AFRICAN DEVELOPMENT FUND

Language: French Original: French

APPRAISAL REPORT

FINANCIAL MANAGEMENT SUPPORT PROJECT (PAGEF)

REPUBLIC OF ANGOLA

This document contains errata or corrigenda (see Annexes) .

GOVERNANCE, ECONOMIC AND OSGE FINANCIAL MANAGEMENT DEPARTMENT September 2007

TABLE OF CONTENTS Page

CURRENCY EQUIVALENTS, WEIGHTS AND MEASURES, LIST OF TABLES, LIST OF ANNEXES, LIST OF ABBREVIATIONS, BASIC DATA, LOGICAL FRAMEWORK, EXECUTIVE SUMMARY i-xii I. PROJECT ORIGIN AND HISTORY 1 II. THE SECTOR 2 2.1 Public Administration and the Economic and Financial Management Mechanism 2 2.2 Main Donor Interventions 4 III. AREAS OF INTERVENTION 6 3.1 Selective Approach 6 3.2 Management of the Property or Non-financial Assets of the State 6 3.3 Control and Internal Audit System 7 3.4 External Control Function 8 IV. THE PROJECT 9 4.1 Design and Rationale of Project 9 4.2 Project Areas and Beneficiary Structures 9 4.3 Strategic Context 10 4.4 Project Goal and Objectives 10 4.5 Project Description 10 4.6 Project Costs 15 4.7 Financing Sources and Expenditure Schedule 16 V. PROJECT IMPLEMENTATION 17 5.1 Executing Agency 17 5.2 Institutional Arrangements 17 5.3 Implementation Schedule 18 5.4 Procurement Arrangements 18 5.5 Disbursement Arrangements 21 5.6 Monitoring and Evaluation 21 5.7 Financial and Audit Reports 21 5.8 Coordination of Donors 22 VI. SUSTAINABILITY AND RISKS OF THE PROJECT 22 6.1 Recurrent Expenditure 22 6.2 Sustainability of Project Impacts 22 6.3 Main risks and Mitigative Measures 22 VII. PROJECT BENEFITS 23 7.1 Economic and Social Benefits 23 7.2 Project Impact on Crosscutting Themes 23 VIII. CONCLUSTIONS AND RECOMMENDATIONS 24 8.1 Conclusion 24 8.2 Recommendations 24 This report was prepared by Mr. S. KONE, Economist, OSGE.2 and a Consultant after an appraisal mission to Angola from 25 June to 10 July 2007. Questions on this report should be referred to Mr. G. NEGATU, Director, OSGE, Extension 2077, or Mr. C. SANTISO, Division Manager, OSGE.1, Extension 2186.

LIST OF TABLES

Tables Pages

4.1 Estimated costs by component 15

4.2 Estimated costs by expenditure category 15

4.3 Financing sources 16

4.4 Expenditure schedule by expenditure category 16

4.5 Expenditure schedule by financing source 16

5.1 Estimated project implementation schedule 18

5.2 Procurement arrangements 19

LIST OF ANNEXES

Annexes Number of Pages Annex 1 Map of Angola 1 Annex 2 Organization structure of MINPLAN 1 Annex 3 Organization structure of MINFIN 1 Annex 4 Organization structure of the Audit Office 1 Annex 5 Organization structure of UGP 1 Annex 6 Operations of the Bank in Angola 1 Annex 7 Terms of reference of the PMU Manager 1 Annex 8 Terms of reference of the Administrative and Financial Assistant 1 Annex 9 Terms of reference for the Technical Assistant in charge of inventory and the institution of a State property valuation methodology 5

Annex 10 Terms of reference for the firm responsible for managing training modules at the NIF 3

Annex 11 Terms of reference for the Technical Assistant in charge of fine-tuning the institutional diagnosis of the Audit Office (AO) 2

Annex 12 Terms of reference for the Technical Assistant in charge of implementing the priority activities of the Audit Office (AO) 4

Annex 13 List of goods and services and detailed costs 5 Annex 14 Flow chart of the project 3

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AFRICAN DEVELOPMENT FUND

01 B.P. 1387 ABIDJAN 01 Tel: 20-20-44-44: Fax: 20-20-40-99

PROJECT INFORMATION SHEET

Date: September 2007

The information given hereunder is intended to provide guidance to prospective suppliers, contractors and all persons interested in the procurement of goods and services for the projects approved by the Board of Directors of the Bank Group More detailed information and guidance may be obtained from the Executing Agency of the Borrower. 1. COUNTRY : Republic of Angola 2. PROJECT TITLE : Financial Management Support Project

(PAGEF) 3. PROJECT AREA : Countrywide 4. BENEFICIARY : Republic of Angola 5. EXECUTING AGENCY : National Department of Studies

and Planning Ministry of Planning

6. PROJECT DESCRIPTION : The main components of the project are:

(i) Capacity-building in the management of State property and internal audit; (ii) Institutional and human capacity-building for the external audit function (iii) Project management and monitoring

7 PROJECT COST : UA 6.57 million

(i) cost in foreign exchange : UA 4.33 million (ii) cost in local currency : UA 2.24 million

8. ADF LOAN : UA 5.9 million

9. OTHER SOURCES

Government : UA 0.68 million

10. LOAN APPROVAL DATE : October 2007 11. PROJECTED START-OFF DATE : January 2008 AND DURATION OF THE PROJECT : and 36 months

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12. PROCUREMENT OF GOODS AND SERVICES

All procurement of goods, works and consultancy services financed with ADF resources shall be made in accordance with the ADF’s relevant rules of procedure on procurement, or where necessary, its rules of procedure for the recruitment of consultants. In all cases, the Bank’s standard bidding documents shall be used. Goods

IT and office automation equipment (computers, printers, software, photocopiers, etc.) for the National Inspectorate of Finance (NIF) and the Audit Office (AO) shall be procured through national competitive bidding (NCB) for about UA 0.30 million as a single lot. Vehicles for the AO and the Project Management Unit (PMU) shall be procured through national competitive bidding for about UA 0.082 million. NCB is justified by the fact that the small quantities and sums involved will probably not attract suppliers abroad, and there is a sufficient number of local suppliers to guarantee competition. Documentation for the AO shall also be procured through international shopping for about UA 0.14 million. To facilitate the start-up of activities, IT and office automation equipment for the PMU shall be procured through national shopping for UA 0.023 million since the sums are small and the items are standard products available locally. Consultants

As concerns State property management, a top-ranking consultancy firm shall be recruited from a shortlist, during Phase 1 on stocktaking, to provide qualified consultants as follows: (i) an expert who is technical coordinator and team leader with proven expertise in asset management (12 months); (ii) a jurist with expertise and experience in property law and ownership rights(12 months); (iii) and IT and information systems expert with experience in Oracle and SQL Server (12 months); (iv) an expert in non-financial asset accounting (12 months); (v) an expert in inventory methodology and asset management control (12 months); and (vi) a pedagogical coordinator plan on-the-job training sessions (3 months). In Phase II which concerns the installation of an asset valuation system, the same consultancy firm shall provide six other consultants as follows: (i) a coordinator/mission chief, with advanced knowledge of asset valutation and management (12 months); (ii) a civil engineer with expertise in real estate valuation (12 months); (iii) a geologist with expertise in natural resource valuation (12 months); (iv) an agronomist specialized in agricultural land valuation (12 months); (v) a specialist in petroleum valuation (12 months); and (vi) a jurist with expertise and experience in property law and ownership right (3 months). The estimated cost of the contract is UA 1.76 million. The selection procedure shall be based on the technical assessment of bids and cost considerations. On support to the Audit Office (AO), a renowned consultancy firm shall be recruited from a shortlist for a short-term consultancy (2 months) to implement the AO’s 2008-2010 Strategic Plan by fine-tuning the institutional diagnosis and training needs. The firm shall provide three consultants as follows: (i) a jurist specialized in the organization of AOs ; (ii) a human resources expert; and (iii) an information systems expert. The contract for this activity amounts to UA 0.13 million. The selection procedure shall be based on the technical assessment of bids and cost considerations. Another consultancy firm shall be recruited from a shortlist for a period of twelve months to assist and provide on-the-job training to AO officials and technicians in the implementation of its priority acitivities. The firm shall provide the AO with four consultants in the following areas: (i) public accounts audit; (ii) contract analysis; (iii) judicial procedure; and (iv) information systems. The contract for this activity amounts to about UA 0.65 million. The selection procedure shall be based on the technical assessment of bids and cost considerations. Furthermore, for implementation of the Strategic Plan, technical assistance and training shall be procured through a

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shortlist for about UA 0.13 million. Besides, the Project Coordinator and the Administrative and Financial Assistant of the PMU shall be recruited from shortlists for an estimated cost of UA 0.45 million. Consultants shall also be recruited from a shortlist to provide assistance to the PMU in the area of procurement and translation of documents for a total sum of UA 0.13 million. Training

For human capacity-building in internal audit, a specialized firm or institution shall be recruited from a shortlist for about UA 0.77 million to provide the National Inspectorate of Finance (NIF) with consultants to organize 11 (eleven) training modules in the form of local workshops and seminars. For the external audit, another specialized firm or institution shall be recruited from a shortlist for about UA 0.84 million to provide the Audit Office (AO) with consultants to organize 11 (eleven) training modules in the form of local workshops and seminars. The selection method shall be based on the comparability of technical proposals and consideration of the lowest bid. Besides, a public institution shall be selected through a negotiated contract to provide a two-week training course abroad for four officials of the National Department of State Property (DNPE). Furthermore, eight senior AO officials shall be given a two-week training course at a similar institution abroad selected through a negotiated contract. These negotiated contracts are justified by the fact that such training abroad is provided within the framework of exchange programs between similar public or parapublic institutions. The estimated cost of both activities is UA 0.067 million. The organization of two sensitization seminars on public finance external control for civil society shall be conducted through national shopping for an estimated cost of UA 0.14 million. Operation

Office supplies, consumables and sundry operating expenses of the PMU shall be procured through national shopping for the sum of UA 0.18 million. Audit

Project audit services (UA 0.043 million) and design of the PMU accounting system (UA 0.023 million) shall be provided by audit firms selected from a shortlist. The selection method shall be based on the lowest price for comparable services.

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CURRENCY EQUIVALENTS

(July 2007)

Currency Unit = Kwanza UA 1 = US$ 1.51557 UA 1 = 120.128 Kwanzas US$ 1 = 79.262 Kwanzas

WEIGHTS AND MEASURES

Metric system (SI)

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ACRONYMS AND ABBREVIATIONS ADB = African Development Bank ADF = African Development Fund AFROSAI = African Organization of Supreme Audit Institutions ANIP = National Agency for the Promotion of Private Investment BD = Bidding documents BNA = National Bank of Angola BNA = National Bank of Angola BWI = Bretton Woods Institutions CEM = Country Economic Memorandum CGP = Country Governance Profile CPAR = Country Procurement Assessment Report DAC = Audit and Litigation Department DAGB = Department of Administration and Budget Management DEAT = Department of Studies and Territorial Analysis DEP = Department of Economic Programs DFID = Department of Financing and International Development DGA = Department of Management and Assistance DIP = Department of Investment Programs DM = Department of Methodology DNDT = National Department of Territorial Development DNI = Department of Investments DP = Department of State Property DRC = Democratic Republic of Congo DSP = Department of Studies and Projects DSP = Department of Studies and Projects EITI = Extractive Industries Transparency Initiative EMTA = Technical Assistance Project for Economic Management in Angola EU = European Union Fiscal ROSC = Report on the Review of Standard and Codes for Fiscal Transparency GDP = Gross domestic product GEREI = International Economic Relations Bureau GSB = General State budget HDI = Human Development Index HIPC = Heavily Indebted Poor Countries Initiative HIV/AIDS = Human immunodeficiency virus HRD = Human Relations Department ICB = International competitive bidding IFCA = Integrated financial control of the Administration IMF = International Monetary Fund IMF = International Monetary Fund INE = National Institute of Statistics INTOSAI = International Organization of Supreme Audit Institutions ISC = Supreme Control Institution LC = Local currency MAPESS = Ministry of the Public Service and Social Security MDGs = Millennium Development Goals MINFIN = Ministry of Finance MINPLAN = Ministry of Planning MTEF = Medium-term expenditure framework

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MTFF = Medium-term fiscal framework NCB = National competitive bidding NEPAD = New Partnership for Africa’s Development NIF = National Inspectorate of Finance PDD = Planning and Development Division PEMFAR = Public Expenditure Management and Fiduciary Accountability Review PFMP = Public Finance Modernization Program PIP = Public investment program PMU = Project Management Unit PRFA = Angola Tax Reform Project PRSP = Poverty reduction strategy paper RBCSP = Results-based Country Strategy Paper SADC = Southern African Development Commission SC = Steering committee SIGFE = Integrated System for the Management of State Finances SIGIP = Integrated System for Public Investment Management SINGHR = Integrated System for human resource Management SONANGOL = National Oil Company of Angola SPSB = Studies, Planning and Statistics Bureau UA = Unit of Account UNDP = United Nations Development Program USAID = United States Aid Agency

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STRATEGIC OUTCOMES MATRIX OF THE FINANCIAL MANAGEMENT SUPPORT PROJECT (PAGEF)

Country : Republic of Angola Date: : September 2007 Project design team : S. KONE, Economist, OSGE.2 and a Consultant

HIERARCHY OF OBJECTIVES

EXPECTED OUTCOMES

SCOPE

Beneficiaries:

PERFORMANCE INDICATORS

OBJECTIVE INDICATORS AND TIMEFRAME

ASSUMTIONS / RISKS

SECTOR GOAL Boost robust and balanced economic growth through transparent and efficient public finance management

LONG-TERM RESULTS

Reduction of inequalities and greater access to public services for the population and the private

sector .

Angolan population (1)Percentage of the population living below the poverty line; (2) GINI index; (3) Percentage of public spending on priority sectors (infrastructure, education, health);

(1) Significant decline in the number of poor people to less than 68% in 2010 (2) Significant decline in the GINI index to less than 0.62 in 2010 (3) Percentage of public spending on priority sectors is in conformity with the PRSP in 2010

PROJECT OBJECTIVES Contribute to transparency and efficiency in public resource management (1) Build capacity in the management of State property (2) Build capacity in the areas of control and internal audit (3) Build capacity in external control

MEDIUM-TERM RESULTS

1.1 The DNPE has the requisite capacity to valuate and manage State property (non-financial assets; 1.2 The public accounting system includes non-financial assets and is effectively operational; 2.1 The NIF has the requisite technical expertise to carry out control and internal audit of public finance; 2.2 The reliability and accuracy of the public accounting system and the GSA increase.. 2.3 Greater efficiency in public finance 3.1 The Audit Office (AO) has adequate institutional capacity and human resources commensurate with its statutory duties. 3.2 The AO exercises jurisdictional control over the accounts and the GSAs are audited regularly. 3.3 Independent external audits are effective and there is greater transparency in public finance 3.4 Civil society (including a good number of women’s NGOs) are sensitized and participate in the public finance transparency process

MINFIN (DNPE, NIF)

Audit Office

1.1 Number of DNPE employees trained in State property management and valuation techniques; 1.2 Percentage of State property registered and integrated into the public accounting system; 2.1 Number of NIF employees trained in public finance control and internal audit techniques; 2.2 Number of NIF audit missions with follow-up actions 2.3 Finance law implementation report 2.4 Projection-actual gaps in budget performance indicators 3.1 Number of AO employees trained 3.2 General State account (GSA) audited 3.3 AO reported 3.4 Number of civil society participants at sensitization seminars on external audits Sources: Official statistics of MINFIN, Finance Law, budget implementation report (GSA), NIF reports, AO reports, donor reports, PEMFAR status report on PAGEF

1.1 At least 36 DNPE experts and technicians receive on-the-job training in Angola, of which 4 are trained abroad in 2009 1.2 GSA produced and published, including State property valued for at least six ministries and five provinces in 2010

2.1 At least 114 NIF inspectors and technicians (including 55 from the provinces) are trained in 11 modules in 2009 2.2 About 15 audits with follow-up actions conducted in by 2010 2.3 Accurate GSA produced regularly in 2010 2.4 Reduction of performance indicator gaps by at least 50% in 2010

3.1 At least 165 AO auditors and experts trained in 2010 3.2 The GSAs for 2006-2008 are audited by the AO before 2010 and the draft GSB for 2009 is endorsed by the AO in 2008 before submission to Parliament 3.3 AO reports are published 3.4 About a hundred persons from civil society (at least 1/3 of them being women) attend the two sensitization seminars on external audits

Inadequate government commitment to the pursuance of reforms Little motivation among senior State employees due to low salaries Weak institutional capacity in the country, notably the lack of qualified manpower for implementation of reforms

ACHIEVEMENTS 1.1 Institution of a State property inventory and valuation system 1.2 Institution of legal procedures and instruments governing State property

SHORT-TERM ACHIEVEMENTS 1.1.1 Property inventory conducted in 6 ministries and 5 provinces in 2010 1.1.2 Property valuation methodology instituted, registered in SIGPE and linked to SIGFE 1.2 Institution of legal procedures and instruments governing State property

1.1.1 Number of technical-assistant-months spent on property inventory 1.1.2 Number of technical-assistant-months spent on State property valuation

1.2 Idem 1.1.1 and 1.1.2

1.1.1 Five (5) TAs for 12 months and 1 TA for 3 months (2008-2009) 1.1.1 Five (5) TAs for 12 months and 1 TA for 3 months (2008-2009)

1.2 Idem 1.1.1 and 1.1.2

Government commitment to financial management

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HIERARCHY OF OBJECTIVES

EXPECTED OUTCOMES

SCOPE

Beneficiaries:

PERFORMANCE INDICATORS

OBJECTIVE INDICATORS AND TIMEFRAME

ASSUMTIONS / RISKS

1.3. Institutional and human capacity-building for the DNPE 2.1. Human capacity-building for the NIF 2.2. Equipment of the NIF with IT material 3.1. Institutional and human capacity-building for the Audit Office (AO) 3.2. Equipment of the AO with IT material 3.3 Capacity-building for civil society

1.3.1 DNPE experts trained in State property inventory and valuation techniques 2.1 Training given to 114 NIF experts, including 55 from the provinces in 2010 2.2 IT equipment supplied to NIF 3.1.1 The AO strategic plan for 2008-2010 fine-tuned and made operational in 2008;

3.1.2 AO strategic plan implemented in 2009-2010

3.1.3 AO capacity reinforced for the performance of its statutory priority activities (analysis of accounts, contracts and procedures) in 2009

3.1.4 ICT master plan prepared and the SIGTC information system set up 3.1.5 Library and documentation services operational in 2009

3.1.6 Training provided to 165 AO experts in 2008-2009 3.2.1 IT equipment supplied to the AO

3.2.2 Vehicles procured for the AO 3.3 Seminars organized for civil society

MINFIN (DNPE, NIF)

Audit Office

1.3.1 Number of training actions organized in Angola for DNPE staff 1.3.2 Number of DNPE employees sent on training abroad 2.1 Number of training actions in Angola and training courses abroad for NIF staff 2.2 Number of PCs, UPS, and laptops procured for the NIF 3.1.1 Number of technical-assistant-months spent on fine-tuning the Strategic Plan for 2008-2010

3.1.2 Number of technical-assistant-months spent on implementing the Strategic Plan

3.1.3 Number of technical-assistant-months spent on support to priority AO activities

3.1.4 Number of technical-assistant-months spent on the ICT master plan and the SIGTC system

3.1.5 Number of books and documents procured

3.16 Number of training actions in Angola

3.1.7 Number of employees on training abroad

3.2.1 Number of overhead projectors, PCs, UPS and photocopiers

3.2.2 Number vehicles procured

3.3 Number of seminars organized for civil society

1.3.1 Nine (9) training modules prepared and implemented by the TAs 2008-2009 1.3.2 A training course abroad for 4 DNPE experts in 2010 2.1 Eleven (11) training modules organized for about 114 trainees from NIF 2.2 42 PCs and UPS, and 72 laptops procured for the NIF in 2009 3.1.1 Three (3) TAs for 2 months in 2008 3.1.2 One (1) consultancy firm for implementation of the Strategic Plan 3.1.3 Three (3) TAs for support in 4 priority areas of the AO in 2008-09 3.1.4 One (1) TA in information systems for 12 months in 2008-2009 3.1.5 Number of books procured in 2009 3.1.6 11 training modules organized for about 165 trainees from the AO in 2008-09 1.3.2 A training course abroad for 8 AO experts in 2010

3.2.1 Two overhead projectors, 30 PCs and UPSs, 2 photocopiers procured in 2008

3.2.2 One (1) 4X4 vehicle and one (1) sedan procured in 2008 3.3 Two sensitization seminars for civil society organized in 2009 and 2010

capacity-building Availability of Government counterpart funds Conduct of planned recruitments in NIF and the Audit Office (AO)

FINANCIAL RESOURCES

ADF loan : UA 5.90 million GVT : UA 0.67 million Total : UA 6.57 million

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EXECUTIVE SUMMARY Beneficiary : Angola

Executing Agency : National Department of Studies and Planning in the Ministry of Planning

Sector : Multisectoral 1. Project history :

1.1 Angola remains one of the poorest countries in Africa although it abounds with natural resources. Oil revenue, which accounts for 56% of GDP, and diamond exports enabled the country to attain high growth rates (11.2% in 2005 and 18.6% in 2006), generating a surge in per capita GDP (US$ 1550 in 2005 and US$1836 in 2006). However, there are wide disparities in national wealth distribution, with a very high GINI index of 0.62 in 2005. 1.2 The 27-year long civil war which ended in 2002 made it impossible to implement the appropriate economic policies. Its effects on several sectors are still a major impediment to real economic revival that can substantially reduce poverty. In the human development index classification, Angola is ranked 161st out of 177 countries. According to the poverty survey conducted in 2002, 68% of the population lives on less than 2 dollars a day, 75% has no access to basic health services and close to 50% are deprived of drinking water. However, a recent increase in oil revenue has substantially raised State budget resources (about 40% of GDP) and provided opportunities for achieving the Millennium Development Goals (MDGs). Hence, transparent and efficient public finance management is a major challenge that needs to be addressed to promote robust and balanced growth. The Government intends to tackle this challenge under its general program whose main pillars include public finance modernization. 1.3 Since 2002, the Government has shown growing commitment to public finance management reforms, with a view to ensuring greater transparency and efficiency in the budget process through programming, budgeting, execution, monitoring/evaluation, audit and control. The result has been progress in the implementation of the Public Finance Modernization Program (PFMP) launched in 2002; funding of certain capacity-building activities with own resources; initiation of the Poverty Reduction Strategy (PRS) update process for 2008-2009; and preparation of a long-term strategy targeting 2025 and a Medium-Term Development Plan (MTDP) for 2009-2013 which should be completed by the end of 2007. Furthermore, the country conducted an analysis and diagnosis of the governance situation with support from development partners. These are the Country Procurement Assessment Review (CPAR) of 2002, and the Public Expenditure Management and Fiduciary Accountability Review (PEMFAR) of 2005. 1.4 One of the major constraints, in this context of nascent institutional changes, is limited capacity to speed up the pace of reforms. In a bid to back up Government efforts, a certain number of donors recently increased their interventions in the area of economic and financial management. These are the World Bank through the EMTA (Economic Management Technical Assistance) Project, restructured in May 2007, and the European Commission through the Capacity-building Project for Planning and Budgeting (RPPO) that will start in 2008 and run for three years. However, the fact remains that certain urgent capacity-building actions still need to be conducted in order to build an adequate fiduciary framework in the medium-term and renovate the public finance management system in accordance with Government objectives. There is need to consolidate gains in the area of State property management and internal audit, and to pay special attention to the external audit function of the Audit Office (AO).

