report no: icr00003665 implementation completion and results …€¦ · implementation completion...
TRANSCRIPT
Document of The World Bank
Report No: ICR00003665
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-H8500)
ON A
GRANT
IN THE AMOUNT OF SDR 13.4 MILLION
(US$20 MILLION EQUIVALENT)
TO THE
KINGDOM OF LESOTHO
FOR A
FIRST GROWTH AND COMPETITIVENESS
DEVELOPMENT POLICY GRANT
December 19, 2016
Macroeconomics and Fiscal Management Global Practice
AFCS1
Africa Region
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
ii
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of June 30, 2014)
Currency Unit = Maloti
Maloti 1.00 = US$0.07
US$ 1.00 = 10.62Maloti
FISCAL YEAR
April 1 – March 31
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank
AGOA African Growth and Opportunity Act
AIDS Acquired Immune Deficiency Syndrome
BEDCO Basotho Enterprises Development Corporation
BoS Bureau of Statistics
CAS Country Assistance Strategy
DFID Department for International Development from United Kingdom
DPO Development Policy Operation
ECF Extended Credit Facility
EU European Union
FDI Foreign Direct Investment
FIA Financial Institutions Act
FIRST Financial Sector Reform and Strengthening Initiative
GDP Gross Domestic Product
GNI Gross National Income
GoL Government of Lesotho
GPOBA Global Partnership for Output-Based Aid
GTZ German Technical Corporation
HBS Household Budget Survey
HIV Human Immunodeficiency Virus
HMIS Health Management Information Systems
HRH Human Resources for Health
IBRD International Bank for Reconstruction and Development
ICT Information and Communication Technologies
IDA International Development Association
IFMIS Integrated Financial Management Information System
IMF International Monetary Fund
LDHS Labor and Demographic Health Survey
LNDC Lesotho National Development Corporation
LRA Lesotho Revenue Authority
MCC Maseru City Council
MDA Ministries, Departments and Agencies
iii
MDGs Millennium Development Goals
M&E Monitoring and Evaluation
MDP Ministry of Development Planning
MoF Ministry of Finance
MoH Ministry of Health
MoSD Ministry of Social Development
MTEF Medium-Term Expenditure Framework
NISSA National Information System for Social Assistance
NPAB National Planning Advisory Board
NSDP National Strategic Development Plan
OBFC One Stop Business Facilitation Center
PAF Performance Assessment Framework
PEFA Public Expenditure and Financial Accountability
PMT Proxy Means Test
PPAD Procurement Policy and Advice Division
PPP Public/Private Partnerships
PSCEDP Private Sector Competitiveness and Economic Diversification
Project
PFM Public Finance Management
PRS Poverty Reduction Strategy
R&D Research and Development
SACU Southern African Customs Union
SADC Southern African Development Community
SCD Systematic Country Diagnostic
TVET Technical and Vocational Education Training
Vice President: Makhtar Diop
Country Director: Catherine Signe Tovey
Senior Practice Director: Carlos Felipe Jaramillo
Practice Manager: Mark R. Thomas
Task Team Leader: Asli Senkal
ICR Team Leader: Asli Senkal
iv
KINGDOM OF LESOTHO
First Growth and Competitiveness Development Policy Grant
Contents A. Basic Information ........................................................................................................... vi B. Key Dates ....................................................................................................................... vi C. Ratings Summary ........................................................................................................... vi D. Sector and Theme Codes ............................................................................................... vii
E. Bank Staff ...................................................................................................................... vii F. Results Framework Analysis ......................................................................................... vii
G. Ratings of Program Performance in ISRs ....................................................................... x H. Restructuring (if any) ..................................................................................................... xi 1. Program Context, Development Objectives and Design ................................................. 1
1.1 Context at Appraisal .................................................................................................. 1 1.2 Original Program Development Objectives (PDO) and Key Indicators (as
approved) ......................................................................................................................... 2 1.3 Revised PDO (as approved by original approving authority) and Key Indicators,
and Reasons/Justification ................................................................................................. 3 1.4 Original Policy Areas Supported by the Program (as approved) ............................... 4 1.5 Revised Policy Areas (if applicable).......................................................................... 5 1.6 Other significant changes ........................................................................................... 5
