TEMPLATE FOR PROJECT CONCEPT NOTE (PCN)



Document ofThe World BankReport No: 70750 v1Restructuring PAPERON APROPOSED Project restructuring of Development of The National Statistical System ProjectCREDITIN THE AMOUNT OF SDR 14.1 MILLION(US$20.5 MILLION EQUIVALENT)March 20, 2007TO THERepublic of kenyaJune 29, 2012ABBREVIATIONS AND ACRONYMSCBSCPIERPGDPCentral Bureau of StatisticsConsumer Price IndexEnterprise Resources PlanningGross Domestic ProductGOKGovernment of KenyaIDAInternational Development AssociationKIHBSKNAOKNBSMDAKenya Integrated Household Budget SurveyKenya National Audit OfficeKenya National Bureau of StatisticsMinistries, Departments, and AgenciesMOFMinistry of FinanceMPNDNAMinistry of Planning and National DevelopmentNot ApplicableNASSEPNational Sample Survey and Evaluation ProgramNSSPADPDONational Statistical SystemProject Appraisal DocumentProject Development ObjectiveTSUTransition Support UnitSTATCAPStatistical Capacity Building ProgramRegional Vice President:Makhtar DiopCountry Director:Johannes ZuttSector Manager / Director:Humberto LopezTask Team Leader:Philip Brynnum JespersenKenyaDevelopment of The National Statistical System ProjectP085414ContentsPageA.SUMMARY6ANNEX 2: Reallocation of Proceeds9RestructuringStatus: DraftRestructuring Type: CD ApprovalLast modified on date : 12/17/20101. Basic InformationProject ID & NameP085414: KE-Development of The National Statistical System Project?CountryKenyaTask Team LeaderPhilip Brynnum JespersenSector Manager/DirectorHumberto LopezCountry DirectorJohannes C.M. ZuttOriginal Board Approval Date03/20/2007Original Closing Date:12/31/2010Current Closing Date06/30/2012Proposed Closing Date09/30/2012EA CategoryC-Not RequiredRevised EA CategoryC-Not Required-Not RequiredEA Completion DateNot Applicable (NA)Revised EA Completion Date2. Revised Financing Plan (US$m)SourceOriginalRevised BORR30.0030.00 IDA20.5020.50 Total50.5050.503. BorrowerOrganizationDepartmentLocation Republic of KenyaKenya4. Implementing AgencyOrganizationDepartmentLocation Kenya National Bureau of StatisticsKenya National Bureau of StatisticsKenya National Bureau of StatisticsP.O. Box 30266– 00100 GPONAIROBI.5. Disbursement Estimates (US$m)Actual amount disbursed as of 06/20/201211.31Fiscal YearAnnualCumulative20082.75 2.7520090.76 3.51 20101.04 4.55 20112.60 7.15 20124.1611.31 Total11.316. Policy Exceptions and Safeguard PoliciesDoes the restructured project require any exceptions to Bank policies?NoDoes the restructured projects trigger any new safeguard policies? If yes, please select from the checklist below and update ISDS accordingly before submitting the package.No7a. Project Development Objectives/OutcomesOriginal/Current Project Development Objectives/OutcomesThe original project development objective (PDO) has not been changed. It is to establish a sustainable national statistical system to provide reliable, timely and accurate data in accordance with international standards through: (a) strengthening the capacity of the relevant statistical agencies through training and adoption of new information and communication technology; (b) carrying out legal and institutional reforms that promote statistical data development; (c) establishing linkages among statistical data producers; (d) promoting statistical information sharing among data users to strengthen the quality of decision making; and (e) developing a data access and dissemination strategy in conformity with relevant legislation and international good practice. 7b. Revised Project Development Objectives/Outcomes [if applicable] Not applicableDevelopment of The National Statistical System ProjectRESTRUCTURING PAPERSUMMARYThe proposed restructuring consists of (i) a reallocation of SDR 1.10m (USD 1.6m) from the spending category Consultant Services & Audits to Training and Workshops, and (ii) an extension of the closing date from June 30, 2012 to September 30, 2012, as requested by Government of Kenya in its letter dated the June 22, 2012. This is the second extension of the closing date after the project was restructured the first time in December 2010. The total cumulative extension does not exceed two (2) years, and therefore does not require RVP approval.The proposed restructuring will facilitate completion of two ongoing priority activities:Finalizing the ongoing installation of the Enterprise Resource Planning (ERP) system in KNBS, which includes automating all financial, administrative and HR systems. The ERP is expected to improve some of the weaknesses identified in the recent procurement and financial management pleting the third phase of the master sampling frame (NASSEP V) in the arid and semi-arid parts of Kenya. The NASSEP will form the basis for all national household-based surveys in Kenya until the next Census in 2019. The current contracts of staff members of the project’s Transitional Support Unit (TSU) will