROGRAMS, that use
        NATIONAL SYSTEMS

    Systematic support for nationally owned strategies
    Calls for more coordinated & predictable actions among
        development partners

    Increased development effectiveness & impact
                                                                             7
Introducing Project Supervision
What is development effectiveness & impact?*
 For poor rural men and women to have better & sustainable
access to:

   a)   Natural resources (land and water)
   b)   Improved agricultural technologies
   c)   A range of financial services
   d)   Transparent & competitive agricultural input & output
        markets
   e) Rural off-farm opportunities
   f) Pro-poor local & national policy processes, in which the poor
        can participate

   *IFAD’s Strategic Framework, paragraph 6                           8
Introducing Project Supervision

 What are the outcomes of development effectiveness and
 impact?*

   a) Direct: increased incomes & enhanced food security for rural
          poor
   b)     Indirect: country capacities strengthened –
        i. Pro-poor policy framework.
        ii. Pro–poor efficient & accountable Government Institutions
        iii. Strengthened rural poor organizations & institutions
        iv. Increased private sector involvement in rural economy
        v. Enhanced national & local implementation capacity
   *IFAD’s Strategic Framework, paragraph 7


                                                                       9
Introducing Project Supervision
 Supervision Policy

IFAD is implementing IFAD supervision . . .

 Supervision is key instrument for Impact, Sustainability &
   Effectiveness/efficiency of IFAD-funded projects

 Legal basis for policy: IFAD’s Supervision & Implementation Support Policy
   was approved by the Executive Board (EB) (December 2006)

 EB Decision to fully supervise projects (December 2006)
 Supervision Guidelines – prepared to facilitate implementation & guide
   supervision practices in IFAD

 Training of all levels of staff
                     Enhance IFAD’s development effectiveness
                     & IMPACT
                                                                               10
Introducing Project Supervision

Rationale
  IFAD had several rationales to accelerate the move to implement full
  supervision . . .
   Improved results under IFAD supervision
           Strengthen direct dialogue with stakeholders at country level
           Address IFAD’s priority concerns
           Create a learning loop between project implementation & design
   Evaluations of IFAD’s effectiveness & impact in the field
   indicated that:
           Supervision = “outmoded and unsuited”; costs are increasing
            (despite fewer projects)
           Reduced chance for IFAD to be proactive
           Absence of systematic learning & knowledge management



                                                                             11
Introducing Project Supervision

Supervision Policy
     Based on the following elements:

    Flexible supervision arrangements
    IFAD’s direct responsibility for management of full supervision function

     Main supervision modalities.

1.   Direct and Full IFAD supervision, comprising different “blends” of:
         Headquarters staff
         Country presence staff & contracted service providers
         Reputable international/regional/national institutions & local partners

2. Supervision by CIs, including Direct Supervision, being reduced, but still required in
   some cases, but with better-specified roles for IFAD & CIs with active IFAD participation

     In all cases:
          •    Substantial strengthening of implementation support function
          •    IFAD responsible for Supervision in any modality

                                                                                               12
    Introducing Project Supervision

    Supervision Definitions

•   Supervision – Administration of loans for the purpose
    of its disbursement & Supervision of the
    implementation of the project; ensures compliance
    with loan covenants, procurement, promoting
    economy & good governance

•   Implementation Support – focuses on development
    impact, based on assessment of progress, embedded
    in an effective M&E system, joint identification of
    problems, agreement on suitable actions to achieve
    project’s development objectives, respecting
    safeguards

•   Cooperating Institution or Full IFAD Supervision =
    whatever the modality - Supervision is IFAD’s
    fiduciary responsibility.




                                                            13
 Introducing Project Supervision

Operational Implications of the Supervision Policy
  1: Institutional
   IFAD takes direct responsibility for supervision

  2: Human
   Adequate financial & human resources must be mobilized
   Strengthen capacities & processes within departments/ divisions
     at all levels, including dedicated training programme

  3: Financial
   Most incremental costs covered by reduced                   CI
     payments
   Some incremental costs to be incurred


                                                                      14
Introducing Project Supervision

              Project Cycle




                                  15
Introducing Project Supervision
Supervision of the Country-Level Engagement

 • Result-based COSOP – Main instrument to pursue Action
   Plan goals & manage development results at country level

 • COSOP should describe:
    o Supervision modalities to be used & why they are most
        appropriate.
    o   How Supervision will improve impact, knowledge
        management, learning & partnerships
    o   How projects operate within specific country context

 • Country Programme Management Team established by
   CPM-COSOP stakeholder members from within IFAD (e.g.:
   legal, finance) & in-country (e.g.: Minister of Finance, Agric.,
   civil society)
                                                                      16
 Introducing Project Supervision
Responsibilities during Project Supervision
 Government (executing agency)
  – Ensure development effectiveness & impact
   –   Overall responsibility for project execution &
       implementation in accordance with loan agreement, letter
       to the borrower, amendments
   –   Ensure alignment with national strategies & Coordination
       with other development efforts
   –   Ensure fiduciary oversight, proper use of all funds
   –   Approval & supervision of AWPB
   –   Participate in supervision missions
   –   Use of government systems consistent with IFAD
       guidelines
                                                                  17
Introducing Project Supervision
Responsibilities during Project Supervision

