Evaluation Team

This report was prepared by Detlev Puetz, Chief Evaluator, OPEV; and Jeffrey Gutman,Consultant. It was peer reviewed by Paul Cadario, Consultant Rakesh Nangia, Director, OPEV, and Mohammed Manai, Division Manager, supervised the preparation of the report.

Objective

This evaluation is designed “to assess the effectiveness and efficiency of trust funds with a particular focus on disbursements and fiduciary factors”

Main Recommendations

Recommendations to the Bank:

• Clarify the future role of trust funds in terms of scale and scope before developing a new policy. Although there is a need for a new policy, this Evaluation believes that crafting a policy at this time would be premature and suggests waiting for about two years. Instead the AfDB should clarify the future role of trust funds in terms of scale and scope. Moreover, it should focus on resolving the specific issues indicated in this evaluation and on reviewing experiences with the range  of trust funds and the arrangements that are currently being applied (such as in CBFF and the Zimbabwe Fund). In the interim, the Bank should be open to a range of trust fund options. While preference could be given to thematic funds, this should not preclude the option of bilateral funds that provide important flexibility outside the chosen themes where important financing gaps are identified. Also, the Bank should be open to the option of a country trust fund (as per Zimbabwe) as a means of addressing funding and coordination on the ground in fragile states.

• Test the “platform” approach to related trust funds similar to those applied the AsDB and World Bank. Initial opportunities for piloting such an approach are: the water-related trust funds, the South-South Facility and related Bilateral funds; and/or FAPA, Migration and Microfinance Trust Funds. The pilot should be designed to achieve benefits in terms of overall strategic framework, coordination and potential economies of scale in providing support and management services while respecting, to the extent possible, the governance requirements of the various donors.

• The ongoing review of CSO partnership experience should incorporate a review of trust fund experience with NGOs. It should result into the preparation of specific guidelines for task managers in assessing NGO capability OPERATIONS EVALUATION DEPARTMENT April 2013 21 and in alternative fiduciary and disbursement procedures that should be discussed with regional and international NGOs. The review and guidelines provide an important opportunity for the Bank to engage with NGOs and raise the level of mutual trust and support.

• The status and role of ORRU should be finalized. The Evaluation findings underscore the critical role that ORRU should play but it requires a substantial change to its functions, even beyond the specifications of the SMCC Task Force, and a clear statement of support from Management. Once finalized, there will be a need to prepare a staffing strategy, including training for existing staff, and to estimate resource requirements. The finalization of the role of ORRU should then be consistent with its placement within the institution. The SMCC Task Force analysis is supported by this Evaluation. It is important to recognize the important resource mobilization relationship between ORRU and ORMU.

• Ensure progress on delegation of authority in the approval of trust-funded projects, replace the setting of arbitrary thresholds and enhance annual reporting including on processing times under the various trust funds. Bank Management should set a policy that after the first one or two years of a fund (mainly pertaining to bilateral funds), there should be full delegation of authority to the Bank as both the Bank and the donor gain understanding and trust. This would replace the setting of arbitrary thresholds.

• Clarify the implementation modality, management structure and resources required with a realistic timeline for disbursements. The newly instituted review process adopted by the SMCC should ensure that it is adequately taking into consideration implementation and resource issues. In particular, proposals should be clear about the implementation modality, management structure and resources required with a realistic estimate of the timeline for disbursements. Specifically the implementation arrangements and resource requirements for the Migration and Development Fund and the Micro-Finance Facility should be reviewed. The process should be monitored over the next year to ensure that it is meeting its objectives and adequately setting expectations.

• A costing analysis should be conducted to inform Management of the Bank’s costs incurred in the management and execution of trust funds and approved projects. While implementation of the ATRS is in its early stages, the analysis could be conducted by taking different types of funds (bilateral vs. thematic; recipient vs. bank executed; investment vs. technical assistance) and selecting a sample for a detailed analysis. This analysis should inform Bank policy on trust fund fees.

• Key Performance Indicators proposed in the Task Force report to the SMCC should be revised taking into consideration the analysis and indicators prepared in this Evaluation. The Key Performance Indicators proposed in the Task Force report to the SMCC should be revised taking into consideration the analysis and indicators (Annex 5) prepared in this evaluation. A process of consultation should be followed with the Board, Management and staff to enhance understanding and commitment. The results should lead to a reformulation of ORRU’s reporting to Management and the Board.

• Revamp ORRU’s website to make it user-friendly and informative. This should include providing the necessary information on individual trust fund requirements and a calendar of upcoming calls for proposals

• Develop an action plan to enhance the procurement capabilities and support to trust funds and related activities. The Action Plan should: incorporate a mandatory training program for task managers in consultant procurement: preparation of clear and succinct guidance notes including examples; and an assessment of options for providing more support in a timely manner to trust fund managers and task managers throughdirect assignment of procurement staff to individual funds and/or placing capacity in ORRU. As part of this effort, an e-learning course should be prepared for management of trust fund projects. This should be mandatory for task managers of trust fund projects to successfully complete the course. The World Bank program could serve as an example and a useful starting point.