2. Key Factors Affecting Implementation and Outcomes ................................................... 6
2.1 Program Performance (supported by a table derived from a policy matrix) ............. 6 2.2 Major Factors Affecting Implementation: ................................................................. 7 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: ........ 11
2.4 Expected Next Phase/Follow-up Operation (if any): ............................................... 12 3. Assessment of Outcomes ............................................................................................... 12
3.1. Relevance of Objectives, Design and Implementation ........................................ 12
3.2. Achievement of Program Development Objectives ............................................ 13 3.3. Justification of Overall Outcome Rating ............................................................. 20 3.4. Overarching Themes, Other Outcomes and Impacts ........................................... 20 3.5. Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ... 22
4. Assessment of Risk to Development Outcome .............................................................. 22
5. Assessment of Bank and Borrower Performance .......................................................... 23 5.1 Bank Performance .................................................................................................... 23
5.2 Borrower Performance ............................................................................................. 25 6. Lessons Learned............................................................................................................. 26 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners................ 26 MAP IBRD 33434R1 ......................................................................................................... 36
v
ANNEXES
Annex 1: Bank Lending and Implementation Support/Supervision Processes ..................... 28 Annex 2: Beneficiary Survey Results .................................................................................... 29
Annex 3: Stakeholder Workshop Report and Results ............................................................ 30 Annex 4: Summary of Borrower's ICR and/or Comments on Draft ICR .............................. 31 Annex 5: Comments of Cofinanciers and Other Partners/Stakeholders ................................ 32 Annex 6: List of Supporting Documents ............................................................................... 33
TABLES
Table 1: Prior Actions for First Growth and Competitiveness DPO ...................................... 7
Table 2: Links between the DPO and Prior Analytical Work ................................................ 9
vi
A. Basic Information
Country: Lesotho Program Name: LS- First Growth and
Competitiveness DPG
Program ID: P128573 L/C/TF Number(s): IDA-H8500
ICR Date: 07/01/2016 ICR Type: Core ICR
Lending Instrument: DPF Borrower: KINGDOM OF
LESOTHO
Original Total
Commitment: XDR 13.40M Disbursed Amount: XDR 13.40M
Revised Amount: XDR 13.40M
Implementing Agencies: Ministry of Finance and Development Planning
Cofinanciers and Other External Partners:
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 01/17/2013 Effectiveness:
Appraisal: 04/08/2013 Restructuring(s):
Approval: 06/03/2013 Mid-term Review: 02/03/2014 03/31/2014
Closing: 06/30/2014 06/30/2014
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Moderately Unsatisfactory
Risk to Development Outcome: High
Bank Performance: Moderately Unsatisfactory
Borrower Performance: Moderately Unsatisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately
Unsatisfactory Government:
Moderately
Unsatisfactory
Quality of Supervision: Moderately
Unsatisfactory
Implementing
Agency/Agencies: Not Applicable
Overall Bank
Performance:
Moderately
Unsatisfactory Overall Borrower
Performance:
Moderately
Unsatisfactory
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments
(if any) Rating:
Potential Problem
Program at any time
(Yes/No):
No Quality at Entry
(QEA): None
vii
Problem Program at any
time (Yes/No): Yes
Quality of
Supervision (QSA): None
DO rating before
Closing/Inactive status:
Moderately
Unsatisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 60 60
General industry and trade sector 20 20
Other social services 20 20
Theme Code (as % of total Bank financing)
Economic statistics, modeling and forecasting 20 20
Public expenditure, financial management and
procurement 40 40
Regulation and competition policy 20 20
Social Protection and Labor Policy & Systems 20 20
E. Bank Staff
Positions At ICR At Approval
Vice President: Makhtar Diop Makhtar Diop
Country Director: Catherine Signe Tovey Asad Alam
Sr. Practice Director Carlos Felipe Jaramillo
Practice Manager: Mark Roland Thomas John Panzer
Program Team Leader: Asli Senkal Christian Yves Gonzalez Amador
ICR Team Leader: Asli Senkal
ICR Primary Author: Maria Teresa Benito-Spinetto
F. Results Framework Analysis
Program Development Objectives
The operation's development objective is to assist the Government in implementing a
reform program aimed at promoting growth, competitiveness and public sector efficiency.