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1.5 Hence, at the request of the Government, the Bank intends to lend its assistance through the current Financial Management Support Project (PAGEF). This project, to be funded under ADF X, is provided for in the Bank’s Results-Based Country Strategy Paper (RBCSP) for Angola in 2005-2007. Its design is informed by the Government’s PFMP, and the relevant studies and diagnoses have been carried out. The preparation mission was conducted in December 2006. The appraisal mission of May-June 2007 made it possible to fine-tune PAGEF with view to ensuring much-needed complementarity with the interventions of other donors.

2. Project goal and objectives The goal of PAGEF is to ensure transparent and efficient public finance management

through capacity-building in order to promote robust and balanced economic growth. More specifically, the project aims to: (i) consolidate public finance reforms on State property management and the internal audit system; and (ii) build capacity for the external audit function.

3. Project description

The main components of the project are:

(i) Capacity-building in State property management and internal audit; (ii) Institutional and human capacity-building for the external audit function; and (iii) Project management and monitoring.

4. Project costs

The cost of the project, net of taxes and customs duties, is estimated at UA 6.57 million, of which UA 4.32 million (65.8%) is in foreign exchange and 2.24 million (32.2%) in local currency.

5. Financing sources

PAGEF shall be co-financed by the ADF and the Government of Angola. The ADF shall provide UA 5.9 million (89.7% of the total cost) through a concessional loan. The ADF loan shall finance 99.7% of expenditure in foreign exchange and 70.4% in local currency, net of all duties and taxes. This financing covers all categories of expenditure. The Government shall finance the rest of the expenditure in local currency (UA 0.68 million), or 10.3% of total project costs, of which 0.3% is in foreign exchange and 29.6% in local currency.

6. Project implementation

6.1 The project shall run for 36 months, from the date of loan effectiveness in January 2008.

6.2 The Project executing agency shall be placed under the National Department of Studies and Planning (DNEP) in the Ministry of Planning (MINPLAN). An ad hoc project implementation unit shall not be set up. PAGEF shall operate with a light management structure within DNEP, acting in synergy with that of the World Bank’s EMTA project with which it has complimentary activities. The manager of PAGEF, appointed by the Government, shall also be the manager of EMTA, namely the Director of DNEP. To ensure adequate implementation and coordination of PAGEF activities, EMTA’s current executing agency shall be reinforced with a PAGEF Management Unit (PMU) composed of a Coordinator and an Administrative and Financial Assistant. The Government shall provide the PMU with a Secretary and driver-messenger. A focal point shall be designated for each of the beneficiary structures (DNPE, NIF and AO) of the project, in order to ensure harmonious implementation of project components.

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6.3 Such a management structure makes it possible to: (i) avoid the proliferation and dispersion of project execution units; (ii) benefit from the experience of the EMTA execution unit and better coordinate complementary activities especially in area of State property management and with the NIF; and (iii) cut transaction costs. Placed under the authority of the Project Manager, the Coordinator’s responsibilities shall include the coordination, planning, smooth implementation, monitoring/evaluation and control of project activities.

7. Conclusion and recommendation

7.1 Conclusion

This Financial Governance Support Project (PAGEF) is part of the Government’s program and is provided for in RBCSP 2005-2007 approved in July 2005. The implementation of this project will enable the country to develop the requisite tools and capacity to promote participation, transparency and efficiency in public resource management, and thus make it possible for a huge segment of the Angolan population to share in economic growth. 7.2 Recommendation In light of the foregoing, it is recommended that a loan, from ADF X resources, not exceeding UA 5.9 million, be awarded to the Government of the Republic of Angola to finance the Financial Management Institutional Support Project (PAGEF).

1. PROJECT ORIGIN AND HISTORY 1.1 The 27-year long civil war which ended in 2002 made it impossible to implement the appropriate economic policies. Its effects on several sectors are still a major impediment to real economic growth that can substantially reduce poverty, which affects 68% of the population1. A recent increase in oil revenue substantially raised State budget revenue (about 40% of GDP) and provided opportunities for attaining the Millennium Development Goals (MDGs). Hence, transparent and efficient public finance management is a major challenge that needs to be addressed in order to promote robust and balanced growth. The Government intends to tackle this challenge under its program whose main pillars include the modernization of public finance. 1.2 Since 2002, the Government has shown growing commitment to public finance management reforms, with a view to promoting transparency and efficiency in the budget process. The result has been progress in the implementation of the Public Finance Modernization Program (PFMP) launched in 2002 and of the recommendations of diagnostic studies; initiation of the Poverty Reduction Strategy (PRS) update process for 2008-2009; preparation of a long-term strategy targeting 2025 and a Medium-Term Development Plan (MTDP) 2009-2013 which should be completed by the end of 2007. Furthermore, the country conducted an analysis and diagnosis of the governance situation with support from development partners. These are the Country Procurement Assessment Review (CPAR) of 2002, and the Public Expenditure Management and Fiduciary Accountability Review (PEMFAR) of 2005. 1.3 One of the major constraints, in this context of nascent institutional changes, is limited capacity to speed up the pace of reforms. In a bid to back up Government efforts, a certain number of donors recently increased their interventions in the area of economic and financial management. These are the World Bank through the EMTA (Economic Management Technical Assistance) Project, restructured in May 2007, and the European Commission through the Capacity-building Project for Planning and Budgeting (RPPO) that will start in 2008 and run for three years. However, the fact remains that certain urgent capacity-building actions still need to be conducted in order to build an adequate fiduciary framework in the medium-term and renovate the public finance management system in accordance with Government objectives. 1.4 Hence, at the request of the Government, the Bank intends to lend its assistance through the current Financial Management Institutional Support Project (PAGEF). This project, to be funded under ADF X, is provided for in the Bank’s Results-Based Country Strategy Paper (RBCSP) for Angola in 2005-2007. Its design is informed by the Government’s PFMP, the relevant studies and diagnoses have already been carried out, and the preparation mission was conducted in December 2006. The appraisal mission of May-June 2007 made it possible to fine-tune PAGEF with view to ensuring much-needed complementarity with the interventions of other donors.

1 Close to 68% of the population lives on less than 2 dollars a day.

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2. THE SECTOR 2.1 Public Administration and the Economic and Financial Management

Mechanism Public administration

2.1.1 Angola’s public service has a workforce of about 258, 000 employees, and its public administration mirrors the country's political, economic and social trends. From the organizational and structural standpoint, the administration is characterized by excessive concentration of functions and little interdependence between structures. This situation undermines coordination between services and often leads to overlap and duplication of structures, with no clear definition of functions and missions. In the area of human resources, there is a glaring shortage of experts within the administration. This situation, which has prevailed since the 1970s, was compounded by the civil war which caused the deterioration in working conditions and fueled social disintegration. Professionally, most of the staff is not highly qualified.

Economic and financial management structures of the State 2.1.2 These public administration constraints affect the functioning of national economic and financial management structures. The economic and financial management framework is composed of the planning, programming, budgeting, execution, monitoring/evaluation and the internal and external audit functions. These functions are based on a national statistics system. The structures responsible for these functions are the Ministry of Planning (MINPLAN), the Ministry of Finance (MINFIN), the National Inspectorate of Finance (NIF), the Audit Office (AO) and the National Institute of Statistics (INE). 2.1.3 MINPLAN is responsible for overall planning, the coordination of technical planning activities, the drafting of economic and social development strategies and programs, and the monitoring of their implementation. It also coordinates the activities of the Poverty Reduction Strategy (ECP), the 2025 long-term strategy and the 2009-2013 Medium-Term Development Plan (MTDP) which is being drafted. The Studies, Planning and Statistics Offices (GEPE), set up in each technical ministry and in the 18 provinces, intervenes in the planning process. The organization chart of MINPLAN is presented in Annex 2. The three central departments responsible for planning are the National Directorate of Studies and Planning (DNEP), the National Directorate of Investments (DNI), and the National Directorate for Regional Development (DNDR). 2.1.4 MINFIN is responsible for the preparation, execution, monitoring and control of the general budget. It is also in charge of State assets, cash flow management and the country’s internal and external financial balance. Its functioning is based on an organizational structure established by Decree No. 4/98 of 30 January 1998. MINFIN has six Departments: Budget, Accounting, Treasury, Taxation, Customs, State Property (cf. Annex III). The public finance control system in Angola is comprised of: the internal audit conducted by the NIF which is administratively under MINFI2, and the external audit conducted by the Audit Office (AO)3.

2 Pursuant to the General State Budget Framework Law (Law No. 9/97) 3 Pursuant to Organic Law No. 5/96 of 12 April 1996.

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Constraints in the economic and financial management of the State

2.1.5 PEMFAR noted a certain number of major constraints within the economic and financial management framework. The planning and budget process is characterized by: (i) limited capacity for planning, programming and monitoring/evaluation at the central, sectoral and provincial levels; (ii) no formal coordination between MINPLAN and MINFIN, especially in budget preparation; (iii) inadequate integration of the public investment program (PIP) in budget preparation and preparation; (iv) budget management decentralization that is not accompanied by the development of adequate capacity and an operational coordination system for the various entities and levels of administration (central, 18 provinces, 163 municipalities and 532 councils); and (v) the limited presence of MINFIN and virtually no internal audits at the provincial level. 2.1.6 Public finance management is characterized by duality between the “conventional” system coordinated by MINFIN through the National Directorate of the Treasury (DNT) and the "non-conventional" system, dominated by oil revenue and external debt operations handled by the National Oil Company of Angola (SONANGOL). Besides, the country has not yet formally adhered to the Extractive Industries Transparency Initiative (EITI), although the Government has expressed its intention to join. 2.1.7 On public accounting and the publication of accounts, the implementation of the new public accounting law and the accounting plan has been partial, and the current accounting information system does not make it possible to conveniently close accounts and generate an accurate general State accounts (GSA) statement. Operations are still recorded through the single entry accounting method as opposed to the double entry principle stipulated in the law. The non-financial assets of the State (property) are not taken into account. Moreover, the NIF does not have adequate capacity to effectively carry out its control and internal audit functions. With regard to external audits, the AO has not been able to audit State accounts since its creation in 2001.

Public Finance Modernization Program (PFMP)

2.1.8 The above economic and financial management constraints also undermine the business environment, discourage private investment and limit the Government’s capacity to provide essential public services that reduce poverty and social disparities. To address this situation, the Government launched the Public Finance Modernization Program (PFMP) in 2002, which comprises three main components: (i) public finance management, aimed at reinforcing the State’s financial management system, which covers the budget process, financial assets, State property (non-financial assets) management, as well as the accounting and internal audit system; (ii) information technology; and (iii) training and capacity-building. Moreover, acting on PEMFAR recommendations, the Government has agreed to implement a set of measures that include the unification of the budget and the elimination of unbudgeted expenditure. 2.1.9 With regard to outputs, progress has been made in PFMP implementation with the deployment of the integrated public finance management system (SIGFE) which has introduced a certain amount of rigor in expenditure management, with an effort to follow the various stages of the process namely: commitment, settlement and payment. The results obtained include: (i) the connection of the budget units of the capital and 8 provinces (out of

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18) to SIGFE, representing 80% of the information to be processed; (ii) the institution of procedures for the steady production of budget implementation, financial and accounting reports; (iii) the preparation of legislation governing the functioning and the input of data into SIGFE by ministries and government bodies within the prescribed deadlines. 2.1.10 On tax reform, a Financial Programming Unit (UPF) was set up within the International Economic Relations Office (GEREI) of MINFIN in 2005, in a bid to develop a reliable and complete database that covers public sector financial operations and has the capacity to undertake multi-year fiscal programming. The interconnection of the other budget units (provinces and embassies) is planned for the second phase of PFMP implementation which should run till 2008-2009. Besides, the Government has started preparing the 2025 long-term strategy and the 2009-2013 Medium-Term Development Plan (MTDP) and plans to launch the preparation of medium-term expenditure frameworks (MTEF). Moreover, the Government has undertaken to update its Poverty Reduction Strategy (PRS) for 2008-2009. All this progress has led to a substantial improvement in public finance management, although major efforts still have to be made to attain the objectives set by the Government with regard to economic and financial management transparency and efficiency. 2.2 Main Donor Interventions 2.2.1 The main donors intervening in the area of economic and financial management in Angola are the IMF, the World Bank, the European Commission (EC), the UNDP, USAID, DFID, Norway and Portugal. The World Bank, DFID, EC, UNDP, USAID and Norway recently set up the Public Finance Management Group (PFM Group) which tries to meet as regularly as possible to ensure better coordination of their interventions. This is the Bank’s first intervention in the area of financial management in Angola. A similar intervention in 1990 was a technical assistance grant of UA 1.16 million to finance a study on the rehabilitation and reconstruction of the Angolan economy. 2.2.2. IMF: Angola has no PRGF-type program with the IMF, given the improvement in the country’s macroeconomic situation. However, the Government has decided to maintain relations with the IMF through Article IV consultations and capacity-building actions in macroeconomic management, which attests to the determination of the authorities to conduct the necessary reforms. The Article IV mission of May-June 2007 noted the progress made but also identified the challenges that need to be addressed to ensure transparent and efficient public finance management. 2.2.3. World Bank: Angola’s Economic Management Technical Assistance (EMTA) Project received IDA financing in 2003. The EMTA project of US$18.5 million, which should have ended in 2007, was restructured and will continue till 2010. It is aimed at reinforcing: (i) planning (planning and program-budget methodologies, poverty reduction strategy); (ii) statistics (national accounts and surveys); (iii) public finance management (State property, finance inspection, external debt management, public procurement and a general capacity-building plan); and (iv) the payments and internal audit system, especially the National Bank of Angola (BNA).

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2.2.4. EC: The Planning and Budgeting Capacity-Building Project (RPPO) of €13.5 million over the 2008-2010 period focuses on MINPLAN, MINFIN, the GEPEs and the provincial delegations of finance. It is aimed at: (i) improving the planning and budgeting process of MINFIN and MINPLAN, while ensuring harmonization between both ministries and with their sectoral and provincial representations; and (ii) enhancing MINFIN’s internal audit capacity at the provincial level. 2.2.5. UNDP: The UNDP intervenes in a pilot decentralization operation in Angola through the definition and experimentation of stable, functional and fiscal intergovernmental relations, the promotion of participatory democracy and human resource development. The UNDP also assists with the setting-up of mechanisms for State budget transfers to decentralized local government structures (provinces, districts and councils). It supports the justice reform and modernization process in Angola with a view to improving access to justice for all citizens. 2.2.6. USAID: The USAID has initiated a technical assistance project to build the capacity of the Fiscal Programming Unit (FPU) within MINFIN. Assistance focuses on the integration of the non-conventional system and regular data collection to assess the impact of macroeconomic policies and establish medium-term budget projection scenarios. In the long run, the FPU is expected to establish a medium-term fiscal framework (MTFF) that will make it possible to determine whether the overall macroeconomic targets set for growth and public expenditure tally with the resources available. 2.2.7. DFID: In January 2007, DFID conducted a capacity-building needs assessment in the area of budgeting, in order to guide the Government’s training program with a view to setting up a performance-oriented budget system. Under the EC’s RPPO project, DFID shall help to develop a training program on medium-term programming and budgeting. 2.2.8. Norway: Norway lent assistance to the statistics system (NIS) and envisages other coordinated assistance with other donors to support the implementation of the (NIS) Strategic Plan which is being drafted. 2.2.9. Portugal: It provides significant support in various areas of economic and financial management that address the specific and short-term needs of the Government. 2.2.10 Lessons learnt from interventions: Most donors face constraints that cause major delays which affect project implementation. Such constraints include: (i) low institutional capacity and limited human resources in project management structures; (ii) lack of coordination in projects that involve several ministries; (iii) slowness in procurements; and (iv) limited Government commitment. The Bank portfolio review conducted in June 2007 shows that, apart from the abovementioned constraints, there are other problems related to ignorance of the Bank’s rules of procedure, delays in project start-up, communication difficulties in the Bank’s official languages (English, French) especially in the area of procurement, and the Bank’s absence on the field. The design of the current project takes all these lessons into account.

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3. AREAS OF INTERVENTION 3.1 Selective Approach 3.1.1 With regard to the constraints of the Government program, the interventions of other donors and urgent measures to be implemented in order to ensure efficient articulation of reforms and adequate functioning of the public finance planning and management process, certain actions have been or will be initiated, as a back-up to Government efforts, to address some pressing capacity-building needs. Such actions include: (i) improvement of the quality of national statistics and public finance (Norway and EMTA); (ii) appraisal of macroeconomic policies (USAID); (iii) improvement of the strategic planning, programming, budgeting, execution and monitoring/evaluation functions at the central, sectoral and provincial levels (RPPO and EMTA); and (iv) decentralization (UNDP) and certain internal audit aspects (EMTA and RPPO). 3.1.2 Meanwhile, some urgent actions need to be implemented to correct persistent shortcomings in State property valuation and management and in the NIF internal audit function. With regard to property management, despite the actions initiated in phase 1 such as the preparation of a draft legal framework to be adopted by the end of 2007, it would appear that State property is not yet factored into the public accounting system (PAS) and the relevant data is not updated, for want of capacity and a valuation method. The three urgent actions envisaged are: (i) a pilot inventory at the central level (Luanda) and in certain provinces; (ii) the definition of a State property valuation methodology; and (iii) an inventory in other ministries and provinces. 3.1.3 With regard to internal audits, phase 1 of the EMTA project essentially led to the preparation of a revised draft legal framework for the NIF which is being discussed in MINFIN prior to examination and adoption by the Council of Ministers before the end of 2007. It also facilitated the assessment of inspector, institutional and IT training needs. However, phase 2 does not provide for funding of the training program or IT equipment that will enable the NIF to conduct an acceptable number of relevant inspections and follow-up actions. 3.1.4 Besides, the external audit function exercised by the Audit Office (AO) is not included in the various interventions, although this function is crucial for enhancing transparency and accountability in keeping with Government commitment and objectives in the area of public finance reform. The ultimate goal is to effectively improve the fiduciary framework. The AO has just prepared a Strategic Plan for 2008-2010. It is important to implement this plan and provide the AO with institutional assistance and training so that it can perform its statutory duties. 3.2 Management of the Property or Non-financial Assets of the State 3.2.1 The organizational framework of MINFIN entrusts the National Department of State Property (DNPE) with the duties of inventory, control and management of State property allocated to central and local services as well as other Government services with administrative and financial autonomy. The DNPE is responsible for preparing the general register of State property, as well as the inventory, registration and control process. It has a workforce of 38 employees (composed of 1 Director, 3 Heads of Department, 32 technicians and 2 secretaries).