be extended on a sole-source basis in order for them to continue managing the project during the extension period and settle outstanding commitments and close all project books after the project’s closure.The recently completed Implementation Support Mission concluded that overall progress towards the project development objective (PDOs) has been substantial and six out of seven indicators had reached their performance targets. In particular, there has been appreciable progress in data production, institutional reform, capacity and infrastructure development, and in coordination of the national statistical system. However, access to data and dissemination had performed below expectations.With respect to institutional reform, Kenya National Bureau of Statistics (KNBS) has been transformed from a Government department, Central Bureau of Statistics (CBS), to a semi-autonomous agency, KNBS, and the planned staff transition process, from GoK to KNBS staff, has been completed. In terms of data production, the project funded 13 out of the 15 surveys undertaken under the current Strategic Implementation Plan (2008-2012), including a number of important economic surveys that have significantly improved the compilation of the national accounts. The Government of Kenya funded the majority of the 2009 Census costs, which generated comprehensive results in one year. Impressive progress has also been registered across the national statistical system (NSS), both with respect to administrative data production in ministries, departments and agencies (MDAs), and coordination of data producers across sectors. In MDAs, in general, there has been a marked increase in the quantity and quality of data produced, and support from the project has helped to reduce the production time in some MDAs.Despite the progress in data production, there has been limited progress in user access to the data and other statistical information produced by MDAs. The Censuses and surveys undertaken by KNBS are traditionally launched in hard copy with only headline statistics being made available in electronic format online. Access to anonymized micro data is very limited and KNBS’ dissemination framework is largely viewed as functioning poorly by data users. Indicators that are regularly updated on KNBS’ website are limited to the monthly CPI, the quarterly GDP aggregates, and basic monthly economic indicators, including as coffee and tea prices. Most of the economic and social survey reports that have been completed over the last decades are not available online. In addition, for a large period of the project, KenInfo, the national database for development results, which is housed in KNBS, has either been inaccessible to users or key indicators have been several years out of date. Although recently, the Mid-Term Priority indicators were updated to the year 2010 – one year short of the latest 2011 indicators that have been available since October 2011.The total projected disbursements for the project is SDR 9,285,365 (USD 13,500,000). The final disbursement ratio is projected to reach approximately 65% of the total IDA credit. The difference of approximately SDR 4,814,634 (USD 7,000,000) is likely to be cancelled.Figure 1: STATCAP disbursements since project startHowever, continuous challenges in financial management and procurement as well as lack of progress on public data access resulted in an overall assessment of Modestly Satisfactory for the project.Despite these challenges, the Bank agreed to extend the project by three months pending progress in the three areas below:The Bank required a formal request from Ministry of Finance to extend the project until the September 30, pleting a procurement plan for the three months extension period.Addressing the financial management issues of (i) clearing the outstanding audit qualifications with Kenya National Audit Office (KNAO) and (ii) settling the differences between the IFRs and cash book that were identified during the recent in-depth financial management review.Progress in all three areas has been significant: a) the letter from Ministry of Finance requesting three months extension was received on June 26, b) the updated procurement plan for the extension period was received on June 25, and c) the project also presented the Bank with the clearance letters from KNAO on June 27. It was agreed with the Bank’s FM team that the reconciliation of the difference between the cash books and the IFRs would require additional time. The exercise is expected to be completed before the end of August 2012.The difference between the project cash book totals and the IFR totals originates from the early years of the project, e.g. 2005-2007, when KNBS (then Central Bureau of Statistics) was a department in Ministry of National Planning and Development (MNPD) and did not have its own financial management or procurement units. During