The DPO supports progress towards the Country Assistance Strategy objectives of fiscal
adjustment and public sector efficiency and enhanced competitiveness and diversification.
Revised Program Development Objectives Program Development Objectives were not revised.
viii
(a) PDO Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target
Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : Number of sub-leases per year
Value
(quantitative or
Qualitative)
8 64 10
Date achieved 12/31/2012 01/01/2016 03/31/2016
Comments
(incl. %
achievement)
Not met. The number of sub-leases (which refers to land sub-leases), were 10
from April 1, 2015 to March 31, 2016, therefore not meeting the target.
Indicator 2 : Number of days to obtain a construction permit
Value
(quantitative or
Qualitative)
330 240 179
Date achieved 12/31/2012 01/01/2016 01/01/2015
Comments
(incl. %
achievement)
Met (100%) The target was achieved earlier than expected. Per Doing
Business 2015, it took 179 days to obtain a construction permit Since then, the
time has remained constant per DB, 2016 and 2017 draft
Indicator 3 : Number of days to register a firm
Value
(quantitative or
Qualitative)
40 7 7
Date achieved 12/31/2012 01/01/2016 01/01/2016
Comments
(incl. %
achievement)
Met (100%). Doing Business Report 2016 report that it takes 7 days to register
a firm. Therefore, the target was met.
Indicator 4 : Number of days required to obtain manufacturing and trading licenses
Value
(quantitative or
Qualitative)
1-5 3
3
2 days to obtain an
industrial license
+1 day for trading
license.
Date achieved 12/31/2012 01/01/2016 06/01/2016
Comments
(incl. %
achievement)
Met (100%). Doing Business Reports 2014 and after do not measure this
indicator any longer. However, the number of days that it takes to obtain an
industrial license according to Director of Industry, is currently 2 days if there
are no queries on the application. In addition, it takes 1 day to obtain a trading
license.
Indicator 5 : Number of days required for import clearance
Value
(quantitative or
Qualitative)
4.5 days 1 day 7 hours
Date achieved 12/31/2012 01/01/2016 01/01/2015
Comments Met (100%). DB Reports 2015 and 2016 measure this indicator in hours and
ix
(incl. %
achievement)
separates the times to obtain Border Compliance and Documentary
Compliance. Both added to 7 hours which was considered to be one day and
therefore, the indicator was met.
Indicator 6 : Number of days required for export clearance
Value
(quantitative or
Qualitative)
4.7 days 1 day 7 hours
Date achieved 12/31/2012 01/01/2016 06/02/2014
Comments
(incl. %
achievement)
Met (100%). The target was met earlier than expected. DB Reports for 2015
and 2016 measure this indicator in hours and separates the times to obtain
Border Compliance and Documentary Compliance. Both added to 7 hours and
therefore the indicator was judged met.
Indicator 7 : Number of months delay in publishing the audit reports on public accounts
Value
(quantitative or
Qualitative)
18 months
Zero (this is
interpreted as less
than one month)
24 months for
2013/14 Public
Accounts and over
12 months for
2014/15 Public
Accounts
Date achieved 12/31/2012 01/01/2016 9/31/2015
Comments
(incl. %
achievement)
Not Met The delay for the 2013/14 accounts was 24 months and for the
2014/15 accounts, 12 months, therefore, indicator was not met.
Indicator 8 : Timely and reliable budget expenditure data from the Integrated Financial
Management Information System (IFMIS).