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3.2.2 However, the laws governing property are disparate and virtually non-existent. There are no registration standards and procedures. Public accounting is only partial, since it does not include State property. An integrated State property management system (SIGPE) was set up with World Bank support. Nevertheless, it is necessary to institute methods and procedures for managing all forms of property in order to ensure the effective functioning of SIGFE, enable the State to enjoy its ownership rights and complete the installation of the public accounting system and the production of accurate GSA statements. 3.2.3 The main constraints are: (i) the computerization of property management which is still in its early stages; (ii) an obsolete legal framework with disparate texts that is being revised; (iii) shortage of human resources, in quality and quantity; (iv) no clear definition of the institutional framework and the lack of appropriate manuals of procedure; and (v) no definition of functions and operational profiles. The is no official valuation system for the State's real property, no title documents and reference legal instruments to be used for transactions between the State and private, national or international bodies, relating to procurements, allocation or sale of real property. Technical capacity-building for the DNPE will make it possible to correct these shortcomings (cf. Annex IX). 3.3 Control and Internal Audit System 3.3.1 The control and internal audit functions are conducted by the National Inspectorate of Finance (NIF) set up in December 19584. It is the technical support structure of MINFIN responsible for conducting internal financial audits in all budget expenditure entities, be they government services or State corporations. In collaboration with the National Department of Taxation (DNI), the NIF can also conduct financial control activities in private enterprises, with such intervention limited to fiscal matters. 3.3.2 Within MINFIN, the NIF works closely with the Minister's Cabinet, the DNI, the National Department of the Treasury (DNT) and the National Department of accounting (DNC). Externally, it works with the Inspectorate General for State Administration (IGAE), the National Directorate for Inspection and Investigation of Economic Activities, the National Department of Criminal Investigation and Civil Courts and other audited entities. 3.3.3 The NIF is organized into three departments, as follows: the Government Services Inspectorate; the Public Corporations Inspectorate; and the Private Entities Inspectorate. At the regional level, the NIF has Delegations that execute activities planned in coordination with the departments that report directly to the National Inspector. It also has regional offices: (i) Benguela Office, Kwanza Sud Province; (ii) Huila Office, extended to Cunene Province; and (iii) Huambo Office, extended to Bié Province. 3.3.4 It has no procedures manual for internal control and produces no periodic reports on its activities. With regard to human resources, the NIF currently has 29 technical inspection expects in Luanda (7 being women), 4 in Benguela, 13 in Huambo and 8 in Huila. However, there are plans to recruit more than 30 technical inspection experts in Luanda and 10 in each of the provinces of Benguela, Huambo and Huila, making a total of 60 by the end of 2007. These new experts, who should be graduates in economics and finance, shall be given initial training on NIF objectives, role and missions. This training program, which has already been prepared, provides for training sessions for about twenty inspectors. Considering the recruitments, it would be proper to adapt the training and extend it to about 114 persons. 4 Decree No. 42/082 of 31 December 1958.

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3.3.5 The NIF received support from the EMTA project that enabled it to draft a strategic development plan for the internal control system and a training program for senior staff. The implementation of internal control reforms will generate huge institutional and human capacity-building needs for the NIF, including information technologies, notably IT equipment. Hence, the NIF also plans to establish a system for Integrated Financial Control of the Administration (CIFA). CIFA could be connected to the tax and customs management system for a more efficient internal control. 3.4 External Control Function 3.4.1 The AO, set up in April 19965, is vested with the necessary authority to conduct public finance external audits and its decisions must reflect the constitutional principles of independence vis-à-vis the other organs of sovereignty, exclusive submission to the law, justification, enforceability and publication. The AO is a member of the International Organization of Supreme Audit Institutions (INTOSAI), the African Organization of Supreme Audit Institutions (AFROSAI) and the SADC Organization of Supreme Audit Institutions (SADCOSAI). 3.4.2 The AO intervenes in both ex ante and ex poste controls. The purpose of the ex ante control is to verify that the documents and contracts of the State and parastatal entities are in accordance with the laws in force and that the expenditure initiated is covered by sufficient budget allocations. Public contracts worth over one million US dollars shall be subject to ex ante controls. The AO exercises ex poste financial control through account audits; assessment of internal audit systems; and appraisal of the legality, economy, efficiency and efficacy of financial management. In its public debt control activities, the AO verifies whether the Government has complied with the debt limits and general financing conditions defined by the Parliament at the beginning of each fiscal year. Ex poste controls are conducted through approval of auditors' reports, external audit of accounts, and the homologation of accounts submitted for internal audit. 3.4.3 The AO has its headquarters in Luanda where it operates with two chambers. The first chamber is responsible for ex ante controls while the second is in charge of ex poste controls. Each Chamber has 4 Judges/Legal Counsels, making a total of 8 Judges and the President, who are appointed by the President of the Republic for a term of 4 years. From the organizational standpoint, the AO has two departments: (i) the Department of Technical Services (DTS) which conducts all control and audit activities, and (ii) the Department of Administrative Services (DAS) which is in charge of administrative and financial affairs, staff and property of the AO. The AO’s budget shall be determined by the Government. The AO has a workforce of 81 persons, including 45 senior staff members. There are plans to recruit more than 84 experts who will need special initial training on the functioning and activities of the AO. 3.4.4 Due to late adoption of the decree defining the organization and procedures of the AO6, and the tardy appointment of its President, the AO effectively went operational only from 2001. Since 2003, it has audited several institutions, including political parties, ministries and embassies. For 2007, it plans to organize support and control visits to the

5 Organic Law No. 5/96 of 12 April 1996. 6 Decree No. 23/01 of 12 April 1996.

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provinces of Uige, Huambo and Cunene, and prepare the AFROSAI meeting. However, it has not yet audited State accounts hitherto. Furthermore, the internal control and external audit functions were not satisfactorily implemented7. In a bid to revive its activities, the AO has just prepared a Strategic Plan for 2008-2010. It is important to implement this plan and provide institutional assistance and training to the AO so that it can perform its statutory duties. 3.4.5 Civil society, which needs to participate and play an active role in promoting transparency and efficiency in public resource utilization, is facing certain constraints that relate mainly to low technical and negotiation capacity as well as limited access and poor understanding of public information. Pressure for budget transparency and adherence to EITI comes mainly from international NGOs such as the Episcopal Conference of Angola and Sao Tomé and the Catholic Relief Services (CRS). Besides, given the disproportionate incidence of poverty on women, it is important to increase female participation in decision-making by providing women’s NGOs with information capacity-building. IV. THE PROJECT 4.1 Design and Rationale of Project 4.1.1 The project is the result of in-depth discussions with the authorities, the diagnosis of needs expressed by the various ministries and consideration of assistance from the various partners. Its appraisal particularly took into account recent developments in Angola’s institutional context, characterized by various capacity-building actions by the Government and other donors. The Bank has stepped up its coordination discussions with the order donors, bilaterally and within the PFM Group. These discussions have made it possible to target those PAGEF components and intervention areas that complementarity and synergy with current or future actions. Its design is based on the Public Finance Modernization Program (PFMP) and benefits from recent public finance analytical reviews (PEMFAR) and the results of needs assessments already conducted in the areas of asset management and internal and external audits. 4.1.2 Activities to be funded under PAGEF were selected on the basis of: (i) their complementarity with EMTA project actions in the areas of State property management and consolidation of the internal audit function of the National Inspectorate of Finance (NIF); and (ii) the objective of increasing the efficacy and effective exercise of the external audit function that was not taken into account in various interventions. 4.2 Project Areas and Beneficiary Structures

PAGEF’s areas of intervention are aimed at consolidating public finance reforms

relating to State property management (non-financial assets), the internal audit system, and capacity-building for the external audit function. These areas were selected on the basis of their relevance to the Government’s Public Finance Modernization Program (PFMP) as well as their urgency and indispensability to the establishment of transparent and efficient economic and financial management, in the medium term, in coordination with the actions of other partners. PAGEF focuses essentially on capacity-building and human resource development actions through technical assistance and well-targeted training and, to a certain extent, equipment. The main beneficiaries of PAGEF are MINFIN (DNPE, NIF) and Audit Office (AO). 7 PEMFAR 2005

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4.3 Strategic Context 4.3.1 The Government’s current economic policy reference document is the Government’s General Program for 2007-2008 which is based on PRSP-I and takes into account the Public Finance Modernization Program. Also noteworthy is the Audit Office’s Strategic Plan for 2008-2010 which is aimed at establishing an effective public finance external audit system, in accordance with the Government’s objectives of promoting transparency and efficiency in economic and financial management. 4.3.2 The project therefore falls within the strategic context of the Government’s General Program and PRSP-I, especially its Thrust 1 on "the creation of a favorable macroeconomic framework for growth and poverty reduction" and Thrust 5 on “institutional capacity-building and the improvement of governance”. By promoting budget relevance, the public accounting system, GSA accuracy and the effective conduct of internal and external audits, PAGEF will help to encourage transparency, build an indispensable framework for macroeconomic stability and improve the business environment for private sector activities. Indeed, after close to three decades of armed conflict, the main obstacles to resource absorption are public sector institutional constraints and limited infrastructure. This translates into low program implementation rates which prevent the development of a private sector can efficiently combating poverty. During this economic revival and national reconstruction phase, PAGEF will, in synergy with other interventions, help to consolidate development policies and the public resource allocation system for priority social sectors and boost private sector investments with a view to achieving more balanced growth. 4.3.3 The project is in line with the Bank’s intervention strategy in Angola, as defined in the Results-based Country Strategy Paper (RBCSP 2005-2007), especially Thrust 2 which aims at creating enabling conditions for private sector development. 4.4 Project Goal and Objectives

PAGEF’s goal is to promote transparent and efficient public finance management

through capacity-building in order to achieve robust and balanced economic growth. More specifically, the project is aimed at: (i) consolidating public finance reforms on State property management and the internal audit system; and (ii) building external audit capacity. 4.5 Project Description 4.5.1 The main components of the project are: (i) capacity-building in State property management and internal audit; (ii) institutional and human capacity-building for the external audit function; and (iii) project management and monitoring. Component I: Capacity-building in the management of State property and internal

audit Sub-component A: Management of State property 4.5.2 This sub-component comprises: (i) international technical assistance, including an on-the-job training component for Staff from the National Department of State Property (DNPE); and (ii) training abroad or a study trip for four DNPE experts.

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4.5.3 Technical assistance: A consultancy firm shall be recruited to assist the DNPE with State property management activities in two complementary phases, namely: (i) an inventory of State property; and (ii) a methodology for State property valuation. The inventory phase shall also include an on-the-job training component for DNPE staff. Each of these phases shall last for 12 (twelve) months, making a total of 24 (twenty-four) months. The second phase could start six months after start-up of the first phase. The pilot structures targeted in these two phases are six ministries (Finance, Public Works, Geology and Mines, Town Planning and Environment, Petroleum, Agriculture and Rural Development) and five provinces (Luanda, Benguela, Huila, Malange et Uige). Furthermore, experts from the consultancy firm shall train the senior staff and technicians of the DNPE. To that end, the DNPE shall designate national counterparts to work closely with the technical assistants. The terms of reference for technical assistance are presented in the annexes. 4.5.4 In Phase I, the firm shall provide six qualified consultants as follows: (i) an expert as technical coordinator (team leader) with proven expertise in asset management; (ii) a jurist with expertise and experience in property law and ownership rights; (iii) and IT and information systems expert with experience in Oracle and SQL Server; (iv) an expert in non-financial asset accounting; (v) an expert in inventory methodology and asset management control; and (vi) a pedagogical coordinator who will plan on-the-job training sessions for 3 (three) months, as opposed to the experts who shall work for twelve months. 4.5.5 This inventory phase in the pilot structures and zones shall entail the continuation of work on the SIGPE software; the registration of results in SIGPE; legal assistance in preparing legal and statutory procedures and instruments (titles) that govern the management of State real property; and definition of the DNPE’s responsibilities with regard to the targets and new rules to be set by the State for non-financial asset management. The consultants shall support property inventory groups that shall be set up based on criteria such as the geographical location, type and size of the property concerned. The pedagogical coordinator shall prepare and ensure execution of a training program that shall be conducted by the technical assistants through the organization of functional courses. A set of nine training modules shall be taught over a period of 9 weeks. The training sessions could be organized in the Public Service Training Institute (INFORSEFE) in Luanda. 4.5.6 During the second 12-month phase on the establishment of an asset valuation system, the same consultancy firm shall provided six other consultants as follows: (i) a coordinator/mission chief, with advanced knowledge of asset valuation and management; (ii) a civil engineer with expertise in real estate valuation; (iii) a geologist with expertise in natural resource valuation; (iv) an agronomist specialized in agricultural land valuation; (v) a specialist in petroleum valuation; and (vi) a jurist with expertise and experience in property law and ownership rights, for 3 (three) months. 4.5.7 In this second phase, the consultants shall conduct a diagnosis of the inventory situation, using the technical, legal and human aspects to define the property valuation criteria. Hence, an official methodology shall be developed for valuation and assessment of training needs in project structures and regions. The experts shall then implement the valuation method in all its regulatory, equipment, accounting and information system (SIGPE) aspects.

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4.5.8 Training abroad: After the two technical assistance phases, the DNPE shall select four of its experts to undergo additional training in an advanced similar public institution abroad, so as to acquaint them with best practices in State property management. 4.5.9 Functioning: The operating costs for sub-component A essentially relate to classrooms and the material organization of the courses, offices for technical assistants and sundry administrative expenses that shall be borne by the Government.

Sub-component A: Build control and internal audit capacity

4.5.10 The activities focus on: (i) the implementation of the training program for NIF inspectors and technicians; (ii) the supply of IT equipment to inspection missions in the provinces; and (iii) operation. 4.5.11 Training: The training program on audit best practices is aimed at providing NIF directors, inspectors and technicians with the skills they need to conduct efficient public finance control and internal audit activities. The program shall be extended to 60 new experts, to be recruited by the end of 2007. Hence it shall focus on: (i) refresher courses and further training for 54 inspectors still in service (29 in Luanda [including 7 women], 4 in Benguela, 13 in Huambo and 8 in Huila); and (ii) initial training for 60 new inspectors (30 in Luanda, 10 in Benguela, 10 in Huambo and 10 in Huila). 4.5.12 Eleven (11) training modules were identified, namely: (i) public resource management; (ii) essentials of accounting; (iii) advanced accounting; (iv) role and activities of the NIF; (v) staff ethics, code of conduct and characteristics; (vi) audit standards; (vii) work planning and risk analysis; (viii) audit techniques and procedures; (ix) audit conclusion reports; (x) audit and computerization; and (xi) the essentials of management. Each module shall be divided into theory and practice. The different modules are presented in the annexes. The training sessions could take place in the Public Service Training Institute (INFORSEFE) in Luanda. 4.5.13 One (1) instructor shall be assigned to each module, making a total of 11 (eleven) consultants. A training consultancy firm shall be recruited to provide the NIF with the consultants who shall administer the training modules. Each module shall have an average duration of one week, making a total of 11 weeks. The instructors shall be retained for two weeks, including the time for preparation of the modules. Fifty-five (55) trainees shall come from the provinces. The Government shall provide transportation within Luanda for experts and trainees from the provinces and pay 20% of their per diems. The other costs shall be borne by the ADF. The total number of trainees is estimated at 114, comprising 54 persons for further training and 60 persons for initial training. Considering the relatively high number of trainees, they shall be divided into four working groups. There shall be four sessions per module (2 for refresher training of current staff and 2 for initial training of recruits). 4.5.14 Goods: The project shall provide the NIF with the following IT equipment: (i) 72 laptops (about thirty for Luanda and the rest for the provinces of Huila, Huambo and Benguela); (ii) 42 PCs accompanied by 42 UPSs (21 for Luanda and 21 for the provinces of Huila, Huambo and Benguela); (iii) 5 printers (2 for Luanda, 1 for each of the provinces of Huila, Huambo and Benguela).

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4.5.15 Operation: The operating expenses for NIF training activities financed by the Government, relate to the procurement of classrooms and instructors offices as well as sundry reprography and communication costs. Component II : Institutional and human capacity-building for the external audit

function 4.5.16 Seven types of activities shall be conducted at the Audit Office (Department of Technical Services (DTS)): (i) 2-month technical assistance for institutional and human resources diagnosis aimed at fine-tuning and implementing the 2008-2010 Strategic Plan; (ii) 12-month technical assistance support to assist the AO with priority statutory activities; (iii) emergency technical support to implement the institutional diagnosis; (iv) implementation of the training program on routine Audit Office activities; (v) a training course or study trip abroad; (vi) provision of IT equipment and other material; and (vii) support to the AO Documentation Center. Besides, the project plans to build the capacity of civil society (including that of a significant number of women’s NGOs), to educate it on the role of external audits so that it can play an effective role in ensuring transparency and efficiency in public finance management. 4.5.17 Technical assistance: A renowned consultancy firm, specialized in the organization, methods and training of Audit Offices, shall be recruited from a shortlist, for a short-term consultancy (2 months), to implement the AO’s 2008-2010 Strategic Plan by fine-tuning the institutional diagnosis and training needs. The terms of reference in Annex XI present the profile of experts and the tasks to be accomplished by the Firm. After validation of the report on fine-tuning of the Strategic Plan, the Project provides for an allocation for technical assistance and targeted capacity-building actions. A consultancy firm shall be recruited to provide this emergency technical assistance which comprises a series of coherent actions to ensure execution of the institutional diagnosis. The Government shall defray about 12% of the cost of these activities. 4.5.18 Another consultancy firm shall be recruited for a period of twelve months to assist the AO in implementing its priority statutory activities and provide on-the-job training to its experts. The firm shall provide the AO with four consultants in the following areas: (i) public accounts audit; (ii) contract analysis; (iii) judicial procedure; and (iv) information systems. This fourth expert shall ensure the adequate use of information technologies (ICTs) within the AO, the drafting of an ICT master plan, and the development and institution of an integrated management system for the AO (SIGTC). He shall help to restructure the internal network of the Documentation and IT Division. The experts shall work in Luanda and also provide on-the-job training in close collaboration with the team of professionals that the AO shall designate for planned activities. It should also be noted that the consultants shall help the AO to organize the sensitization seminar (cf. Para. 4.5.24) (cf Terms of reference Annex II). 4.5.19 Training: The project shall finance a training program for Judges/Legal Counsels, audit staff and other senior technicians, through training workshops and seminars. The program will provide refresher courses to current AO staff and initial training to 84 new recruits, making a total of 165 trainees. The 11 (eleven) modules identified are: (i) budget execution control; (ii) audit techniques and procedures and the preparation of audit reports; (iii) ex ante and ex poste control and inspection; (iv) judicial procedure; (v) account analysis and expert analysis of the general State account; (vi) guidelines on the account presentation format; (vii) the judicial process for audit reports; (viii) joint audits with similar supreme audit institutions; (ix) judicial

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investigation and process judgment; (x) court judgments; (xi) IT training in information systems (SIGFE) for 4 engineers. Each module shall be divided into theory and practice. The different modules are presented in the annexes. The training sessions could take place in Luanda in the National Institute of Legal Studies (INEJ) that is under the Ministry of Justice. 4.5.20 One (1) instructor shall be assigned to each module, making a total of 11 (eleven) consultants. A training consultancy firm shall be recruited to provide the NIF with the consultants that will administer the training modules. Each module shall run for an average period of one week making a total of 11 weeks. The instructors shall be retained for two weeks, including the time for preparation of the modules. Fifty (50) trainees shall come from the provinces to attend the courses. The Government shall provide transportation within Luanda for experts and trainees from the provinces and pay 20% of their per diems. The other costs shall be borne by the ADF. The estimated total number of trainees is 165. Considering their relatively high number, the trainees shall be divided into four working groups. Six sessions have been planned per module and could be extended for a total period of 2 months. 4.5.21 Training abroad: As additional training, the AO shall select eight of its experts to undergo a training course or make a study trip abroad in a similar public institution. 4.5.22 Sensitization seminar for civil society: The project plans to organize two information and sensitization seminars for civil society on the role, activities and results of public finance external audits conducted by the AO. A significant proportion of women’s NGOs shall attend these 2 two-day seminars to be conducted by AO officials with the support of the Technical Assistants. The AO shall prepare the course material as well as training and information brochures. The Government shall defray 20% of the organizational costs, in the form of classrooms, administrative expenses and transport within Luanda for about a hundred trainees, some of whom come from the provinces. 4.5.23 Goods: The project shall provide the AO with the following IT equipment and supplies: (i) 2 overhead projectors; (ii) 30 PCs accompanied by 30 UPSs (21 for Luanda and 21 for the Provinces of Huila, Huambo and Benguela) ; and (iii) 2 photocopiers (1 heavy-duty and 1 average). Moreover, the project provides for an allocation for the stocking of a library or documentation center with books on civil and social law, criminal law, public law, economics, management, civil procedure, banking, local government bodies, administrative law and competition, and others that could serve as reference for the Judges/Legal Counsels and other AO officials. Besides, a 4x4 vehicle shall be procured for external inspections in the provinces and another vehicle to support AO activities in Luanda. 4.5.24 Operation: The operating expenses generated by such AO assistance, and borne by the State, relate to the provision of classrooms and instructors offices as well as sundry reprography and communication costs. Component III: Project management and monitoring 4.5.25 The activities are: (i) administrative and financial management of the project; (ii) account audits; and (iii) monitoring/evaluation of project activities. The expenses relate to consultancy services, equipment and operating costs. 4.5.26 Consultant and staff of the PAGEF Management Unit (PMU): The daily management of the project shall be ensured by a Coordinator who is an economist with