Project
–   Ensure development effectiveness & impact
–   Project implementation in accordance with financing agreement, letter to
    the borrower
–   Develop AWPB, seek approval from Government & IFAD, and operate
    within its agreed parameters
–   Set up procurement methods utilizing Government systems, consistent
    with IFAD Guidelines
–   Develop appropriate financial, M&E other systems to ensure proper
    impact, operational, financial & administrative information is available
–   Responsible for proper use of all funds utilized by projects
–   Organise supervision missions with IFAD, prepare reports beforehand,
    provide all pertinent information

                                                                               18
Introducing Project Supervision
Responsibilities during Project Supervision

IFAD
–   Ensure development effectiveness & impact
–   Ensure harmonization & alignment of IFAD’s actions in
    country as per Paris declaration on Aid Effectiveness
–   Fiduciary responsibility & “general rules of engagement”
    for proper use of IFAD financing - on all types of
    supervision modalities – according to IFAD legal
    documents & AWPB
–   Flexibility to reach development impact
–   Provide implementation support

                                                               19
   Introducing Project Supervision

Who plays what role in Supervision at IFAD? (1)
  CPM, Country Presence & Support Staff
  • Ensure development effectiveness & impact
  •   Gather information & provide technical analysis

  •   Listen to borrower, stakeholders & solve problems, or convey
      messages to management. Sometimes good reasons exist for
      NOT doing what IFAD wants

  •   Ensure solutions serve
      broadest range of interests

  •   Fiduciary oversight, “no objections”                 to use
      of financing proceeds
 &                                                                   20
 Introducing Project Supervision
Who plays what role in Supervision at IFAD? (2)
Country Presence
• Ensure development effectiveness & impact

• Gather information from borrower & stakeholders; report &
  propose solutions to CPM

• Carry out technical analysis on portfolio & COSOP
  performance and provide trouble-shooting

• Within CPMT, represent IFAD in Donor/ Government fora to
  develop & strengthen partnerships, KM & policy dialogue

• Fiduciary oversight – monitor implementation of AWPB &
  general compliance with IFAD guidelines
&                                                             21
Introducing Project Supervision

Who plays what role in Supervision in IFAD? (3)
 Management
 • Ensure development effectiveness & impact
 • Approves Supervision plan & budget
 • Take account of macroeconomic, social & political factors,
   as well as technical & economic aspects
   - for country & within the region
 • Make decisions based on information from staff & others
 • Post-mission letter to Government
 • Supervision Quality
    o Managers comment on quality of Supervision
    o Annual Portfolio Review process: Department & IFAD-wide

                                                                22
 Introducing Project Supervision

How to get best results from Supervision
     Always keep project development effectiveness & IMPACT - benefiting
      rural poor - at the forefront
     Flexibility! Learn rules and regulations so know how & where to be
      flexible.
     Learn from past experiences
     Concentrate efforts on performance improvement & demonstrable
      development impact–adopt a problem-solving approach
     Ensure project is driven by beneficiary demand, to develop stakeholder
      commitment
     Promote a participatory approach to implementation, problem solving,
      innovation, sharing information
     Establish clear objectives, guidelines, expectations reflected in AWPB
     Maintain IFAD’s fiduciary oversight

                                                                               23
 Supervising Project Implementation

General Principles (1)

 •   Monitor progress of the projects against targets,
     development objectives & indicators

 •   Monitor procurement made & disbursement of funds

 •   Review effectiveness of financial management
     system and reports

 • Review compliance with loan covenants


                                                         24
Supervising Project Implementation
General Principles (2)
•   Assess risks and problems to successful implementation
    & sustainability, & offer practical solutions

•   Review the continued relevance of the project to the
    recipient country, beneficiary, IFAD development
    priorities; modify if appropriate

•   Assess implementation quality, safeguard adherence &
    IMPACT!

Do not lose sight of IMPACT on rural poor


                                                             25
Supervising Project Implementation:
Financial Management
 Objective
    Primary objective of financial management process:

    •   To optimise financial and economic benefits from
        investment

    •   It includes multiple processes including financial,
        management, assets, cash & funds accounting;
        financial reporting; internal controls; internal audit;
        external audit

    Priority to use national systems consistent with
      IFAD guidelines
                                                                  26
Supervising Project Implementation:
Financial Management

          Fiduciary Roles (1)

               FIDUCIARY ROLE: What is it?

     “Fiduciary” – A person who occupies a position of power
     and confidence with regards to the property of another that
     the law requires him/her to act solely in the interest of the
     person whom he/she represents. It is illegal for a fiduciary to
     misappropriate money for personal gain.

                       » Derived from Roman Law, Encyclopedia
                                                    Britannica


                                                                       27
Supervising Project Implementation:
Financial Management



            FIDUCIARY RESPONSIBILITY

  How much power and confidence?
  How much trust?

   Too much trust could be risky;
   but distrust could be very
   expensive too

   Striking the right balance
   is the challenge
                                       28
Supervising Project Implementation:
Financial Management
Reference Documents
 IFAD Loan Documents
 IFAD Procedures and Guidelines (Handbook/ LTB)
 Government procedures
 Project Implementation Manual
 Project Financial Management Manual
   •   Internal Controls

   •   Project Accounts

   •   Separate Bank Accounts

   •   Annual Audit of Accounts
                                                   29
Thank You

				
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