Value
(quantitative or
Qualitative)
No quarterly
expenditure reports
reconciled from IFMIS
Zero delays
No quarterly
expenditure reports
reconciled from
IFMIS
Date achieved 12/31/2012 01/01/2016 06/10/2016
Comments
(incl. %
achievement)
Not Met By June 2014, still there weren't reconciled quarterly expenditure
reports from IFMIS. Currently there are some reconciliation, but reports are
not reliable. Therefore, this indicator is judged not met.
Indicator 9 : Medium term budget policy statement and a medium term fiscal framework
approved by Cabinet.
Value
(quantitative or
Qualitative)
Not approved by
Cabinet
Approved by
Cabinet
Informal approval
by Cabinet
Date achieved 12/31/2012 01/01/2016 06/15/2016
Comments
(incl. %
achievement)
Met. The Medium term budget policy and medium term fiscal framework are
not approved by Cabinet separately. However, the budge ceilings which are
approved by cabinet include a budget policy statement and MTFF Therefore,
one can argue that the MTFF has implicitly been approved by Cabinet deeming
this indicator as met.
Indicator 10 : Number of waivers allowing non-competitive bidding approved
Value
(quantitative or
Qualitative)
79 30 79
x
Date achieved 12/31/2012 01/01/2016 06/30/2015
Comments
(incl. %
achievement)
Not met. The number of waivers allowing non-competitive biddings approved
was 48 in June 2014, but went back to 79 by mid-2015 which is latest
information available according to the register at the Ministry of Finance.
Indicator 11 : Number of waivers allowing non-competitive bidding not approved
Value
(quantitative or
Qualitative)
40 70 56
Date achieved 12/31/2012 01/01/2016 03/31/2015
Comments
(incl. %
achievement)
Mostly met (80%). Number of waivers allowing non-competitive bidding not
approved were 31 in June 2014, but increased to 56 by March 2015. Not
further information is available.
Indicator 12 : Number of households in NISSA reached through the Childs Grant
Programme(CGP)
Value
(quantitative or
Qualitative)
6,920 25,000
19,500 (April 1,
2014)
25,400 (End 2015)
Date achieved 12/31/2012 01/01/2016 09/29/2015
Comments
(incl. %
achievement)
Met. Latest available data is that 25,400 children where reached. In April
2014 19,500 were reached. Therefore, indicator was achieved.
Indicator 13 : Number of ministries using harmonized concepts and definitions
Value
(quantitative or
Qualitative)
Zero 14 Not available
Date achieved 12/31/2012 01/01/2016 06/10/2016
Comments
(incl. %
achievement)
Not met. The BoS no longer follows up on the ministries’ progress on the
usage of harmonized concepts and definitions. Therefore, the indicator is
considered not met.
Indicator 14 : Percentage of population issued with National ID cards
Value
(quantitative or
Qualitative)
Zero 100 percent
43% (April 2016)
Date achieved 12/31/2012 01/01/2016 04/30/2014
Comments
(incl. %
achievement)
Partially met (43%). 43% of the population were issued National ID cards by
April 2016. This program continues to be implemented.
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target Values
Actual Value
Achieved at
Completion or
Target Years
G. Ratings of Program Performance in ISRs
No. Date ISR
Archived DO IP
Actual
Disbursements
xi
(USD millions)
1 05/03/2014 Moderately
Unsatisfactory
Moderately
Unsatisfactory 20.54
H. Restructuring
1
1. Program Context, Development Objectives and Design
1. This Implementation Completion and Results Report (ICR) assesses the achievements
of expected results of the programmatic series “Growth and Competitiveness
Development Policy Grants” to the Kingdom of Lesotho. The DPO series intended to
support the Government of the Kingdom of Lesotho in implementing a reform program
aimed at promoting growth, competitiveness and public sector efficiency. The first
operation of SDR 13.4 million (US$ 20 million equivalent) was approved by the World
Bank’s Board of Directors on June 3, 2013. The second operation was planned to be
presented to the Board on April 2015, but it was stopped on January 28, 2015 due to the
inadequacy of the macroeconomic framework. Subsequent operations in the series never
materialized.