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experience in project management and procurement. The PMU shall employ an administrative and financial assistant in charge of the financial management of the project, a secretary and a driver/messenger. The last two staff members shall be provided by the Government, while the Coordinator and the Administrative and Financial Assistant shall be paid with ADF resources. The PMU shall program and manage training and procurement. Besides, consultancy services for procurements (4 months) and translation of important documents (5 months) have also been planned to speed up the implementation of activities. 4.5.27 Equipment, supplies and miscellaneous items: IT equipment (computers, printer, scanner), a photocopier, a liaison vehicle and office furniture shall be procured for the PMU with ADF resources. 4.5.28 Functioning: PMU operating expenses cover office and other supplies, vehicle maintenance costs and provision for sundry expenses. Such operating expenses shall be borne by the ADF. 4.6 Project Costs

The cost of the project, net of taxes and customs duties, is evaluated at UA 6.57

million, of which UA 4.32 million (65.8%) is in foreign exchange and 2.24 million (34.2%) in local currency. The cost comprises a provision of 5% for contingencies, 10% for inflation on local currency and 3% for inflation on foreign exchange. The table of detailed costs is presented in the annexes. The estimated costs are summed up in Tables 4.1 and 4.2 below:

Table 4.1

Estimated costs by component

US$ thousands UA thousand COMPONENTS F.E. LC Total F.E. LC Total % of total

(1) Capacity-building in State property management and internal audit 2731.6 1554.4 4286.0 1802.3 1025.6 2828.0 43.1% Institutional and human capacity-building for the Audit Office 2418.5 1026.8 3445.3 1595.8 677.5 2273.2 34.6% Project management 856.7 380.4 1237.1 565.3 251.0 816.3 12.4% AUDIT 60.0 0.0 60.0 39.6 0.0 39.6 0.6% Baseline cost 6066.8 2961.6 9028.3 4002.9 1954.1 5957.0 90.7% Physical contingencies (5%) and inflation (3% and 10%) 488.1 437.9 926.1 321.2 289.8 611.0 9.3% Total project costs 6554.9 3399.5 9954.4 4324.2 2243.9 6568.1 100.0%

Table 4.2

Estimated costs by expenditure category

US$ thousand UA thousand Expenditure category F.E LC Total F.E LC Total

% of total Total cost

1. Goods 772.7 0.0 772.7 509.8 0.0 509.8 7.8% 1.1. IT equipment for the NIF 273.0 0.0 273.0 180.1 0.0 180.1 1.2. IT and office automation equipment for the AO 152.0 0.0 152.0 100.3 0.0 100.3 1.3. IT and office automation equipment for the PMU 32.7 0.0 32.7 21.6 0.0 21.6 1.4. Documentation for the AO 200.0 0.0 200.0 132.0 0.0 132.0 1.5. Vehicles 115.0 0.0 115.0 75.9 0.0 75.9 2. Consultancy services 5,294.1 2,254.2 7,548.2 3,493.1 1,487.3 4,980.5 75.8% 2.1. Technical assistance 3,761.0 723.0 4,484.0 2,481.6 477.0 2,958.6 2.2. Implementation of the diagnosis 176.0 24.0 200.0 116.1 15.8 132.0 2.3. Training 1,297.1 1,507.2 2,804.2 855.8 994.5 1,850.3 2.4. Audit 60.0 0.0 60.0 39.6 0.0 39.6 3. Functioning 0.0 707.4 707.4 0.0 466.8 466.8 7.1% Total baseline cost 6,066.8 2,961.6 9,028.3 4,002.9 1,954.1 5,957.0 90.7% Provision for contingencies (5%) and inflation (3% & 10%) 488.1 437.9 926.1 321.2 289.8 611.0 9.3% Total project costs 6,554.9 3,399.5 9,954.4 4,324.2 2,243.9 6,568.1 100.0%

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4.7 Financing Sources and Expenditure Schedule PAGEF shall be co-financed by the ADF and the Government of Angola. The ADF

shall provide UA 5.9 million (89.7% of the total cost) through a concessional loan. The ADF loan shall finance 99.7% of expenditure in foreign exchange and 70.4% in local currency, net of all duties and taxes. This financing covers all categories of expenditure. The Government shall finance the rest of the expenditure in local currency (UA 0.68 million), or 10.3% of total project costs, of which 0.3% is in foreign exchange and 29.6% in local currency. The expenses borne by the Government are transportation costs for international consultants and trainees in Luanda, operating costs for components 1 and 2, 20% of trainee per diems, 12% of the cost of assistance provided for implementation of the Audit Office diagnosis, 20% of the cost of seminars organized for civil society and PMU rent expenses. Government counterpart funds to be mobilized essentially in cash are estimated at UA 0.13 million (per diem for trainees coming from the provinces).

Table 4.3

Financing sources

UA thousand Sources F.E LC Total

% of total Total

ADF 4309.3 1579.1 5888.3 89.7 Government 14.9 664.8 679.7 10.3 TOTAL 4324.2 2243.9 6568.1 100.0

Table 4.4

Expenditure schedule by expenditure category

US$ thousand UA thousand of which

Expenditure category 2008 2009 2010 Total 2008 2009 2010 Total ADF

1. Goods 502.7 270.0 0.0 772.7 331.7 178.2 0.0 509.8 509.8 1.1. IT equipment for the NIF 273.0 0.0 0.0 273.0 180.1 0.0 0.0 180.1 180.1 1.2. IT and office automation equipment for the AO 152.0 0.0 0.0 152.0 100.3 0.0 0.0 100.3 100.3 1.3. IT and office automation equipment for the PMU 32.7 0.0 0.0 32.7 21.6 0.0 0.0 21.6 21.6 1.4. Documentation for the AO 0.0 200.0 0.0 200.0 0.0 132.0 0.0 132.0 132.0 1.5. Vehicles 45.0 70.0 0.0 115.0 29.7 46.2 0.0 75.9 75.9 2. Consultancy services 2,187.9 4,404.4 956.0 7,548.2 1,443.6 2,906.1 630.8 4,980.5 4,635.8 2.1. Technical assistance 1,104.3 2,762.8 617.0 4,484.0 728.6 1,822.9 407.1 2,958.6 2,732.2 2.1. Implementation of the diagnosis (AO) 0.0 100.0 100.0 200.0 0.0 66.0 66.0 132.0 116.1 2.3. Training 1,063.6 1,521.6 219.0 2,804.2 701.8 1,004.0 144.5 1,850.3 1,766.5 2.4. Audit 20.0 20.0 20.0 60.0 13.2 13.2 13.2 39.6 39.6 3. Operation 197.3 300.3 209.8 707.4 130.2 198.1 138.4 466.8 156 Total baseline cost 2,887.9 4,974.7 1,165.8 9,028.3 1,905.5 3,282.4 769.2 5,957.0 5,141.3 Provision for contingencies (5%) and inflation (3% and 10%) 292.9 514.4 118.7 926.1 193.3 339.4 78.3 611.0 547.8 Total project costs 3,180.8 5,489.1 1,284.5 9,954.4 2,098.7 3,621.8 847.6 6,568.1 5,889.1

As % of total project costs 32.0 55.1 12.9 32.0 55.1 12.9

Table 4.5

Expenditure schedule by financing source (UA million)

UA thousand Sources 2008 2009 2010 Total

% of total

ADF 1909.7 3247.2 731.5 5888.4 89.7 Government 189.1 374.6 116.1 679.7 10.3 TOTAL 2098.7 3621.8 847.6 6568.1 100.0

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V. PROJECT IMPLEMENTATION 5.1 Executing Agency 5.1.1 The Project executing agency shall be placed under the National Department of Studies and Planning (DNEP) in the Ministry of Planning (MINPLAN). There shall be no ad hoc project implementation unit. PAGEF shall operate as a light management structure within DNEP, acting in synergy with the World Bank’s EMTA project with which it has complementary activities. The Manager of PAGEF, appointed by the Government, shall also be the manager of EMTA and is the Director of DNEP. To ensure adequate implementation and coordination of PAGEF activities, EMTA’s current executing agency shall be reinforced with a PAGEF Management Unit (PMU) composed of a Coordinator and an Administrative and Financial Assistant. The Government shall provide the PMU with a Secretary and driver/messenger. A focal point shall be designated for each of the beneficiary structures (DNPE, NIF and AO) of the project, in order to ensure harmonious implementation of project components. 5.1.2 This arrangement makes it possible to: (i) avoid the proliferation and dispersal of project execution units; (ii) benefit from the long experience of the EMTA execution unit and enhance the coordination of complementary State property management and NIF activities; and (iii) cut transaction costs. Under the authority of the Project Manager, the Coordinator, in conjunction with the focal points, shall be responsible for: (i) coordination, planning and smooth implementation of components; (ii) monitoring/ evaluation and control of project activities; (iii) administrative, financial and accounting management; (iv) the bidding process and procurements; and (v) the Secretariat of the Project Steering Committee (PSC). 5.2 Institutional Arrangements 5.2.1 A Project Steering Committee (PSC), composed of the Director of DNEP and the Directors of project beneficiary services (DNPE, NIF, Audit Office) shall be set up to guide, monitor and coordinate project activities. It shall meet on a quarterly basis, under the chairmanship of the Minister of Finance or his representative, to define the objectives, program and working schedule of the project for the next quarter. It shall adopt quarterly project status reports and provide any guidance it deems necessary to ensure the harmonious execution of various project components and the smooth coordination other donor activities. 5.2.2 The PMU shall ensure daily project management and keep accurate accounting that makes it possible to monitor and control expenditure by category and by component, and also prepare the necessary financial reports. The PMU shall establish a detailed project implementation schedule and prepare quarterly project status reports, bidding documents (BDs) and minutes of bid opening and analysis sessions. The Project Coordinator shall be an experienced consultant, recruited through a competitive process, after formal approval from the Bank. Under the supervision of the project manager, he shall regularly forward quarterly reports and meeting minutes to the Bank and inform all beneficiary structures of the status of project activities.

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5.3 Implementation Schedule

The project shall be implemented over a total period of 36 months, from the date of

loan effectiveness. In a bid to monitor implementation, the Bank shall conduct a launching mission as well as regular supervision missions, in accordance with the provisions in force. The indicative project implementation schedule is summed up below:

Table 5.1

Planned Project Implementation Schedule

Tasks Authority in charge Start-up date • ADF loan approval ADF October 2007 • Signature of loan agreement ADF/GVT November 2007 • Effectiveness ADF/GVT January 2008 • Setting-up of PMU GVT/ADF April 2008 • Launch of bidding process GVT/PMU May 2008 • Recruitment of technical assistants PMU/ADF September 2008 • Supply of goods PMU/DNEP/Enterprises December 2008 • Start of training PMU/Consultants October 2008 • Project audits PMU/Consultants March 2009, 2010 and January 2011 • Mid-term review ADF/GVT June 2009 • Completion Report GVT/PMU December 2010/January 2011

5.4 Procurement Arrangements 5.4.1 Procurement arrangements are summed up in Table 5.2 below. All procurement of goods, works and consultancy services financed with ADF resources shall be made in accordance with the ADF’s relevant rules of procedure governing procurement, or where necessary, its rules of procedure for the recruitment of consultants. In all cases, the Bank’s standard bidding documents shall be used. 5.4.2 Goods: IT and office automation equipment (computers, printers, software, photocopiers, etc.) for the National Inspectorate of Finance (NIF) and the Audit Office (AO) shall be procured through national competitive bidding (NCB) for about UA 0.30 million as a single lot. Vehicles for the AO and PMU shall be procured through NCB for about UA 0.082 million. NCB is justified by the fact that the small quantities and sums involved will probably not attract suppliers abroad, and there is a sufficient number of local suppliers to guarantee competition. Documentation for the AO shall also be procured through international shopping for about UA 0.14 million. To facilitate the start-up of activities, IT and office automation equipment for the PMU shall be procured through national shopping for UA 0.023 million since the sums are small and the items are standard products that are available locally.

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Table 5.2 Procurement Arrangements (in UA million)

Expenditure category UA million

NCB Others short list

Non-ADF financing **

Total

1. Goods 384.8 384.8 165.8 165.8 0.0 0.0 0.0 0.0 550.6 550.6 1.1. IT equipment (NIF) 194.5 194.5 194.5 194.5 1.2. IT and office automation equipment (AO) 108.3 108.3 108.3 108.3 1.3. IT equipment 0.0 23.3 23.3 23.3 23.3 1.4. Documentation (AO) 142.5 142.5 142.5 142.5 1.5. Vehicles 81.9 81.9 81.9 81.9 2. Consultancy services 0.0 0.0 209.5 209.5 4,922.1 4,086.8 349.1 0.0 5,480.7 4,296.3 2.1. Technical assistance in property management 1,763.1 1,763.1 45.5 0.0 1,808.6 1,763.1 2.2. Technical assistance in diagnostic study (AO) 126.6 126.6 7.6 0.0 134.2 126.6 2.3. Support technical assistance (AO) 654.2 654.2 49.3 0.0 703.5 654.2 2.4. Implementation of the diagnosis (AO) 126.4 126.4 18.2 0.0 126.4 2.5. PMU Manager 363.4 363.4 363.4 363.4 2.6. Administrative and financial assistant (PMU) 84.8 84.8 84.8 84.8 2.7 Consultants for procurements and translations 129.6 129.6 129.6 129.6 2.8. Institution of procedures (PMU) 22.8 22.8 22.8 22.8 2.9. Training abroad (DNPE and AO) 67.0 67.0 67.0 67.0 2.10. 11 training modules (NIF) 773.3 773.3 130.2 903.5 773.3 2.11. 11 training modules (AO) 835.3 62.6 0.0 897.9 0.0 2.12 Sensitization seminar for civil society 142.5 142.5 35.6 0.0 178.2 142.5 2.13. Audit 42.8 42.8 42.8 42.8 3. Functioning 179.4 179.4 357.4 0.0 536.8 179.4

TOTAL 384.8 384.8 554.7 554.7 4922.1 4086.8 706.5 0.0 6568.1 5026.4 N.B: - The figures in parenthesis are amounts financed by the ADF.

- “Others” refers to national shopping, international shopping and negotiated contracts. - ** Procurements financed with Government resources. 5.4.3 Consultants: On the management of State property, a top-ranking consultancy firm shall be recruited from a shortlist, during Phase 1 on property inventory, to provide qualified consultants as follows: (i) an expert as technical coordinator/team leader with proven expertise in asset management (12 months); (ii) a jurist with expertise and experience in property law and ownership rights (12 months); (iii) an IT and information systems expert with experience in Oracle and SQL Server (12 months); (iv) an expert in non-financial asset accounting (12 months); (v) an expert in inventory methodology and asset management control (12 months); and (vi) a pedagogical coordinator to plan on-the-job training sessions (3 months). 5.4.4 During Phase II on the establishment of an asset valuation system, the same consultancy firm shall provided six other consultants as follows: (i) a coordinator/mission chief, with advanced knowledge of asset valuation and management (12 months); (ii) a civil engineer with expertise in real estate valuation (12 months); (iii) a geologist with expertise in natural resource valuation (12 months); (iv) an agronomist specialized in agricultural land valuation (12 months); (v) a specialist in petroleum valuation (12 months); and (vi) a jurist with expertise and experience in property law and ownership rights (3 months). The estimated cost of the contract is UA 1.76 million. The selection procedure shall be based on the technical assessment of bids and cost considerations. 5.4.5 On support to the Audit Office (AO), a renowned consultancy firm shall be recruited from a shortlist for a short-term consultancy (2 months) to implement the AO’s 2008-2010 Strategic Plan by fine-tuning the institutional diagnosis and training needs. The firm shall provide three consultants as follows: (i) a jurist specialized in the organization of AOs; (ii) a human resources expert; and (iii) an information systems expert. The contract for this activity amounts to UA 0.13 million. The selection procedure shall be based on the technical assessment of bids and cost considerations.

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5.4.6 Another consultancy firm shall be recruited from a shortlist for a period of twelve months to assist and provide on-the-job training to AO officials and technicians in the implementation of priority activities. The firm shall provide the AO with four consultants in the following areas: (i) public accounts audit; (ii) contract analysis; (iii) judicial procedure; and (iv) information systems. The contract for this activity amounts to about UA 0.65 million. The selection procedure shall be based on the technical assessment of bids and cost considerations. Furthermore, for implementation of the Strategic Plan, technical assistance and targeted training shall be procured through a shortlist for about UA 0.13 million. Besides, the Project Coordinator and the Administrative and Financial Assistant of the PMU shall be recruited from shortlists for an estimated cost of UA 0.45 million. Consultants shall also be recruited from a shortlist to provide assistance to the PMU in the areas of procurement and translation of documents for a total sum of UA 0.13 million. 5.4.7 Training: For human capacity-building in internal audit, a specialized firm or institution shall be recruited from a shortlist for about UA 0.77 million to provide the National Inspectorate of Finance (NIF) with consultants to organize 11 (eleven) training modules through local workshops and seminars. For the external audit, another specialized firm or institution shall be recruited from a shortlist for about UA 0.84 million to provide the Audit Office (AO) with consultants to organize 11 (eleven) training modules through local workshops and seminars. The selection method shall be based on the comparability of technical proposals and consideration of the lowest bid. Besides, a public institution shall be selected through a negotiated contract to provide a two-week training course abroad for four officials of the National Department of State Property (DNPE). Furthermore, eight senior AO officials shall be given a two-week training course at a similar institution abroad selected through a negotiated contract. These negotiated contracts are justified by the fact that such training abroad will be provided within the framework of exchange programs between similar public or para-public institutions. The estimated cost of both activities is UA 0.067 million. The organization of two sensitization seminars on public finance external control for the civil society shall be conducted through national shopping for an estimated cost of UA 0.14 million. 5.4.8 Functioning: Office supplies, consumables and sundry operating expenses of the PMU shall be procured through national shopping for the sum of UA 0.18 million. 5.4.9 Audit: Project audit services (UA 0.043 million) and the design of the PMU accounting system (UA 0.023 million) shall be provided by audit firms selected from a shortlist. The selection method shall be based on the lowest price for comparable services. 5.4.10 General procurement notice and review procedure: An agreement shall be reached with the executing agency on the text of the general procurement notice which shall be published in Development Business, after adoption of the loan proposal by the Board. The following documents shall be submitted to the Bank for study and approval prior to publication: (i) shortlists and invitations to bid; (ii) bidding documents; (iii) bid evaluation reports and contract award recommendations; and (iv) draft contracts in case of modification of the terms stipulated in the bidding documents (BD).

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5.5 Disbursement Arrangements

Loan resources shall be disbursed through the special account method or the direct

payment method. Disbursements for operating expenses shall be made through the special account method, in accordance with the relevant ADF rules of procedure. To that end, the Borrower shall open a special account in a bank deemed acceptable by the ADF. The account shall be provisioned with an initial deposit, following a scheduled program, whose amount shall not exceed the budget for six months of activity. It shall be replenished on the same basis (scheduled program of six months of activity), after justification of the use of at least 50% of the previous transfer and full justification for all previous advances. Disbursements for contracts (for equipment, technical assistance, training, etc.) shall be made through the direct payment method. Pursuant to a preliminary agreement with the ADF, expenditure on contracts worth less than UA 20,000 may be paid through the special account. To obtain payments from the Fund, the PMU shall prepare disbursement requests and submit them to the Project Manager for verification and transmission to the Bank. National counterpart funds shall be paid directly from the budgets of the various beneficiary ministries. 5.6 Monitoring and Evaluation

The PMU shall ensure monitoring/evaluation of the project under the supervision of

the DNEP. The beneficiaries and the Fund shall be informed through regular submission of quarterly status reports drafted by the PMU under the supervision of the Project Manager, using a format agreed upon with the Bank. For each quarter, such reports shall cover aspects related to project implementation, including status, expenditure, work program, analysis of noted cost variances and any problems encountered and solutions proposed. They shall also present an overview of activities for the next quarter. Besides, the PMU shall prepare a completion report within six months from the end of the project. The Bank shall monitor project implementation through field supervision missions and mid-term review missions. 5.7 Financial and Audit Reports

The PMU shall keep an accounting of the project that makes it possible to identify

and monitor expenditure by component, by expenditure category and by financing source. The accounts shall be audited annually by an audit firm, recruited from a shortlist and remunerated with ADF funds. The audit reports, drafted in accordance with ADF requirements, shall be submitted at most 6 (six) months from the end of the previous fiscal year. Besides, to ensure efficient implementation and monitoring of expenditure, a financial and accounting management software shall be procured at the start of the project, which makes it possible to set up a private accounting system that is compatible with project activities. The system should take into account the various components, expenditure categories and financing sources. The PMU shall also prepare a manual of administrative, financial and accounting procedures and keep complete registers of expenditure by component, by category and by financing source.