this period all cash books were handled by MNPD and expenditures for CBS and MNPD were manually entered in the same hand-written cash books. The substantial process of separating the CBS and MNPD related expenditures recorded in the cash books has begun and is expected to be completed before the end of August 2012.Therefore, the current extension has been approved by both procurement and financial management.ANNEX 2:Reallocation of Proceeds_______________________________________________________________________Kenya — Development of The National Statistical System ProjectP085414{42760}Restructuring PaperProceeds for THE DEVELOPMENT OF The National Statistical System Project, Project ID. P085414, Credit No. 42760-KE will be reallocated as follow:Category of Expenditure#Allocation (SDR)% of FinancingCurrentRevisedCurrentRevisedCurrentRevisedGoodsGoods2,536,6592,536,659100%100%Consultants’ services & auditsConsultants’ services & audits5,104,013-9525-9525-9525-95251447800-95251447800-9525-9525-9525-9525-9525-9525180975144780018097514478001809751447800-95251447800-95254,003,525100%100%Training & workshopsTraining & workshops3,162,607-9525-9525-9525-95251447800-95251447800-95254,263,095100%100%Incremental Operating CostsIncremental Operating Costs2,144,1622,144,162100%100%Refund of Project Preparation AdvanceRefund of Project Preparation Advance658,690658,690Amount due pursuant to section 2.02(b) of this agreementN/AUnallocatedUnallocated493,869493,869N/AN/ATotal*14,100,00014,100,000# A constant conversion rate of 0.69 has been used to covert USD to SDR.The outlined reallocation entails allocating an amount of SDR 1.10m (USD 1.6m) from the spending category Consultant Services & Audits to the spending category Training and Workshops. The proposed reallocation is necessary to have sufficient funds in the spending category Training & Workshops to (i) finalize the third phase of the above-mentioned national sampling frame (NASSEP). This activity will include training of field enumerators. The activities were foreseen in the original PAD, but delayed for reasons including Census implementation, the post election violence, and recently procurement issues.Substantial progress has been made in the project implementation since December 2010 when the project was extended for the first time, including towards the Project Development Objectives. The recently completed Implementation Support Mission concluded that six out of seven outcome indicators had reached their targets, including with respect to progress towards adopting the international GDDS standards that Kenya has signed up to. There has also been good progress towards strengthening data production across line ministries and towards completing the institutional reforms in KNBS. However, there was insufficient progress towards making produced data publicly available online, and previously identified financial management and procurement issues have persisted and not been satisfactorily resolved.In addition, the financial sustainability of the project results is uncertain as the Government of Kenya budget allocations for statistics remain insufficient to fund core economic and social statistical work.Nevertheless, the team believes that a further project extension of three months will enable KNBS to complete the Enterprise Resource Planning system, and the third phase of NASSEP V. Therefore, the closing date for The Development of the National Statistical System (STATCAP) Project, Project ID P085414, Credit No. 42760-KE will be extended from June 30, 2012 until September 30, 2012, as requested by Government of Kenya in the request for extension letter dated June 22, 2012. This will be the second extension of the project. The proposed extension of the project closing date meets the requirements of OP 13.30, paragraph 3, on the Extension of the Closing Date. The requirements consist of: (a)?the project objectives continue to be achievable; (b) performance of?the borrower and other project implementing agencies is satisfactory; and (c)?the borrower has prepared a specific action plan acceptable to the Bank to complete the project. The Interim Financial Reports and audits have been approved. The financial management rating is currently Moderately Unsatisfactory, while the financial management risk rating is Substantial.Despite financial management and procurement challenges, disbursements have improved over the last 12 months, and in total the project has disbursed USD 11.31m. In addition, existing commitments will be settled during the extension period. The total expected disbursements are expected to reach approximately 65% of the IDA credit amount. The remaining balance is expected to be cancelled.In line with the new World Bank the project will continue to be 100% financing of Project Cost Categories. ................
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