1.1 Context at Appraisal
2. At appraisal, the Government showed commitment to fiscal consolidation to restore
macroeconomic stability. After a sharp decline in SACU revenues from 33.1 percent of
GDP in 2009/10 to 15.8 percent of GDP in 2010/11, in 2010 the authorities had
embarked on an ambitious fiscal consolidation program supported by the IMF ECF in
response to fiscal pressures and volatility of SACU transfers through cutting expenditures
by 11 percent of GDP. The Government had successfully completed the Fifth Review
under the Extended Credit Facility (ECF) arrangement and the program remained broadly
on track. Despite the drought and declining diamond prices, authorities continued the
adjustment efforts. Financial aid by Lesotho’s international partners helped mitigate the
impact on fiscal and external balances. This operation was aimed at assisting the
Government, in close collaboration with Lesotho’s development partners and
stakeholders, to implement its reform agenda.
3. Macroeconomic developments were judged positive at appraisal. Despite the global
financial crises the economy had grown by 5.4 percent in FY 2011/12 (April to March)
driven mainly by public investment. And in 2012/13, despite lower agricultural
production caused by the drought and weak diamond prices, the economy grew by 3.5
percent fueled by construction and mining. The construction sector had grown
significantly, driven by large infrastructure projects, and the mining sector was expanding.
Inflation was continuing to subside since the beginning of 2012 reaching 5.1 percent by
the end of February 2013. External balances were improving aided by large financial
inflows and the government’s fiscal consolidation efforts. The improved external balance
allowed for a rebuilding of external reserves reaching 4 months of imports by the end of
February 2013.
2
4. Fiscal consolidation was moving forward. The non-SACU deficit1 was estimated to
have reached 20 percent of GDP in FY 2012/13, compared with 22.6 percent in 2011/12
and the overall deficit was estimated at 4.8 percent of GDP in 2012/13, down from 10.3
percent of GDP a year earlier. In 2012/13, recurrent spending declined slightly to 39
percent of GDP (down from 39.6 percent a year earlier) as the government embarked in a
program to contain the wage bill which stood at 19.3 percent of GDP in 2011/12 and
2012/13. Capital expenditures increased slightly by 0.2 percentage points in 2012/13 to
21.7 percent of GDP, caused by delays in the implementation of some investment
projects during the transition period after the election. Revenue collection increased as
SACU revenues almost doubled in 2012/13 to 28.9 percent of GDP partly as
compensation for underpayments in previous years. The magnitude of the SACU revenue
volatility had made budget management challenging and a priority. As a key element of
the medium term macroeconomic program adopted by the Government in 2010,
containing expenditures to levels consistent with revenue flows, while safeguarding
social spending for the poor and vulnerable groups, became increasingly important.
Rational for Bank Assistance
5. This operation was designed to assist the Government in implementing a reform
program aimed at promoting growth, competitiveness and public sector efficiency. The
operation as part of the DPL series was envisaged in the Country Assistance Strategy
covering FY2010-2014, discussed by the Board in July 2010. Specifically, the operation
supported three areas that were central to the reform program: (i) improve private sector
competitiveness, through implementing key investment climate reforms; (ii) improve the
sustainability and efficiency of public spending, through fiscal consolidation and public
financial management and public procurement system reforms; and (iii) improve social
protection and monitoring systems, through improving the targeting of social safety net
programs and strengthening the statistical system. The operation supported three strategic
goals of the National Strategic Development Plan (NSDP): (i) pursue high, shared and
employment creating economic growth; (ii) improve health, combat HIV and AIDS and
reduce (social) vulnerability; and (iii) promote peace and democratic governance and
build effective institutions. It also contributed to two pillars of the three CAS’s Pillars2:
(i) fiscal adjustment and public-sector efficiency; and (ii) competitiveness and
diversification.
1.2 Original Program Development Objectives (PDO) and Key Indicators
6. The operation’s development objective was to assist the Government in implementing
a reform program aimed at promoting growth, competitiveness and public sector
efficiency.
1 Non-SACU fiscal deficit is equal to the overall budget deficit minus the SACU revenues.
2 The CAS programme was constructed around three strategic pillars, six results clusters,
and 22 outcomes.