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5.8 Coordination of Donors

During preparation and appraisal of PAGEF, the Bank worked in close coordination

with other partners intervening in the area of public finance, especially the recently-created Public Finance Management (PFM) Group. Such coordination will continue during the implementation phase of PAGEF. VI. SUSTAINABILITY AND RISKS OF THE PROJECT 6.1 Recurrent Expenditure

PAGEF mainly covers technical assistance activities, training, and to a lesser extent,

equipment. Hence, any residual recurrent expenses after the project will be minimal, and concern the purchase of consumables, IT equipment maintenance costs and other logistical material amounting to about UA 0.09 per year. This amount, to be factored into the operating budget of the beneficiary structures (DNPE, NIF and AO) from 2011, will easily be defrayed by the Government. The salaries of the PMU secretary and driver, and of their counterparts in the beneficiary structures have already been included in the State budget and shall continue to be paid by the Government. The remuneration of the Coordinator and the Administrative and Financial Assistant in the PMU, as well as other operating expenses for components financed with Government counterpart funds will be terminated at the end of the project. 6.2 Sustainability 6.2.1 PAGEF actions, which essentially focus on human capacity-building, are sustainable by nature. Indeed, PAGEF falls in line with a series of actions initiated by the Government and other development partners to promote transparency and efficiency in the State’s economic and financial management. It also falls within a context where there is growing State commitment to the reforms needed to improve the fiduciary framework. The sustainability of PAGEF effects will depend, in large measure, on the sustainability of such commitment and coordination of the interventions of the other donors with a view to making the process irreversible. 6.2.2 Project implementation will enhance transparency and efficiency in the implementation of poverty reduction programs and improve the framework for the exercise of private sector activities. The emphasis on building internal training capacity will enable the institutions involved in public finance management and control to address their specialized human resource needs on a sustainable basis. The sustainability of project impacts will be reinforced by the ongoing public administration reform process and the transfer of knowledge and know-how from the Technical Assistants to their national counterparts who shall be trained under the project. Through the project, appropriate training shall be given to at least 300 experts from the services involved in the management of State resources and State accounts. 6.3 Main Risks and Mitigative Measures 6.3.1 Three main risks could affect the smooth implementation of the project. First of all, the Government’s political commitment to the pursuit of public finance reforms could wane and thus reduce the expected impact of the project on the improvement of economic and

23

financial governance. However, the mitigative measures for this risk include the Government’s determination to maintain relations with the IMF and growing State involvement in the financing of several capacity-building actions. 6.3.2 The second risk is a lack of motivation among experts, due to low public service salaries, which may lead to high mobility among trained employees. This risk is mitigated by the ongoing administrative reform process which provides for the imminent institution of a results-based management system, human resource development and the institution of a merit-based assessment and remuneration mechanism. This reform should ultimately lead to a salary revision for State employees. The third risk is inherent in the low project management capacity which could lead to major delays in implementation. This risk is mitigated by the measures taken to ensure that an efficient project management team is recruited on the basis of a results-based contract. VII. PROJECT BENEFITS 7.1 Economic and Social Benefits The main impact expected from the project is its contribution to the attainment of the objectives of economic growth and poverty reduction as outlined in PRSP-I, through overall improvement of the country's economic and financial governance. It should also be appreciated within the framework of actions conducted by other partners to build economic and financial management capacity. The technical assistance, studies and training actions conducted under the project will have a real impact on capacity-building in public finance management, which constitutes a major element of viability within the macroeconomic framework that is indispensable to growth. Moreover, the protection of public resources through appropriate State property valuation, and consolidation of the internal and external audit system will lead to budget implementation that is more in keeping with the Government's poverty reduction strategy objectives, and substantially reduce the disparities that constitute a social scourge in Angola. 7.2 Project Impact on Crosscutting Themes 7.2.1 Impact on poverty reduction: The project’s impact on poverty will be felt mainly through an improvement in financial management which promotes macroeconomic stability that is crucial to robust growth, and ensures the effective utilization of public resources on sectors, like infrastructure, health and education, that fuel private sector development and poverty reduction. This will certainly lead to a significant improvement in the country’s social indicators that stand at alarming levels (poverty incidence of 68% and a GINI index of 0.62) and hasten achievement of the MDGS. 7.2.2 Impact on Governance: PAGEF will contribute to the effective exercise of the key functions of financial governance. According to PEMFAR recommendations, consolidation of the audit and control systems is crucial to the success of public finance reforms in Angola. By the end of PAGEF in 2010/2011, State assets would have been accurately valued and factored into the GSA in six ministries and five provinces; internal audit would have been conducted on about fifteen targeted State structures with monitoring of recommendations; the gaps in budget performance indicators would have been halved and the reports of the Audit Office (AO) would be published. Furthermore, the enhancement of GSA accuracy and capacity-building for the AO will enable this institution to present quality budget and

24

financial implementation reports to Parliament, thereby enhancing the capacity of parliamentarians to control budget management by the Executive, in accordance with the Constitution. Besides, the project will increase participation through capacity-building for civil society by enabling it to play an effective role in the transparency and corruption control process for public resource management. 7.2.3 Impact on private sector development: Of the 128 countries surveyed in the World Bank’s 2007 global competitiveness index, Angola reportedly has the least attractive business environment. The primary causes of this situation are poor infrastructure, an inefficient public service, the poor quality of human capital (health, education) and the macroeconomic situation. The successful implementation of PAGEF will help to mitigate these constraints to private sector development directly (efficiency of financial administration and the impact of public finance on macroeconomic stability) or indirectly (effective use of public resources to improve education, health and infrastructure). Besides, clarification of the management and transactions framework as well as the institution of legal instruments governing State property will enhance transparency, which will, in turn, boost private sector confidence. 7.2.4 Impact on the environment: The current project, given its various components, has no direct negative impact on the environment. It has therefore been classified in Category III following Bank criteria. 7.2.5 Impact on gender: Women make up 52% of Angola’s total population. Indeed, extreme poverty affects 27.3% of households headed by men and 30.1% of households headed by women (cf. Household Consumption Survey 2001). In rural areas, women constitute about 70% of the agricultural labor force. About 85% of female family heads are self-employed or work in informal private sector enterprises. On account of its low salaries, the public service attracts only 25% of male family heads and 15% of female family heads. Women will certainly benefit from the positive effects of PAGEF on poverty reduction and the private sector. Besides, in response to the findings of gender-related studies, PAGEF intends to lay special emphasis on building the information management capacity of women’s NGOs so as to increase their participation in the taking of decisions that affect their lives. Moreover, the Government has undertaken to increase female participation in the training courses organized for the various beneficiary structures. VIII. CONCLUSION AND RECOMMENDATIONS 8.1 Conclusion This Financial Governance Support Project (PAGEF) is part of the Government’s program and is defined in the 2005-2007 RBCSP approved in July 2005. Implementation of the project will enable the country to develop the requisite tools and capacity to promote participation, transparency and efficiency in the public resource management so as to make it possible for a huge segment of the Angolan population to share in economic growth. 8.2 Recommendations 8.2.1 In light of the foregoing, it is recommended that a loan, from ADF X resources, not exceeding UA 5.9 million, be awarded to the Government of the Republic of Angola to finance the Financial Management Institutional Support Project (PAGEF).

25

8.2.2 The ADF loan is subject to fulfillment of the following conditions by the Government:

A. Conditions precedent to ADF loan effectiveness: The loan agreement shall become

effective subject to the Borrower’s fulfillment of the conditions provided for in Section 5.01 of the General Conditions for Loan Agreements and Guarantee Agreements

B. Conditions precedent to first disbursement: Apart from loan effectiveness, the first

disbursement shall be subject to fulfillment by the Borrower of the following specific conditions:

(i) provide proof of having opened a special account in the name of the project,

in a bank deemed acceptable by the Fund, into which ADF resources shall be deposited for the project’s operating budget (paragraph 5.5).

C. Other conditions:

(ii) provide proof of appointment of the Director of the DNPE as Project Manager and of focal points in PAGEF's beneficiary structures (NIF and Audit Office), within a maximum period of 3 (three) months after loan effectiveness (paragraphs 5.1.1 and 5.1.2); and,

(iii) provide proof, by 30 June 2008 latest, that the Council of Ministers has

adopted draft decrees relating to (i) the revised legal framework of the National Inspectorate of Finance and (ii) the legal framework for asset management (paragraphs 3.1.2, 3.1.3 and 3.3.5).

ANNEX 1

MAP OF THE REPUBLIC OF ANGOLA FINANCIAL MANAGEMENT SUPPORT PROJECT

This map was provided by the African Development Bank Group exclusively for the use of the readers of the report to which it is attached. The names used and borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

ANNEX 2

REPUBLIC OF ANGOLA FINANCIAL MANAGEMENT SUPPORT PROJECT

ORGANIZATION STRUCTURE OF THE MINISTRY OF PLANNING

DNEP

DCAPD

DNI

DPI

DGA

DNDT

DEAT

DM

CENTRAL EXECUTIVE SERVICES

DEP

DPE

Legal Service Doc. & Info. Center

Regional Integration

DAC

OPERATIONAL SUPPORT SERVICE

Cabinet of 2nd Vice Minister

Cabinet of 1st Vice Minister

UCP DNI = Department of Investments = Department of Investment Programs DGA = Management and Assistance DNDT = National Department of Territorial Development DEAT = Department of Studies and Territorial Analysis DM = Department of Methodology = Department of Studies and Projects = Department of Economic Programs DAGB = Department of Administration and Budget Management DRH = Human Relations Department = Department of State Property DAC = Audit and Litigation Department

Consultant Adviser

TECHNICAL SUPPORT SERVICES

SUPPORT CONSULTANCY SERVICES

Policy Adviser

Technical Adviser

Secretariat General

DP

DAGB

DRH

DNEP National Directorate of Studies and Planning

Project Executing Agency

MINISTIRY OF PLANNING

UCP Project Coordination Unit

ANNEX 3

REPUBLIC OF ANGOLA

ECONOMIC AND FINANCIAL MANAGEMENT INSTITUTIONAL SUPPORT PROJECT

ORGANIZATION STRUCTURE OF THE MINISTRY OF FINANCE

MIINISTRY OF FINANCE

Technical Adviser

Policy Adviser

Consultant Adviser

Vice Minister of Finance

Vice Minister of Finance

Vice Minister of Finance

Documentation Secretariat General

DNPE DNC DND DNT DNB

INF IT Office

Price & Compe-tition Office

Legal Office

Provincial Delegations of

Finance

Provincial Inspection Office

Provincial Advisers of Finance

DNI Medical Department

ANNEX 4

ORGANIZATION STRUCTURE OF THE AUDIT OFFICE

PLENARY SESSION

PUBLIC PROSECUTOR JUDGE/LEGAL

COUNSEL

CABINET OF LEGAL COUNSEL

1st CHAMBER REGIONAL OR PROVINCIAL

SECTIONS

2nd CHAMBER

Judge 1 Judge 2 Judge 3 Judge 4 Judge 5 Judge 6 Judge 7 Judge 8

Department of Technical Services

Administrative Council of the Registry

Department of Administrative Services

General Controller/Auditor

Administration and Finance Section

Human Resources Section

Transport and Public Relations Section

Documentation and IT Section

First section

Second section

Third section

Fourth section

Fifth section

ANNEX 5

PROJECT MANAGEMENT ORGANIZATION CHART

STEERING COMMITTEE

MINISTRY OF FINANCE PRESIDENT OF THE AUDIT OFFICE NATIONAL

DIRECTOR OF PROJECT

MONITORING

NATIONAL INSPECTOR OF FINANCE

NATIONAL DIRECTOR OF

STATE PROPERTY

COORDINATOR OF THE PROJECT

MANAGEMENT UNIT

(Secretary of SC)

ACCOUNTANT

NATIONAL INSPECTORATE OF FINANCES (NIF)

(Appointed ocal point)

NATIONAL DEPARTMENT OF STATE PROPERTY

(DNEP) (Appointed focal point)

AUDIT OFFICE

(Appointed focal point)

ANNEX 6

REPUBLIC OF ANGOLA FINANCIAL MANAGEMENT SUPPORT PROJECT

ACTIVE PORTFOLIO OF BANK GROUP Amount (UA million)

ANNEX 7

ANGOLA

Financial Management Support Project (PAGEF) Terms of reference of the Project Management Unit Coordinator

Goal:

1. The mission of the Project Management Unit (PMU) Coordinator shall be to monitor the activities defined within the framework of the project, under the supervision of the Financial Management Support Project (PAGEF) Manager. He shall produce all documents relating to the functioning of the project (progress reports, management procedures, status reports) and any other relevant document requested by the Government and the Bank.

Missions

2. As his main functions, he shall:

(i) ensure the daily management of the project and coordinate actions with the other institutions and donors;

(ii) submit all problems encountered in project implementation to the Steering Committee and propose concrete solutions where necessary;

(iii) perform all duties relating to procurement;

(iv) verify compliance with Bank rules and procedures and with procurement regulations for goods/works and services on behalf of the State in this project;

(v) introduce, with the support of the technical assistants if need be, and coordinate the execution of the project’s technical assistance and capacity-building programs (local training, seminars, study trips, etc.);

(vi) prepare quarterly project status reports for the Bank and the Government;

(vii) attend all meetings or working sessions convened by the Government or other current or potential donors of Angola.

Qualifications

3. Candidates for this position must be holders of a postgraduate diploma in economics and have proven experience in the areas of institutional development, public finance management and project management. They must also be fully knowledgeable in procurement procedures and must have at least 10 years working experience in a Government administration or international organization.

Duration and place of contract 4. Thirty-six (36) months, LUANDA, Republic of Angola.

ANNEX 8

ANGOLA

Financial Management Support Project (PAGEF)

Terms of reference of the Administrative and Financial Assistant for the PMU

Goal:

1. The Administrative and Financial Assistant shall assist the Project Manager with daily administrative management and ensure the financial and accounting management of the Project, under the supervision of the Project Manager. As such, he shall be responsible for keeping the accounts of the project. He shall ensure that project resources are effectively used for the project and in conformity with the directives of the Bank Group.

Missions

2. As his main functions, he shall:

(i) assist the Manager in the daily administrative management of the project;

(ii) help with the setting-up and functioning of the entire budget, accounting and internal audit system for the financial management of project activities;

(iii) ensure appropriate general and analytical accounting: opening an account register for project activities, containing information on bank and supplier accounts and the signatories of such accounts;

(iv) participate in budget preparation and implementation by component; (v) keep records of all ADF and Government disbursements to the project;

(vi) identify and keep complete lists of entrepreneurs, suppliers and bids for the procurement of goods and services;

(vii) prepare requests for equipment expenditure for project activities; (viii) prepare payment/reimbursement requests for signature by the Manager; (ix) prepare quarterly financial and status reports on project accounts;

(x) process allowances and pay staff dues; and

(xi) carry out any administrative and financial task deemed necessary.

Qualifications

3. Candidates for this position must hold a university degree in accounting and have long-standing experience in the financial management of projects. They must also be fully knowledgeable in procurement procedures and have at least 10 years working experience in a Government administration or international organization.

Duration and place of contract

4. Thirty-six (36) months, LUANDA, Republic of Angola.

ANNEX 9 Page 1 of 5

ANGOLA

Financial Management Support Project (PAGEF)

Terms of reference for the Technical Assistant in charge of inventory and the institution of a State property valuation methodology

Introduction

1. The Republic of Angola receives support from the African Development Bank (ADB) Group in implementing the Government’s program. The Loan Agreement of UA 5.9 million, signed by both parties, is aimed at building the Government’s institutional capacity in public finance management. Under this project, the Government intends to recruit a consultancy firm to conduct an inventory and institute a State property valuation methodology. Property management, classification, dissemination and inclusion into the general State budget (GSB) are key elements in the public finance management modernization process currently underway in Angola. Hence, three activities have been planned to achieve budget transparency and thus enhance governance. 2. The terms of reference (TORs) are structured as follows: (i) background to State property management problems; (ii) objective of the consultancy; (iii) focus areas of the consultancy; (iv) mission of the audit firm; (v) organization of the consultancy; (vi) profile of the firm; and (vii) duration of services. Background

3. State property management is virtually non-existent. Apart from a few classified buildings, the State has no idea of the corresponding value of most its property. Under the current reforms, the Ministry of Finance (MINFIN), through its National Department of State Property), has programmed the inclusion of State property into the national budget, which implies the conduct of an inventory and valuation using a computerized system known as the Integrated State Property Management System (SIGPE) set up with the support of the World Bank’s EMTA project. However, SIGPE is not yet operational. There is also need to reinforce and energize the management institutional structure at the central, sectoral and provincial levels. The first phase of activities on State property ran from April 2005 to October 2005. The second phase started in May 2006 and ended in April 2007. The current project is thus aimed at building on the previous efforts. Essentially, the expected outcomes of this project are the development of conditions for the application of SIGPE software and the preparation of some legal titles to property. Hence, to implement the DNPE’s work program, the Government wishes to use the services of a specialized consultancy firm to ensure this continuity aimed at finalizing the concept and operationalization of SIGPE as well as the guidance and training of current staff. Objective

4. The objective of technical assistance is to develop a feature to be integrated into the SIGPE software, through Phase 1 on State property inventory support and on-the-job training. In Phase 2, the software will be used for the official valuation and registration of real property. The idea is to create the initial preconditions for valuation of the State’s real property, with a view to ultimately extending this exercise to the rest of the country’s real assets, including any property abroad.

Focus areas for technical assistance activities

5. The Consultant shall conduct two major complementary activities, namely: (i) conduct an inventory of State property; and (ii) design a methodology for valuation of State property. The inventory phase shall also comprise an on-the-job training component for DNPE staff. The inventory/valuation activities shall mainly target pilot structures and regions, namely six ministries

ANNEX 9 Page 2 of 5

(Finance, Public Works, Geology and Mines, Town Planning and Environment, Petroleum, Agriculture and Rural Development) and five provinces (Luanda, Benguela, Huila, Malange and Uige). 6. Activity 1: Two major sub-activities, namely: (i) the pursuit of activities to implement SIGPE; and (ii) legal support. 7. The main tasks under Sub-activity 1, to be conducted by teams that will be set up, are: (i) the conduct of joint tests on system functionality for FY2008, computerized recordkeeping including configuration of the special Zebra printer and the bar-code scanner; (ii) initiation of the pilot phase in MINFIN, including the property registration and labeling process; (iii) implementation of the pilot project as compared to disaggregation/dissemination of the previous fiscal years 2004/05/06/07 within SIGFE/SIGPE; (iv) preparation of the SIGPE instruction manual (disaggregation/dissemination); (v) preparation of reports (current fiscal year and closed fiscal years 2004-2007) with identification of actual property (disaggregation/dissemination) and identification of goods targeted through means of payment, ongoing construction work, major repair projects, credit lines, grants and other forms of payment; (vi) consultation of archives for identification of purchase documents (bills and other types of documents); (vii) harmonization of account classifications (non-financial assets) with the Public Accounting Plan, economic nomenclature; (viii) production of inventory bar code labels for State property eligible for labeling for the current fiscal year; (ix) assignment of State property to various government bodies, public service employees and other relevant entities (budget unit or dependent organ); and (x) inventory of State property (furniture, vehicles and buildings) used by budget units and dependent organs. 8. The main tasks under Sub-activity 2 on legal support are: (i) development of legal and statutory procedures governing legal titles; (ii) revision of titles in accordance with comments or changes noted in the SIGPE; (iii) preparation of new legal or statutory titles necessary for the operationalization/regulation of State real property in conjunction with the other sectoral services and operationalization of the start-up and implementation of the property inventory process; (iv) legal support in finalizing the design, start-up and implementation of SIGPE, taking into account the operationality of its integration into the Integrated Financial Management System of the State (SIGFE); (v) legal support to the DNPE and preparation of regulations defining the responsibilities of the DNPE in the face of new State requirements and objectives in the area of property management. 9. Activity 2 entails supporting the DNPE in the use of SIGPE to conduct an official valuation of real property as an efficient way of carrying out a global evaluation of State property, while contributing to the process of transparency, profitability, management and control of State real property and its operationality within the framework of the budget. The Consultant shall develop the following actions: (i) diagnosis; (ii) advanced and progressive design of the property valuation system; and (iii) implementation of the official property valuation system for the inventories conducted and efficient management of the real property of the State. 10. The diagnosis will analyze the current situation using the existing State property valuation criteria, from the technical, legal and human standpoints; present a status of computerized property management; and also define future options. Its design will entail defining the official property valuation system to be used in the structure concerned and conducting a staff-training needs assessment in the project structures/regions. Lastly, implementation of the valuation system will entail: (i) accounting between the valuation system and SIGPE; (ii) preparation of legislation/regulations governing valuation; (iii) identification of equipment needs; (iv) constitution of property valuation teams according to established criteria such as geographical location, type and size of the property. 11. Capacity-building Component: Two capacity-building activities have been planned. First of all, during the inventory phase, the Technical Assistants shall conduct a training program based on 9 (nine) modules, presented in the annex, over a period of 9 (nine) weeks, representing an average

ANNEX 9 Page 3 of 5

of one module per week. The firm shall provide the DNPE with a pedagogical coordinator for 3 (three) months to organize the training. At the end of the two technical assistance phases, and as additional training, the firm shall help the DNPE to select four of its experts to undergo a training course in a similar advanced public institution abroad, to acquaint them with the best practices in State property management.

Mandate of the consultancy firm

12. For the abovementioned three main focus areas, the consultancy firm shall provide the DNPE with a group of 6 (six) competent consultants for the activities mentioned under Activity 2. The consultants shall also provide the staff with guidance and training. The consultancy firm shall also help with the organization of training courses abroad. The trainees shall be selected by the DNPE. The profiles of consultants are presented below.

Organization of technical assistance

13. The Consultants shall work under the authority of the National Director of State Property and under the coordination of the PAGEF Coordinator. The firm shall appoint one of the consultants as mission chief for technical coordination. The firm shall submit monthly reports and a mid-term report. Upon completion of work by each group of consultants, the consultancy firm shall submit an implementation report to the DNPE which shall validate and forward it to the Bank. The experts from the consultancy firm shall work in close collaboration with the team of professionals that the DNPE shall designate for planned activities. The PAGEF Coordinator shall also monitor these activities.

Total duration of technical assistance 14. The duration of technical assistance for each of the two groups of consultants shall be 12 (twelve) months, making a total duration of 24 months. The second activity to be implemented by the second group of consultants could start 5 to 6 months after commencement of the first activity.

Profile of the consultancy firm and experts 15. For Activity 1 and the component on the administration of 9 (nine) training modules, the consultancy firm to be recruited shall provide evidence of proven experience in property management. The firm shall provide six qualified consultants as follows:

i) A Technical Coordinator/mission chief, with proven expertise in property management (12 months);

ii) A jurist with expertise and experience in property law and property rights to conduct a diagnosis of the current legislation and help in the preparation of new titles (12 months;

iii) An IT and information systems expert with experience in Oracle and SQL Server programming to work with SIGPE and establish the linkage with SIGFE (12 months);

iv) An expert specialized in non-financial asset accounting (12 months);

v) An expert in inventory methodologies and property management control (12 months); and

vi) A pedagogic coordinator to plan and implement the 9 (nine) training modules (3 months).

16. For Activity 2 on the establishment of an asset valuation system, the same consultancy firm shall provide 6 (six) other consultants as follows:

i) A Technical Coordinator/mission chief, with great expertise in property valuation and management, including the functioning of SIGPE (12 months);

ANNEX 9 Page 4 of 5

ii) A jurist with expertise and experience in property law and State property rights to monitor application of property laws (3 months);

iii) A civil engineer specialized in real property valuation (12 months);

iv) A geologist specialized in natural resource valuation;

v) An engineer specialized in petroleum valuation; and

vi) An agronomist specialized in agricultural land valuation.

Annex to Annex 9

TRAINING MODULES TO BE ADMINISTERED BY DNPE TECHNICAL ASSISTANTS

INTRODUCTION AND METHODOLOGY

1. Nine training modules shall be taught by the Technical Assistants for Activity 1 on property inventory. These courses could be organized in INFORSEFE for a period of 9 weeks (with about 1 week of 30 hours per module). The Consultant shall present the content of each module. The trainees shall be Directors, Senior Technicians and Public Servants with an administrative background. 2. The teaching methods and tools should be tailored to the course objectives and profiles of trainees. 3. The various concepts taught by the instructors (TAs) shall be supplemented with group work, practicals, case studies, experience-sharing on problems encountered and the presentation of alternatives and possible solutions. OBJECTIVES OF THE MODULES Module 01 - Integrated State Property Management System (SIGPE)

Provide trainees with adequate knowledge needed to use the Integrated State Property Management System as a medium for conducting a general inventory of State property in the Republic of Angola. SIGPE shall be used both during the disaggregation phase for property procured through liquidation (already included in the pre-2006 SIGPE) and from the time of procurement. Module 02 – Property Accounting

Acquaint trainees with the basic notions of accounting and finance. Identify and teach the basic principles of property accounting and its applications to the relationships between SIGPE, SIGFE, State accounts and the State budget. Module 03 – Introduction to Administrative Law Teach the general principles of administrative procedure and different aspects of the administrative process in State property management. Module 04 – Property of the State and Local Government Entities Teach the fundamental principles of land administration in Angolan law (land law); the characteristics and differences between State lands and private lands (land tenure); the essential characteristics of the legislation governing natural resources on State and private lands.

ANNEX 9 Page 5 of 5

Module 05 – Internal Control and Audit Provide trainees with knowledge on internal controls and audits in administrative and property management. Module 06 – Inventory of State property - ISP Train participants on the organization of inventories and the management of fixed assets, furniture, vehicles, and buildings with a view achieving efficient property management by State bodies. Module 07 – Instructions on the use of the economic nomenclature of public income and

expenditure in property management Train participants on the organization of accounting nomenclature with a view achieving efficient property management by State bodies. Module 08 – State Property Accounting Provide trainees with in-depth and general knowledge on how to conduct the administration and management of State property. Module 09 – Introduction to public finance and financial law Provide trainees with in-depth knowledge of the fundamentals of public finance and public sector economics. Teach the financial aspects State property, its management, revenue and expenditure.

ANNEX 10 Page 1 of 3

ANGOLA

Financial Management Support Project (PAGEF)

Terms of reference for the consultancy firm responsible for organizing training modules for Inspectors of Finance from the National Inspectorate of Finance

Introduction

1. The Republic of Angola receives support from the African Development Bank (ADB) Group for implementation of the Government’s program. The Loan Agreement for UA 5.9 million, signed by both parties, is aimed at building the Government’s institutional capacity in public finance management. It is under this project that the Government intends to recruit a consultancy firm to organize training modules for Inspectors of Finance. 2. This training is aimed at developing the technical expertise of the inspectors and administrative staff of the National Inspectorate of Finance (NIF) so that they can efficiently conduct their duties of control and internal audit of public finance. This training program was identified by the State Personnel Training Institute (INFORSEFE) under the economic management support project funded by the World Bank. The target trainees are current NIF staff and new staff to be recruited by the end of 2007. 3. Objectives of the 11 (eleven) training modules Module 01 – Public resource management

Provide trainees with adequate and necessary knowledge on the principles, rules and responsibilities of financial inspection and internal control. Module 02 – Essentials of Accounting

Educate trainees on: (i) the mission and objectives of accounting; (ii) the use of accounting information in a social/public interest context; (iii) accounting results; (iv) accounting methods and organization; (iv) fundamentals of accounting; (v) accounting as a basis for audit work. Module 03 – Advanced Accounting

The target areas are: (i) the principles of tangible and intangible assets in accounting; (ii) financial investments; (iii) multi-year contracts; (iv) third-party accounts; (v) equity capital; (vi) taxation; (vii) accounting of economic groups; (viii) future developments in accounting. Module 04 – Role and activities of the National Inspectorate of Finance Teach the fundamentals of the traditional products of inspection and a new philosophy of intervention. The areas targeted are: (i) expenditure audit; (ii) revenue audit; (iii) property audit; and (iv) assessment of public services. Module 05 – Ethics, rules of professional conduct and staff characteristics Sensitize trainees to the following aspects: (i) the professional independence of the Inspector; (ii) competence; (iii) professional ethics; (iv) other staff characteristics crucial to inspection; (v) types of relations with entities subject to inspection; and (vi) the conduct of an inspection mission. Module 06 – Audit standards Train inspectors to master best practices in auditing: (i) audit standards framework; (ii) national audit standards; (iii) international standards; (iv) INTOSAI standards; and (v) the financial control manual.

ANNEX 10 Page 2 of 3

Module 07 – Work planning and risk analysis Build trainees’ capacity in: (i) inspection planning and methodology; (ii) risk assessment; (iii) assessment of various risk factors; and (iv) effective conduct of inspection and tolerable errors. Module 08 – Audit techniques and procedures Provide trainees with in-depth and general knowledge on audit best practices especially in: (i) audit procedures; (ii) working documents as evidence of inspection; (iii) revision of work done; (iv) verification of events previous to the reference date on the inspection report. Module 09 – Audit conclusions report Provide trainees with in-depth knowledge of the fundamentals of public finance and financial law. The main aspects targeted are: (i) detailed information on inspection conclusions; (ii) specificity of audit reports; (iii) audit elements for reporting; (iv) audit report methodology; (v) various reporting models. Module 10 – Audits in computerized environments Provide trainees with in-depth knowledge on working in computerized environments, with focus on: (i) information systems in advanced technology environments; (ii) process adjustment in computerized audits; (iii) audit of financial transaction procedures; (iv) access to computerized content and level of security; (v) self-control mechanisms; (vi) programmed controls; and (vii) electronic billing systems. Module 11 – Essentials of financial management Train technicians, especially new NIF recruits, on the financial management techniques for State auditors. The target topics are: (i) management control instruments; (ii) financial information for management control; (iii) management control and accountability; (iv) forecasting process; (v) valuation by objectives; (vi) introduction to financial information for detailed analysis; (vii) management accounting mission; and (viii) accounting and accountability. 4. Trainee groups

The program is destined for two groups of trainees:

1. Further/refresher training for inspectors currently in service (54 inspectors); 2. Initial training for newly- recruited inspectors (60 inspectors).

5. Methodology

The teaching methods and tools should be tailored to the course objectives and the profiles of trainees. The various concepts taught by the instructors (TAs) shall be supplemented with group work, practicals, case studies, experience-sharing, scenario-writing and presentation of alternatives and possible solutions.

6. Duration and place

6.1 The training sessions could be organized in the Public Service Training Institute (INFORSEFE) in Luanda. 6.2 One (1) instructor shall be assigned to each module, making a total of 11 (eleven) consultants. A training consultancy firm shall be recruited to provide the NIF with the consultants that will administer the training modules. Each module shall run for an average period of one week making a total of 11 weeks. The instructors shall be retained for two weeks, including the time for preparation of the modules.

ANNEX 10 Page 3 of 3

6.3 About 55 (fifty-five) trainees from the provinces shall attend the courses. The total number of trainees is estimated at 114, comprising 54 persons for further training and 60 persons for initial training. Considering the relatively high number of trainees, they shall be divided into four working groups. There shall be four sessions per module (2 for refresher training of current staff and 2 for initial training of recruits).

ANNEX 11 Page 1 of 2

ANGOLA

Financial Management Support Project (PAGEF)

Terms of reference for the Technical Assistant in charge of fine-tuning the institutional diagnosis of the Audit Office (AO)

CONTEXT AND RATIONALE

1. The Republic of Angola receives support from the African Development Bank (ADB) Group for implementation of the Government’s program. The Loan Agreement for UA 5.9 million, signed by both parties, is aimed at building the Government’s institutional capacity in public finance management. It is under this project that the Government intends to recruit a consultancy firm to fine-tune and implement the Strategic Plan of the Audit Office (AO) for 2008-2010. 2. The AO was set up by Law No. 5/96 of 12 April 1996. It is the supreme organ for external control of public finance and is independent and autonomous. The AO is vested with the necessary authority to conduct external audits on public finance and its decisions have to reflect the following constitutional principles: (i) the principle of independence vis-à-vis other organs of sovereignty; (ii) the principle of exclusive submission to the law; (iii) the principle of motivation; and (iv) the binding nature of its decisions and their publicity. The AO is a member of the International Organization of Supreme Audit Institutions (INTOSAI), the African Organization of Supreme Audit Institutions (AFROSAI) and the SADC Organization of Supreme Audit Institutions (SADCOSAI). 3. The AO will intervene in both ex ante and ex poste audits. The purpose of the ex ante audit is to verify that the documents and contracts of State and parastatal entities are in accordance with the laws in force and that the initiated expenditure is covered by sufficient budget allocations. Public contracts worth over one million US dollars shall be subject to ex ante audits. The AO exercises ex poste financial control through account audits, the assessment of internal audit systems, and appraisal of the legality, economy, efficiency and efficacy of financial management. In its public debt control activities, the AO verifies whether the Government has complied with the debt limits and general financing conditions defined by the National Assembly at the beginning of each fiscal year. Ex poste financial audits are always conducted through approval of auditors' reports, external account audits, and homologation of accounts submitted for internal audit. 4. However, the AO has not yet audited State accounts so far, mainly because of limited institutional capacity and a shortage of human resources. Moreover, budget implementation control by the National Assembly is not fully operational and is undermined by long delays. Indeed, in June 2005, the Executive submitted State Budget and Financial Execution Reports for 2003 and 2004 which did not explain the disparities between the original performance indicators and actual results. Moreover, they were not reviewed by the AO and not published. The PEMFAR review of 2005 concluded that the internal control and external audit functions were not satisfactorily implemented. Besides, the AO has just prepared a Strategic Plan for 2008-2010 . It is important to implement this plan and provide institutional assistance and training to the AO so that it can perform its statutory duties.

Objectives of fine-tuning the diagnosis 5. The objective is to implement the 2008-2010 Strategic Plan and help to improve the assessment of real needs in institutional development, human resources and ICTs, with a view to providing more targeted technical assistance and training. 6. Following the 2008-2010 Strategic Plan and in a bid to build external audit capacity, this will entail: (i) fine-tuning the functional and structural analysis; (ii) analyzing human capacity

ANNEX 11 Page 2 of 2

and IT systems needs; (iii) identifying problems and proposing alternatives to guarantee the operationality of the Strategic Plan and improve performance in AO activities; (iv) analyzing proposed interventions in detail; and (iv) preparing an operational action plan for institutional and human resource development to facilitate decision-taking or revision/ restructuring of the Audit Office support program in future. The action plan has to spell out the objectives, activities, means, implementation schedule and results indicators. The action plan will have to be validated by the appropriate bodies.

Mandate of the Consultancy Firm

7. A renowned consultancy firm specialized in the organization, methods and training of audit offices shall be recruited for a short-term consultancy (2 months). The firm shall provide three consultants as follows: (i) a jurist specialized in the organization of AOs; (ii) a human resources specialist with expertise in the functioning of audit offices, to conduct a skills assessment and propose a training plan; and (iii) an information systems expert. After the two-month period of consultancy, the firm shall submit a report and an action plan.

Organization of consultants

8. The experts from the consultancy firm shall work at the headquarters of the Audit Office in Luanda, in close collaboration with the team of professionals that the Audit Office shall designate for the planned activities and under the leadership of the PAGEF Coordinator.

ANNEX 12 Page 1 of 4

ANGOLA

Financial Management Support Project (PAGEF)

Terms of reference for the Technical Assistant in charge of implementing the priority statutory activities of the Audit Office (AO)

CONTEXT AND RATIONALE 1. The Republic of Angola receives support from the African Development Bank (ADB) Group for implementation of the Government’s program. The Loan Agreement for UA 5.9 million, signed by both parties, is aimed at building the Government’s institutional capacity in public finance management. It is under this project that the Government intends to recruit a consultancy firm to assist the Audit Office (AO) in the implementation of its priority statutory activities and provide on-the-job training to the senior staff of the institution. BACKGROUND INFORMATION ON THE AUDIT OFFICE 2. History and competence: The Audit Office (AO) was set up by Law No. 5/96 of 12 April 1996, as amended by Law No. 21/03 and regulated by Decree No. 23/01 (Rules Governing the Organization and Procedures of the Audit Office). Decree No. 24/01 approves the regime and structure of rates payable to the AO. The AO is the judicial organ of the Republic of Angola specially charged with exercising financial control over the State and other government entities set up by law. It has jurisdiction over the entire national territory and abroad under Angolan law. The following are under the AO’s jurisdiction: sovereign State organs; public institutes; local institutions and their associations; enterprises or corporations in which the State has a majority shareholding; public associations and other entities defined by law. 3. Missions: The AO is composed of 9 Legal counsel/judges, including one President and one Vice President. The AO shall: (i) give expert opinion on the General State Budget; (ii) audit the accounts of bodies, services and entities under its jurisdiction; (iii) conduct preliminary control of documents and contracts that generate expenditure or establish the financial responsibility of the entities under its jurisdiction; (iv) conduct accounting, financial or State property audits on its own initiative or at the behest of Parliament. 4. The Audit Office is connected to the State information system. Provision is made for access to the accounts of budget units and control of human resources in government services. However, the integrated system still needs improvement. The Integrated Control Commission will, in principle, start working from 2008 within the context of the General State Budget (proposal to be sent to the AO for comments before submission to Parliament). The first evaluation of the financial management system, public debt, State property and social security will start in 2008. Ultimately, the single State account shall be presented to the AO for analysis and the control of implementation shall be done through the selfsame AO. In practice, the Government forwards the General State Budget to Parliament along with the opinion of the AO, with copies to the President of the Republic and the Prime Minister. 5. Activities: The AO effectively went operational in April 2001. It organized some training courses for its Judges/Legal counsels and technicians to develop their knowledge of State property management. From 2005, after several adaptations of the law, the AO started controlling the legality and accuracy of public revenue and expenditure, assessing financial resource management and holding culprits accountable for financial offences. Its responsibilities have also increased considerably in the ongoing public administration reform and the economic and financial management consolidation drive aimed at introducing more rigor and transparency in public accounts.

ANNEX 12 Page 2 of 4

6. Constraints: However, the AO has not audited State accounts hitherto, mainly because of limited institutional capacity and a shortage of human resources. Moreover, the control of budget implementation by the National Assembly is not fully operational and is undermined by long delays. Indeed, in June 2005, the Executive submitted State Budget and Financial Execution Reports for 2003 and 2004 which do not explain the disparities between the original performance indicators and actual results. Moreover, they were neither reviewed by the AO nor published. Most contracts of a certain amount are not analyzed. The PEMFAR review of 2005 concluded that the internal control and external audit functions were not satisfactorily implemented. In a bid to take up these challenges, the AO drew up a 2008-2010 Strategic Plan, which needs to be implemented. Meanwhile, it is imperative to support the AO in the implementation of its priority statutory activities.

Objectives of technical assistance 7. The goal of technical assistance is to assist the AO in the implementation of its priority statutory activities and provide on-the-job training to AO experts in the audit and control of contracts worth over one million US dollars, audit of the general State budget, current judicial procedures and the setting up of an efficient internal information system.

Focus areas and organization of the Consultant’s mandate

8. A training consultancy firm shall be recruited to provide the AO with 4 (four) consultants for 12 months as follows: (i) an expert in public accounts audit to analyze General State Accounts for 2008; (ii) an expert in contract analysis, public works and procurements worth over one million US dollars; (iii) an expert in judicial procedure; and (iv) information systems expert. This fourth expert shall ensure the adequate use of information technologies (ICTs) within the AO, assist in the drafting of an ICT master plan, and help to develop and institute an integrated management system for the AO (SIGTC). He shall help to restructure the internal network of the Documentation and IT Division. 9. All the consultants shall also be responsible for guiding and training the staff. They shall be based at the AO headquarters in Luanda. The Consultants shall work under the authority of the AO Director and under the coordination of the PAGEF Coordinator. One of the consultants shall be appointed as mission chief for technical coordination. The experts from the consultancy firm shall work in close collaboration with the team of professionals that AO shall designate for planned activities. It should be noted that, if need be, the consultants shall adapt to the recommendations of the study to fine-tune the 2008-2010 Strategic Plan, after such recommendations have been approved. The firm shall submit monthly reports and a mid-term report. Upon completion of the technical assistance work, the consultancy firm shall submit an implementation report to the AO which shall validate and forward it to the Bank. 10. Expected results

• General State account (GSA) for 2008 audited; • External audits of State institutions for 2008 conducted; • Contracts of more than one million US dollars audited; • Advanced judicial procedures; • On-the-job training conducted; and • Integrated Audit Office management system (SIGTC) operational.

11. Profile of experts 1. Audit expert

He shall assist his designated counterparts in auditing the General State Account (GSA) for 2008. Furthermore, he shall help with the appraisal of the following:

ANNEX 12 Page 3 of 4

i) State financial activity in the areas of revenue, expenditure, cash flow and public credits;

ii) application of the budget law and additional legislation;

iii) direct or indirect State responsibilities, including the granting of guarantees;

iv) the inventory of State property;

v) subsidies, tax benefits, credits and other forms of support designed by the State; and

vi) implementation of action programs, investment and financing programs for public corporations, as well as the use or application of subsidies from autonomous funds.

2. Expert in contract analysis

He shall assist his designated counterparts in preventive actions, such as: i) controlling the legality of government documents and contracts that generate expenditure or

involve the financial responsibility of the entities under his jurisdiction;

ii) analyzing contract proposals before entry into the public register as well as the financial expenses that result from entry;

iii) analyzing the basis of public debt as well as the contracts and other instruments that generate an increase in public debt and which are under the jurisdiction of the Audit Office;

iv) analyzing contract proposals that are binding on State corporations or contracts between State companies and enterprises headquartered abroad;

v) analyzing contracts and business decisions relating to staff recruitments; and

vi) conducting investigations and accounting, financial or State property audits on contracts, at the behest of the Audit Office or Parliament.

3. Expert in judicial procedures

He shall assist his designated counterparts in:

i) updating work programs as well as audit and control procedures;

ii) improving the legal and normative support structure for external control; iii) improving the implementation level of the annual audit plan, from the legal standpoint;

iv) reducing the duration for legal work and appreciation of the legal process; v) combating corrupt practices in the public administration;

vi) rigorously applying penalties and ensuring their legal execution; and

vii) preventing mismanagement in public services through a methodological approach, while encouraging good governance.

4. Information systems expert

He shall assist in:

i) preparing the IT master plan;

ii) developing and installing the Integrated Audit Office management system (SIGTC);

iii) restructuring the internal IT network;

iv) restructuring the Documentation and IT Division;

v) managing work flow and digitalization system;

ANNEX 12 Page 4 of 4

vi) implementing the IT structure of the provincial sections;

vii) designing the home page on the Audit Office website; and

viii) selecting high-level IT experts to manage the functioning of the SIGTC and establish the connection with SIGFE.

ANNEX 13 Page 1 of 5

ANGOLA

Financial Management Support Project (PAGEF) List of goods and services and detailed costs

US$ thousand UA thousand

PROJECT COMPONENTS & UP 2008 2009 2010 TOTAL Financing 2008 2009 2010 Total Financing

EXPENDITURE CATEGORIES Unit Q 000 LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT US$

COMPONENT 1

Capacity-building in State property management

and internal audit

A. Sub-Component 1: State property management (DNPE) 106.0 315.0 424.0 1419.0 80.0 373.0 2717.0 2081.0 636.0 2501.0 216.0 69.9 207.8 279.8 936.3 52.8 246.1 1792.7 1373.1 419.6 1650.2 142.5

1. Consultants

Consultancy firm for inventory and institution of a

property valuation system and on-the-job training

Activity No. 1 / Phase I: Inventory and management of State property

and on-the-job training (A.1)

1 Expert Technical Coordinator/Mission Chief (12 months) M/months 12 15 60.0 120.0 180.0 180.0 180.0 0.0 39.6 0.0 79.2 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 Legal expert for application of the legal framework (12 months) M/months 12 15 60.0 120.0 180.0 180.0 180.0 0.0 39.6 0.0 79.2 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 IT expert (12 months) M/months 12 15 60.0 120.0 180.0 180.0 180.0 0.0 39.6 0.0 79.2 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 expert in non-financial asset accounting (12 months); M/months 12 15 60.0 120.0 180.0 180.0 180.0 0.0 39.6 0.0 79.2 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 expert in management methodology (12 months) M/months 12 15 60.0 120.0 180.0 180.0 180.0 0.0 39.6 0.0 79.2 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 Pedagogic coordinator for training (3 months) M/months 3 15 45.0 45.0 45.0 45.0 0.0 0.0 0.0 29.7 0.0 0.0 29.7 29.7 0.0 29.7 0.0

Sub-total: consultant A.1 300.0 0.0 645.0 945.0 945.0 0.0 945.0 0.0 0.0 197.9 0.0 425.6 0.0 0.0 623.5 623.5 0.0 623.5 0.0

Activity No. 2 / Phase II: Valuation system (A.2)

1 Legal expert for the legal framework (3 months) M/months 3 15 45.0 45.0 45.0 45.0 0.0 0.0 0.0 29.7 0.0 0.0 29.7 29.7 0.0 29.7 0.0

1 Expert in real property valuation (12 months) M/months 12 15 120.0 60.0 180.0 180.0 180.0 0.0 0.0 0.0 79.2 0.0 39.6 118.8 118.8 0.0 118.8 0.0

1 Expert in mineral resource valuation (12 months) M/months 12 15 120.0 60.0 180.0 180.0 180.0 0.0 0.0 0.0 79.2 0.0 39.6 118.8 118.8 0.0 118.8 0.0

1 Expert in petroleum valuation (12 months) M/months 12 15 120.0 60.0 180.0 180.0 180.0 0.0 0.0 0.0 79.2 0.0 39.6 118.8 118.8 0.0 118.8 0.0

1 Expert in agricultural land valuation (12 months) M/months 12 15 120.0 60.0 180.0 180.0 180.0 0.0 0.0 0.0 79.2 0.0 39.6 118.8 118.8 0.0 118.8 0.0

1 Expert in State property management (12 months) M/months 12 15 120.0 60.0 180.0 180.0 180.0 0.0 0.0 0.0 79.2 0.0 39.6 118.8 118.8 0.0 118.8 0.0

Sub-total: consultant A.2 0.0 645.0 300.0 945.0 945.0 0.0 945.0 0.0 0.0 0.0 0.0 425.6 0.0 197.9 623.5 623.5 0.0 623.5 0.0

Direct costs for Technical Assistants (A.3)

Transport for 6 Experts /Phase 1 (2 vehicles) Fixed sum/yr 1 30.00 10.0 20.0 30.0 30.0 30.0 6.6 0.0 13.2 0.0 0.0 0.0 19.8 0.0 19.8 0.0 19.8

Transport for 6 Experts /Phase II (2 vehicles) Fixed sum/yr 1 30.00 20.0 10.0 30.0 30.0 30.0 0.0 0.0 13.2 0.0 6.6 0.0 19.8 0.0 19.8 0.0 19.8

Housing for 10 Experts /Phase I/Phase II months 120 3.50 70.0 280.0 70.0 420.0 420.0 420.0 46.2 0.0 184.7 0.0 46.2 0.0 277.1 0.0 277.1 277.1 0.0

Per diem for Legal Expert (Activity 2/Phase II) days 90 0.35 31.5 31.5 31.5 31.5 0.0 0.0 0.0 20.8 0.0 0.0 20.8 20.8 0.0 20.8 0.0

Per diem for Pedagogical Coordinator (Activity 2/Phase II) days 90 0.35 31.5 31.5 31.5 31.5 0.0 0.0 0.0 20.8 0.0 0.0 20.8 20.8 0.0 20.8 0.0

Air tickets for 10 Experts - 3 tickets/yr/expert (Phases I and II) Nmbr 30 3.00 15.0 60.0 15.0 90.0 90.0 90.0 0.0 9.9 0.0 39.6 0.0 9.9 59.4 59.4 0.0 59.4 0.0

Air ticket for Pedagogical Coordinator (Activity 2/Phase II) Nmbr 1 3.00 3.0 3.0 3.0 3.0 0.0 0.0 0.0 2.0 0.0 0.0 2.0 2.0 0.0 2.0 0.0

Air ticket for 1 Legal Expert (Activity 2/Phase II) Nmbr 1 3.00 3.0 3.0 3.0 3.0 0.0 0.0 0.0 2.0 0.0 0.0 2.0 2.0 0.0 2.0 0.0

Sub-total:: Direct costs for Technical Assistants (A.3) 80.0 15.0 320.0 129.0 80.0 15.0 639.0 159.0 480.0 579.0 60.0 52.8 9.9 211.1 85.1 52.8 9.9 421.6 104.9 316.7 382.0 39.6

Overall Sub-total: Consultant (A.1+A.2+A.3) 80.0 315.0 320.0 1419.0 80.0 315.0 2529.0 2049.0 480.0 2469.0 60.0 52.8 207.8 211.1 936.3 52.8 207.8 1668.7 1352.0 316.7 1629.1 39.6

Activity No. 3 / Phase II: 2-week training for 4 DNPE

experts in an institution abroad (A1.4)

Per diem for the 4 experts days 60 0.15 9.0 9.0 9.0 9.0 0.0 0.0 0.0 0.0 0.0 5.9 5.9 5.9 0.0 5.9 0.0

Housing of the 4 experts days 60 0.15 9.0 9.0 9.0 9.0 0.0 0.0 0.0 0.0 0.0 5.9 5.9 5.9 0.0 5.9 0.0

Air tickets for the 4 experts Pers 4 3.00 12.0 12.0 12.0 12.0 0.0 0.0 0.0 0.0 0.0 7.9 7.9 7.9 0.0 7.9 0.0

Documentation Fixed sum/pers 4 0.50 2.0 2.0 2.0 2.0 0.0 0.0 0.0 0.0 0.0 1.3 1.3 1.3 0.0 1.3 0.0

Sub-total: Training abroad (A1.4) 0.0 0.0 0.0 0.0 0.0 32.0 32.0 32.0 0.0 32.0 0.0 0.0 0.0 0.0 0.0 0.0 21.1 21.1 21.1 0.0 21.1 0.0

2. Functioning

Sundry administrative expenses (communication, photocopy, etc.) Fixed sum/yr 2 15.00 5.0 20.0 5.00 30.00 30.00 30.00 3.3 0.0 13.2 0.0 0.0 3.3 19.8 0.0 19.8 0.0 19.8

ANNEX 13 Page 2 of 5

US$ thousand UA thousand

PROJECT COMPONENTS & UP 2008 2009 2010 TOTAL Financing 2008 2009 2010 Total Financing

EXPENDITURE CATEGORIES Unit Q 000 LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT US$

Sundry costs (offices, classrooms) Fixed sum/yr 2 63.00 21.0 84.0 21.00 126.00 126.00 126.00 13.9 0.0 55.4 0.0 0.0 13.9 83.1 0.0 83.1 0.0 83.1

Sub-total: Functioning (A.1.5) 26.0 0.0 104.0 0.0 0.0 26.0 156.0 0.0 156.0 0.0 156.0 17.2 0.0 68.6 0.0 0.0 17.2 102.9 0.0 102.9 0.0 102.9

B. Sub-Component 2: Consolidation on internal audit capacity (NIF) 319.2 410.3 574.2 240.3 25.0 0.0 1569.0 650.6 918.4 1322.4 246.6 210.6 270.7 378.9 158.5 16.5 0.0 1035.2 429.2 606.0 872.5 162.7

Activity No. 1: 11 Training modules (initial+further training)

1. Consultants/Instructors

Firm to provide experts to organize 11 training modules

for 2 weeks, including one week for preparation (4 sessions/module - total = 55 weeks)

1. Public management, types and products M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

2. Essentials of accounting M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

3. Advanced accounting M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

4. NIF action M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

5. Ethics, rules of professional conduct and staff characteristics M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

6. Audit standards M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

7. Work planning and risk analysis M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

8. Audit techniques and procedures M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

9. Audit conclusions report M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

10. Audits and computerized environments M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

11. Essentials of management M/months 1.25

15 18.8 18.8 18.8 0.0 0.0 0.0 0.0 0.0 0.0 12.4 12.4 0.0 12.4 0.0

Sub-total: Instructors’ fees (B.1) 75.0 131.3 0.0 206.3 206.3 206.3 49.5 86.6 0.0 136.1 136.1 136.1

Direct training fees (B.2) – 1 week/module for trainees (total=11 weeks)

Air tickets for the experts/instructors Nmbr 11 3.00 12.0 21.0 0.0 33.0 33.0 33.0 0.0 7.9 0.0 13.9 0.0 0.0 21.8 21.8 0.0 21.8 0.0

Teaching aids and pedagogical material (training kits) trainees 114 0.20 8.3 14.5 0.0 22.8 22.8 22.8 0.0 5.5 0.0 9.6 0.0 0.0 15.0 15.0 0.0 15.0 0.0

Transport for experts in Luanda Fixed sum/module 11 3.00 12.0 21.0 0.0 33.0 33.0 33.0 7.9 0.0 13.9 0.0 0.0 0.0 21.8 0.0 21.8 0.0 21.8

Per diem for experts in Luanda (30 days x 11) days 330 0.35 42.0 73.5 0.0 115.5 115.5 115.5 0.0 27.7 0.0 48.5 0.0 0.0 76.2 76.2 0.0 76.2 0.0

Lunch for trainees in Luanda (59 trainees) x 5 days x 11) days 3245

0.025 29.5 51.6 0.0 81.1 81.1 81.1 19.5 0.0 34.1 0.0 0.0 0.0 53.5 0.0 53.5 53.5 0.0

Per diem for trainees from the provinces days 4235

0.15 231.0 404.3 0.0 635.3 635.3 508.2 127.1 152.4 0.0 266.7 0.0 0.0 0.0 419.1 0.0 419.1 335.3 83.8

(55 trainees for 11 weeks, representing 77 days) 55x77 dys 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Transport for trainees from Provinces-Luanda (3 trips/trainee – 55 trainees x 3) Pers 165 0.50 30.0 52.5 0.0 82.5 82.5 82.5 19.8 0.0 34.6 0.0 0.0 0.0 54.4 0.0 54.4 54.4 0.0

Transportation of trainees to Luanda (Minibus) days 77 0.15 4.2 7.4 0.0 11.6 11.6 11.6 2.8 0.0 4.8 0.0 0.0 0.0 7.6 0.0 7.6 0.0 7.6

Sub-total: consultant B.1 306.7 62.3 536.7 109.0 0.0 0.0 1014.7 171.3 843.4 843.1 171.6 202.4 41.1 354.1 71.9 0.0 0.0 669.5 113.0 556.5 556.3 113.2

Grand Sub-total: Consultant/Instructor (B.1+B.2) 306.7 137.3 536.7 240.3 0.0 0.0 1221.0 377.6 843.4 1049.4 171.6 202.4 90.6 354.1 158.5 0.0 0.0 805.6 249.1 556.5 692.4 113.2

Activity No. 2: Set of IT equipment for NIF (B.3)

2. GOODS

Laptop computers Nmbr 72 2.00 144.0 144.0 144.0 144.0 0.0 95.0 0.0 0.0 0.0 0.0 95.0 95.0 0.0 95.0 0.0

Desktop PC Nmbr 42 2.50 105.0 105.0 105.0 105.0 0.0 69.3 0.0 0.0 0.0 0.0 69.3 69.3 0.0 69.3 0.0

Printers Nmbr 5 0.60 3.0 3.0 3.0 3.0 0.0 2.0 0.0 0.0 0.0 0.0 2.0 2.0 0.0 2.0 0.0

UPS Nmbr 42 0.50 21.0 21.0 21.0 21.0 0.0 13.9 0.0 0.0 0.0 0.0 13.9 13.9 0.0 13.9 0.0

Sub-total: equipment B.3 0.0 273.0 0.0 0.0 0.0 0.0 273.0 273.0 0.0 273.0 0.0 0.0 180.1 0.0 0.0 0.0 0.0 180.1 180.1 0.0 180.1 0.0

3. FUNCTIONING (B.4)

Sundry expenses (reprography, communication, etc.) Fixed sum 1 25 4.2 12.5 8.3 25.0 25.0 25.0 2.7 0.0 8.2 0.0 5.5 0.0 16.5 0.0 16.5 0.0 16.5

Other operating expenses (classrooms, etc.) Fixed sum 1 50 8.3 25.0 16.7 50.0 50.0 50.0 5.5 0.0 16.5 0.0 11.0 0.0 33.0 0.0 33.0 0.0 33.0

Sub-total: Functioning B.4 12.5 0.0 37.5 0.0 25.0 0.0 75.0 0.0 75.0 0.0 75.0 8.2 0.0 24.7 0.0 16.5 0.0 49.5 0.0 49.5 0.0 49.5

Baseline cost Component I 425.2 725.3 998.2 1659.3 105.0 373.0 4286.0 2731.6 1554.4 3823.4 462.6 280.6 478.6 658.6 1094.8 69.3 246.1 2828.0 1802.3 1025.6 2522.7 305.2

Provision for physical contingencies (5%) 0.05 21.3 36.3 49.9 83.0 5.3 18.7 214.3 137.9 76.4 191.2 23.1 14.0 23.9 32.9 54.7 3.5 12.3 141.4 90.1 51.3 126.1 15.3

Inflation (Local currency= 10%; Foreign exchange= 3%) 0.10 0.03

42.5 21.8 99.8 49.8 10.5 11.2 235.6 82.7 152.8 210.1 25.4 28.1 14.4 65.9 32.8 6.9 7.4 155.4 54.6 100.8 138.7 16.8

TOTAL COMPONENT 1 489.0 783.3 1148.0 1792.0 120.8 402.8 4735.8 2575.3 1636.9 4224.7 511.2 322.6 516.8 757.4 1182.4 79.7 265.8 3124.8 1699.2 1080.1 2787.5 337.3

COMPONENT 2

Building NIF capacity and human capacity

in the area of external audits (Audit Office – AO)

ANNEX 13 Page 3 of 5

US$ thousand UA thousand

PROJECT COMPONENTS & UP 2008 2009 2010 TOTAL Financing 2008 2009 2010 Total Financing

EXPENDITURE CATEGORIES Unit Q 000 LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT US$

1. CONSULTANTS

C- Activity 1: Consultancy firm for institutional diagnosis

operationalization of the Strategic Plan and training plan

1 Legal expert specialized in AO organization (2 months) M/months 2 15 30.0 30.0 30.0 30.0 0.0 19.8 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

1 Expert specialized in human resources (2 months) M/months 2 15 30.0 30.0 30.0 30.0 0.0 19.8 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

1 information systems expert (2 months) M/months 2 15 30.0 30.0 30.0 30.0 0.0 19.8 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

Sub-total: consultant for diagnosis C.1 0.0 90.0 0.0 0.0 0.0 0.0 90.0 90.0 0.0 90.0 0.0 0.0 59.4 0.0 0.0 0.0 0.0 59.4 59.4 0.0 59.4 0.0

Diret TA expenses for diagnosis C.2

Transportation of experts on the field Fixed sum 1 15.00 15.0 15.0 15.0 15.0 0.0 9.9 0.0 0.0 0.0 0.0 9.9 9.9 0.0 9.9 0.0

Perdiem for experts in Luanda (60 days x 3) Days 180 0.35 63.0 63.0 63.0 63.0 0.0 41.6 0.0 0.0 0.0 0.0 41.6 41.6 0.0 41.6 0.0

Air ticket for experts Nmbr 3 3.00 9.0 9.0 9.0 9.0 0.0 5.9 0.0 0.0 0.0 0.0 5.9 5.9 0.0 5.9 0.0

Sundry administrative costs (offices, communications, reports, etc.) Fixed sum 1 10 10.0 10.0 10.0 10.0 6.6 0.0 0.0 0.0 0.0 0.0 6.6 0.0 6.6 0.0 6.6

Sub-total: direct costs for diagnosis (C.2) 10.0 87.0 0.0 0.0 0.0 0.0 97.0 87.0 10.0 87.0 10.0 6.6 57.4 0.0 0.0 0.0 0.0 64.0 57.4 6.6 57.4 6.6

Sub-total: Technical Assistants for diagnosis (C.1+C.2) 10.0 177.0 0.0 0.0 0.0 0.0 187.0 177.0 10.0 177.0 10.0 6.6 116.8 0.0 0.0 0.0 0.0 123.4 116.8 6.6 116.8 6.6

Activity 2: Firm for support technical assistance

1 Expert in public account audits (12 months) M/months 12 15 45.0 135.0 180.0 180.0 180.0 0.0 29.7 0.0 89.1 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 Expert in contract analysis (12 months) M/months 12 15 45.0 135.0 180.0 180.0 180.0 0.0 29.7 0.0 89.1 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 Expert in judicial procedure (12 months) M/months 12 15 45.0 135.0 180.0 180.0 180.0 0.0 29.7 0.0 89.1 0.0 0.0 118.8 118.8 0.0 118.8 0.0

1 Expert in information systems M/months 12 15 45.0 135.0 180.0 180.0 180.0 0.0 29.7 0.0 89.1 0.0 0.0 118.8 118.8 0.0 118.8 0.0

Sub-total: Consultants C.3 0.0 180.0 0.0 540.0 0.0 0.0 720.0 720.0 0.0 720.0 0.0 0.0 118.8 0.0 356.3 0.0 0.0 475.1 475.1 0.0 475.1 0.0

Direct costs of support TA C.4

Transportation of experts on the field Fixed sum/yr 1 15.00 3.8 11.3 15.0 15.0 15.0 2.5 0.0 7.4 0.0 0.0 0.0 9.9 0.0 9.9 0.0 9.9

Housing of experts in Luanda (12 months x 4) mois 48 3.50 42.0 126.0 168.0 168.0 168.0 27.7 0.0 83.1 0.0 0.0 0.0 110.8 0.0 110.8 110.8 0.0

Air ticket for experts (3 tickets/yr/expert) Nmbr 12 3.00 9.0 27.0 36.0 36.0 36.0 0.0 5.9 0.0 17.8 0.0 0.0 23.8 23.8 0.0 23.8 0.0

Sundry administrative costs (offices, communications, reports, etc.) Fixed sum/yr 1 50.00 12.5 37.5 50.0 50.0 50.0 8.2 0.0 24.7 0.0 0.0 0.0 33.0 0.0 33.0 0.0 33.0

Sub-total: Direct costs of support TA 58.3 9.0 174.8 27.0 0.0 0.0 269.0 36.0 233.0 204.0 65.0 38.4 5.9 115.3 17.8 0.0 0.0 177.5 23.8 153.7 134.6 42.9

Sub-total: Support Technical Assistance (C.3+C.4) 58.3 189.0 174.8 567.0 0.0 0.0 989.0 756.0 233.0 924.0 65.0 38.4 124.7 115.3 374.1 0.0 0.0 652.6 498.8 153.7 609.7 42.9

Activity 3: Provision for implementation of AO diagnosis Fixed sum/yr 2 100.0 100.0 100.0 200.0 176.0 24.0 176.0 24.0 0.0 0.0 0.0 66.0 0.0 66.0 132.0 116.1 15.8 116.1 15.8

Activity 4: Firm for organization of 11 training modules on the spot

2. TRAINING

2.1. Consultants/Instructors - 11 training modules

for 165 trainees (6 groups)

Consultancy firm to supply experts for 11 training modules

of 2 semaines, including 1 week for preparation (6 sessions/module) - 77 weeks

2.1.1. Budget implementation control M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.2 Audit techniques and procedures M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.3 Preventive and successive control M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.4 Adjudicative process M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.5 Account audits and issue of GSA statements M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.6 Instruction on account presentation formats M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.7 Adjudicative process for audit reports M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.8 Joint audits with higher institutions M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.9 Magisterial inquiry and process judgment M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.10 Court judgement M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

2.1.11 IT training for 4 SIGFE engineers M/months 2 15.00 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

Sub-total: Consultants/Instructors (C.5) 165.0 165.0 330.0 330.0 0.0 330.0 0.0 108.9 108.9 217.7 217.7 0.0 217.7 0.0

Direct costs for training modules (C.6) - for 11 weeks

Air tickets for experts-instructors (2 tickets/expert = 11x2) Nmbr 22 3.00 33.0 33.0 0.0 66.0 66.0 66.0 0.0 21.8 0.0 21.8 0.0 0.0 43.5 43.5 0.0 43.5 0.0

Teaching aids and pedagogical equipment (training kits) Partcipant 165 0.20 16.5 16.5 0.0 33.0 33.0 33.0 0.0 10.9 0.0 10.9 0.0 0.0 21.8 21.8 0.0 21.8 0.0

Transport for experts in Luanda Fixed sum 1 15.00 7.5 7.5 0.0 15.0 15.0 15.0 4.9 0.0 4.9 0.0 0.0 0.0 9.9 0.0 9.9 0.0 9.9

Perdiem for experts in Luanda (45 days x 11 x 2) jour 990 0.35 173.3 173.3 0.0 346.5 346.5 346.5 0.0 114.3 0.0 114.3 0.0 0.0 228.6 228.6 0.0 228.6 0.0

Transport of trainees from Provinces-Luanda Pers 50 0.50 12.5 12.5 0.0 25.0 25.0 25.0 8.2 0.0 8.2 0.0 0.0 0.0 16.5 0.0 16.5 16.5 0.0

Lunch for trainees in Luanda (115 trainees x 5dys x 6 wks) Pers/jour 3450

0.025 43.1 43.1 0.0 86.3 86.3 86.3 28.5 0.0 28.5 0.0 0.0 0.0 56.9 0.0 56.9 56.9 0.0

Perdiems for trainees from the provinces Pers/jour 2250

0.15 168.8 168.8 0.0 337.5 337.5 270.0 67.5 111.3 0.0 111.3 0.0 0.0 0.0 222.7 0.0 222.7 178.2 44.5

(50 trainees x 45 days)

Sub-total: Direct costs for training modules (C.6) 231.9 222.8 231.9 222.8 0.0 0.0 909.3 445.5 463.8 826.8 82.5 153.0 147.0 153.0 147.0 0.0 0.0 599.9 293.9 306.0 545.5 54.4

ANNEX 13 Page 4 of 5

US$ thousand UA thousand

PROJECT COMPONENTS & UP 2008 2009 2010 TOTAL Financing 2008 2009 2010 Total Financing

EXPENDITURE CATEGORIES Unit Q 000 LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT US$

Sub-total: Instructors for training modules (C.5+C.6) 231.9 387.8 231.9 387.8 0.0 0.0 1239.3 775.5 463.8 1156.8 82.5 153.0 255.8 153.0 255.8 0.0 0.0 817.7 511.7 306.0 763.2 54.4

Activity No. 5: Training course abroad (8 AO experts)

Perdiem for 8 experts Days 120 0.15 18.0 18.0 18.0 18.0 0.0 0.0 0.0 0.0 0.0 11.9 11.9 11.9 0.0 11.9 0.0

Housing for 8 experts Days 120 0.15 18.0 18.0 18.0 18.0 0.0 0.0 0.0 0.0 0.0 11.9 11.9 11.9 0.0 11.9 0.0

Air ticket for 8 experts Nmbr 8 3.00 24.0 24.0 24.0 24.0 0.0 0.0 0.0 0.0 0.0 15.8 15.8 15.8 0.0 15.8 0.0

Documentation Fixed sum/pers 4 0.50 2.0 2.0 2.0 2.0 0.0 0.0 0.0 0.0 0.0 1.3 1.3 1.3 0.0 1.3 0.0

Sub-total: Training abroad (C.7) 0.0 0.0 0.0 0.0 0.0 62.0 62.0 62.0 0.0 62.0 0.0 0.0 0.0 0.0 0.0 0.0 40.9 40.9 40.9 0.0 40.9 0.0

Activity No. 6: Sensitization Seminar for Civil Society on the External Control of Public Finance (C.8)

Fixed sum/ 2 125.00 100.0 25.0 100.0 25.0 250.0 50.0 200.0 200.0 50.0 0.0 0.0 66.0 16.5 66.0 16.5 165.0 33.0 132.0 132.0 33.0

Seminaire

Activity No. 7: Set of IT equipment and material for the AO

3. GOODS

Overhead projectors (Auto datashow) Nmbr 2 1.00 2.00 2.00 2.00 2.00 0.0 1.3 0.0 0.0 0.0 0.0 1.3 1.3 0.0 1.3 0.0

Desktop PCs Nmbr 30 2.50 75.00 75.00 75.00 75.00 0.0 49.5 0.0 0.0 0.0 0.0 49.5 49.5 0.0 49.5 0.0

UPSs Nmbr 30 0.70 21.00 21.00 21.00 21.00 0.0 13.9 0.0 0.0 0.0 0.0 13.9 13.9 0.0 13.9 0.0

Heavy-duty photocopiers Nmbr 2 15.00 30.00 30.00 30.00 30.00 0.0 19.8 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

Average-sized photocopiers Nmbr 3 8.00 24.00 24.00 24.00 24.00 0.0 15.8 0.0 0.0 0.0 0.0 15.8 15.8 0.0 15.8 0.0

Sub-total: Equipment (C.9) 0.0 152.0 0.0 0.0 0.0 0.0 152.0 152.0 0.0 152.0 0.0 0.0 100.3 0.0 0.0 0.0 0.0 100.3 100.3 0.0 100.3 0.0

C.10 - Documentation/Support to library (Books and technical reviews) Fixed sum 1 200.0 200.00 200.0 200.0 200.0 0.0 0.0 0.0 132.0 0.0 0.0 132.0 132.0 0.0 132.0 0.000

Four-wheel drive vehicle for external inspections in the provinces Nmbr 1 45.0 45.00 45.0 45.0 45.0 0.0 0.0 0.0 29.7 0.0 0.0 29.7 29.7 0.0 29.7 0.0

Support vehicle for AO activities Nmbr 1 25.0 25.00 25.0 25.0 25.0 0.0 0.0 0.0 16.5 0.0 0.0 16.5 16.5 0.0 16.5 0.0

Sub-total: Vehicles (C.11) 0.0 0.00 0.00 70.00 0.00 0.00 70.0 70.0 0.0 70.0 0.00 0.0 0.0 0.0 46.2 0.0 0.0 46.2 46.2 0.0 46.2 0.0

Sub-total: GOODS (C.9+C.10+C.11) 0.0 152.0 0.0 270.0 0.0 0.0 422.0 422.0 0.0 422.0 0.0 0.0 100.3 0.0 178.2 0.0 0.0 278.4 278.4 0.0 278.4 0.0

4. FUNCTIONING (C.11)

Sundry administrative costs (reprography, communication, internet, etc) Fixed sum/yr 3 12.00 12.0 12.00 12.00 36.0 36.0 36.00 7.9 0.0 7.9 0.0 7.9 0.0 23.8 0.0 23.8 0.0 23.8

Other operating expenditure (offices, classrooms, etc.) Fixed sum/yr 3 20.00 20.0 20.00 20.00 60.0 60.0 60.00 13.2 0.0 13.2 0.0 13.2 0.0 39.6 0.0 39.6 0.0 39.6

Sub-total: Functioning C.11 32.0 0.0 32.0 0.0 32.0 0.0 96.0 0.0 96.0 0.0 96.0 21.1 0.0 21.1 0.0 21.1 0.0 63.3 0.0 63.3 0.0 63.3

Baseline cost: Component II 332.1 905.8 538.6 1349.8 132.0 187.0 3445.3 2418.5 1026.8 3117.8 327.5 219.1 597.6 355.4 890.6 87.1 123.4 2273.2 1595.8 677.5 2057.1 216.1

Provision for physical contingencies (5%) 0.05 16.6 45.3 26.9 67.5 6.6 9.4 172.3 120.9 51.3 155.9 16.4 11.0 29.9 17.8 44.5 4.4 6.2 113.7 79.8 33.9 102.9 10.8

Inflation (Local currency = 10%; Foreign exchange = 3%) 0.03

0.10 33.2 27.2 53.9 40.5 13.2 5.6 173.6 73.3 100.3 157.1 16.5 21.9 17.9 35.5 26.7 8.7 3.7 114.5 48.3 66.2 103.6 10.9

TOTAL: COMPONENT 2 381.9 978.2 619.4 1457.7 151.8 202.0 3791.1 2612.7 1178.4 3430.7 360.4 252.0 645.4 408.7 961.8 100.2 133.3 2501.4 1723.9 777.5 2263.6 237.8

COMPONENT 3

Project management and monitoring

1. Consultants

- Project manager M/months 34 15.00 150.0 180.0 180.0 510.0 510.0 510.0 0.0 99.0 0.0 118.8 0.0 118.8 336.5 336.5 0.0 336.5 0.0

- Administrative and technical assistant M/months 34 3.50 35.0 42.0 42.0 119.0 119.0 119.0 0.0 23.1 0.0 27.7 0.0 27.7 78.5 78.5 0.0 78.5 0.0

- Procurements consultant M/months 4 15.00 30.0 30.0 60.0 60.0 60.0 0.0 19.8 0.0 19.8 0.0 0.0 39.6 39.6 0.0 39.6 0.0

- Consultant translator (for various documents) M/months 5 12.00 30.0 30.0 60.0 60.0 60.0 0.0 19.8 0.0 19.8 0.0 0.0 39.6 39.6 0.0 39.6 0.0

- Procedures manual and training of the administrative and financial assistant M/months 2 15.00 30.0 30.0 30.0 30.0 0.0 19.8 0.0 0.0 0.0 0.0 19.8 19.8 0.0 19.8 0.0

Sub-total: Consultants (D.1) 0.0 275.0 0.0 282.0 0.0 222.0 779.0 779.0 0.0 779.0 0.0 0.0 181.4 0.0 186.1 0.0 146.5 514.0 514.0 0.0 514.0 0.0

2. Equipment, supplies and miscellaneous

- Desktop PCs Computer 2 2.5 5.0 5.0 5.0 5.0 0.0 3.3 0.0 0.0 0.0 0.0 3.3 3.3 0.0 3.3 0.0

- Laser printer Printer 1 0.6 0.6 0.6 0.6 0.6 0.0 0.4 0.0 0.0 0.0 0.0 0.4 0.4 0.0 0.4 0.0

- UPS 800 VA UPS 2 0.70 1.4 1.4 1.4 1.4 0.0 0.9 0.0 0.0 0.0 0.0 0.9 0.9 0.0 0.9 0.0

- Scanner Scanner 1 0.7 0.7 0.7 0.7 0.7 0.0 0.5 0.0 0.0 0.0 0.0 0.5 0.5 0.0 0.5 0.0

- Photocopier Photocopier 1 5.0 5.0 5.0 5.0 5.0 0.0 3.3 0.0 0.0 0.0 0.0 3.3 3.3 0.0 3.3 0.0

- Four-wheel drive vehicle Vehicle 1 45.0 45.0 45.0 45.0 45.0 0.0 29.7 0.0 0.0 0.0 0.0 29.7 29.7 0.0 29.7 0.0

- Office furniture Fixed sum 1 20.0 20.0 20.0 20.0 20.0 0.0 13.2 0.0 0.0 0.0 0.0 13.2 13.2 0.0 13.2 0.0

Sub-total: equipement, supplies and miscellaneous (D.2) 0.0 77.7 0.0 0.0 0.0 0.0 77.7 77.7 0.0 77.7 0.0 0.0 51.3 0.0 0.0 0.0 0.0 51.3 51.3 0.0 51.3 0.0

3. Functioning

- Consumables, office furniture and sundry items Fixed sum/yr 3 18.0 18.0 18.0 18.0 54.0 54.0 54.0 11.9 0.0 11.9 0.0 11.9 0.0 35.6 0.0 35.6 35.6 0.0

- Vehicle maintenance (insurance, fuel, repairs) Fixed sum/yr 3 10.0 10.0 10.0 10.0 30.0 30.0 30.0 6.6 0.0 6.6 0.0 6.6 0.0 19.8 0.0 19.8 19.8 0.0

- Maintenance of equipements Fixed sum 3 15.0 15.0 15.0 15.0 45.0 45.0 45.0 9.9 0.0 9.9 0.0 9.9 0.0 29.7 0.0 29.7 29.7 0.0

- Secretary’s allowance M/months 36 0.5 6.0 6.0 6.0 18.0 18.0 18.0 4.0 0.0 4.0 0.0 4.0 0.0 11.9 0.0 11.9 11.9 0.0

ANNEX 13 Page 5 of 5

US$ thousand UA thousand

PROJECT COMPONENTS & UP 2008 2009 2010 TOTAL Financing 2008 2009 2010 Total Financing

EXPENDITURE CATEGORIES Unit Q 000 LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT LC F.E. LC F.E. LC F.E. Total F.E. LC ADF GVT US$

- Driver/messenger’s allowance M/months 36 0.4 4.8 4.8 4.8 14.4 14.4 14.4 3.2 0.0 3.2 0.0 3.2 0.0 9.5 0.0 9.5 9.5 0.0

- Rents and leases mois 36 4.0 48.0 48.0 48.0 144.0 144.0 144.0 31.7 0.0 31.7 0.0 31.7 0.0 95.0 0.0 95.0 0.0 95.0

- Sundry management costs (communication, internet, etc.) Fixed sum/yr 3 25.0 25.0 25.0 25.0 75.0 75.0 75.0 16.5 0.0 16.5 0.0 16.5 0.0 49.5 0.0 49.5 49.5 0.0

Sub-total: functioning (D.3) 126.8 0.0 126.8 0.0 126.8 0.0 380.4 0.0 380.4 236.4 144.0 83.7 0.0 83.7 0.0 83.7 0.0 251.0 0.0 251.0 156.0 95.0

Baseline cost: Component 3 126.8 352.7 126.8 282.0 126.8 222.0 1237.1 856.7 380.4 1093.1 144.0 83.7 232.7 83.7 186.1 83.7 146.5 816.3 565.3 251.0 721.2 95.0

Provision for physical contingencies (5%) 0.05 6.3 17.6 6.3 14.1 6.3 11.1 61.9 42.8 19.0 54.7 7.2 4.2 11.6 4.2 9.3 4.2 7.3 40.8 28.3 12.5 36.1 4.8

Inflation (Local currency = 10%; Foreign exchange = 3%) 0.03

0.10 12.7 10.6 12.7 8.5 12.7 6.7 63.7 25.7 38.0 56.3 7.4 8.4 7.0 8.4 5.6 8.4 4.4 42.1 17.0 25.1 37.2 4.9

TOTAL COMPONENT 3 145.8 380.9 145.8 304.6 145.8 239.8 1362.7 925.2 437.5 1204.1 158.6 96.2 251.3 96.2 201.0 96.2 158.2 899.1 610.5 288.6 794.5 104.7

AUDIT Fixed sum 3 20 20.0 20.0 20.0 60.0 60.0 0.0 60.0 0.0 13.2 0.0 13.2 0.0 13.2 39.6 39.6 0.0 39.6 0.0

Provision for physical contingencies (5%) 0.05 0.0 1.0 0.0 1.0 0.0 1.0 3.0 3.0 0.0 3.0 0.0 0.0 0.7 0.0 0.7 0.0 0.7 2.0 2.0 0.0 2.0 0.0

Provisions for inflation (3%) 0.03 0.0 0.6 0.0 0.6 0.0 0.6 1.8 1.8 0.0 1.8 0.0 0.0 0.4 0.0 0.4 0.0 0.4 1.2 1.2 0.0 1.2 0.0

TOTAL AUDIT 0.0 21.6 0.0 21.6 0.0 21.6 64.8 64.8 0.0 64.8 0.0 0.0 14.3 0.0 14.3 0.0 14.3 42.8 42.8 0.0 42.8 0.0

Baseline cost of Project 884.1 2003.7 1663.7 3311.0 363.8 802.0 9028.3 6066.8 2961.6 8094.2 934.1 583.4 1322.1 1097.7 2184.7 240.0 529.2 5957.0 4002.9 1954.1 5340.7 616.3

Provision for physical contingencies (5%) 44.2 100.2 83.2 165.6 18.2 40.1 451.4 304.6 146.8 404.7 46.7 29.2 66.1 54.9 109.2 12.0 26.5 297.9 200.1 97.7 267.0 30.8

Inflation (Local currency = 10%; Foreign exchange = 3%) 88.4 60.1 166.4 99.3 36.4 24.1 474.7 183.5 291.2 425.3 49.3 58.3 39.7 109.8 65.5 24.0 15.9 313.2 121.1 192.1 280.6 32.6

TOTAL PROJECT COST 1016.7 2164.0 1913.2 3575.9 418.4 866.2 9954.4 6554.9 3399.5 8924.3 1030.1 670.9 1427.9 1262.4 2359.4 276.0 571.5 6568.1 4324.2 2243.9 5888.4 679.7

ANNEX 14 Page 1 of 3

ANGOLA

Financial Management Support Project (PAGEF) Project schedule

ANNEX 14 Page 2 of 3

ANNEX 14 Page 3 of 3

Annex

ANGOLA: FINANCIAL MANAGEMENT SUPPORT PROJECT (PAGEF)

CORRIGENDUM

1. Table 5.2 below supersedes and replaces the initial Table 5.2 in the Appraisal Report:

Table 5.2 Procurement Arrangements (in UA thousand)

NCB Others Short List Total Total ADF Total ADF Total ADF

Non-ADF Financing ** Total ADF

1. Goods 384.7 (384.7) 165.8 (165.8) 550.6 (550.6) 1.1. IT equipment (NIF) 194.5 (194.5) 194.5 (194.5) 1.2. IT and office automation equipment (AO) 108.3 (108.3) 108.3 (108.3) 1.3. IT equipment 23.3 (23.3) 23.3 (23.3) 1.4. Documentation (AO) 142.5 (142.5) 142.5 (142.5) 1.5. Vehicles 81.9 (81.9) 81.9 (81.9) 2. Consultancy Services 209.5 (209.5) 4,948.8 (4,948.8) 351.4 5,509.7 (5,158.3) 2.1. Technical Assistance in property management 1,793.9

(1,793.9) 45.5 1,839.4 (1,793.9)

2.2. Technical Assistance in diagnostic study (AO) 126.6

(126.6) 7.6 134.2 (126.6)

2.3. Support Technical Assistance (AO) 668.5 (668.5) 49.3 717.8 (668.5) 2.4. Implementation of the diagnosis (AO) 126.4

(126.4) 18.2 144.6 (126.4)

2.5. PMU Coordinator 363.4 (363.4) 363.4 (363.4) 2.6. Admin. and Fin. Assistant (PMU) 84.8 (84.8) 84.8 (84.8) 2.7 Consultants for procurements and translation 85.5

(85.5) 85.5 (85.5)

2.8. Institution of procedures (PMU) 21.4 (21.4) 21.4 (21.4) 2.9. Training abroad (DNPE and AO) 67.0 (67.0) 67.0 (67.0) 2.10. 11 training modules (NIF) 786.3 (786.3) 130.2 916.5 (786.3) 2.11. 11 training modules (AO) 849.3 (849.3) 62.6 911.9 (849.3) 2.12 Sensitization seminar for civil society 142.5 (142.5) 37.9 180.5 (142.5) 2.13. Audit 42.8 (42.8) 42.8 (42.8) 3. Operating costs 179.4 (179.4) 328.4 507.8 (179.4)

TOTAL 384.7 (384.7) 554.7 (554.7) 4948.8 (4,948.8) 679.8 6,568.1 (5,888.3) N.B: - The figures in brackets are amounts financed by the ADF.

- “Others” refers to national shopping, international shopping and negotiated contracts. - ** Procurements financed with Government resources 2. Page 19, Section 5.4.4, the last two sentences should read as follows:

“The estimated cost of the contract is UA 1.79 million. The selection procedure shall be based on the technical assessment of bids and cost considerations.”

3. Page 20, Section 5.4.6, the third sentence should read as follows:

“The contract of this activity amounts to about UA 0.67 million. The selection procedure shall be based on the technical assessment of bids and cost considerations.”

4. Page 20, Section 5.4.6, the last sentence should read as follows:

“Consultants shall also be recruited from a short list to provide assistance to the PMU in the areas of procurement and translation of documents for a total sum of UA 0.11 million.”

All the other parts of the document shall remain unchanged.