3
7. The key indicators as approved were grouped under three pillars. The three pillars of
the DPO were (i) improve private sector competitiveness, through implementing key
investment climate reforms; (ii) improve the sustainability and efficiency of public
spending, through fiscal consolidation and public financial management and public
procurement system reforms; and (iii) improve social protection and monitoring systems,
through improving the targeting of social safety net programs and strengthening the
statistical system. The DPO supported progress towards the Country Assistance Strategy
objectives of fiscal adjustment and public sector efficiency and enhanced competitiveness
and diversification. Although the Program development objectives as originally approved
don’t refer to these three pillars clearly, the key indicators in this document will be
analysis under these themes which reflect the PDOs intention of assisting the
Government of Lesotho with promoting growth, competitiveness and efficiency of the
public sector.
Pillar I: Improving Private Sector Competitiveness
i. Number of sub-leases per year.
ii. Number of days to obtain a construction permit.
iii. Number of days to register a firm.
iv. Number of days required to obtain manufacturing and trading licenses.
v. Number of days required for import clearance.
vi. Number of days required for export clearance.
Pillar II: Improving the Sustainability and Efficiency of Public Spending
vii. Number of months delay in publishing the audit reports on public accounts.
viii. Timely and reliable budget expenditure data from the Integrated Financial
Management Information System (IFMIS).
ix. Medium term budget policy statement and a medium term fiscal framework
approved by Cabinet.
x. Number of waivers allowing non-competitive bidding approved.
xi. Number of waivers allowing non-competitive bidding not approved.
Pillar III: Social Protection and Monitoring Systems
a. Strengthening Social Protection
xii. Number of households in NISSA reached through the Child’s Grant Programme.
b. Improving Data and Information Monitoring Systems
xiii. Number of line ministries using harmonized concepts or definitions.
xiv. Percentage of population issued with National ID cards.
1.3 Revised PDO (as approved by original approving authority) and Key Indicators,
and Reasons/Justification
4
8. The DPO and key indicators were not revised.
1.4 Original Policy Areas Supported by the Program (as approved)
9. The program supported three main policy areas:
i. Improving private sector competitiveness. The DPL supported the
government’s efforts to continue improving the business environment as an
essential area for attracting new FDI, in particular investment coming from new
sources (such as South Africa), flowing into new sectors (with emphasis on low-
skill production), and with greater focus on the South African market. Lesotho’s
was ranked 136th
among 185 countries in terms of Ease of Doing Business among
185 countries and there were significant constraints in almost every stage of
business such as access to land, obtaining construction permits, access to finance,
and cross-border trade. Focusing on areas of competitiveness that were under
control of the Government was very important given that the Government did not
have control over key policies to improve competitiveness, such as: exchange
rate policy, which is determined by the Maloti’s peg to the Rand; and trade policy,
which is decided at the SACU level. \
ii. Improving the sustainability and efficiency of public spending. PEFA report
of 2012 documented several weaknesses in credibility, comprehensiveness and
transparency of the budget, predictability and control in budget execution and
audits. The DPL supported the government’s PFM reforms developed in detail in
the PFM Action Plan approved by the PFM Improvement and Reform Steering
Committee (IRSC) in March 2013. The Action Plan was developed in close
collaboration with development partners. It sought to develop more effective PFM
systems, including improvements in planning, budget execution, procurement
accounting, reporting, audit and oversight. The PFM Action Plan included
activities to fully control and commit the budget through IFMIS. The DPL
supported the IFMIS to improve financial control and reporting weaknesses. It
supported the government steps to improve the availability and reliability of
financial information, including the timely publication of reliable budget
expenditure data and audit reports. The DPL also supported the government’s
plans to further strengthen the public procurement system, starting with the
establishment of the Public Procurement Tribunal and its appointed members.
iii. Improving social protection and monitoring systems. The DPL supported the
government efforts to strengthen social protection and improving data and
information monitoring systems. In 2012 a separate Ministry of Social
Development was created which demonstrated the government’s growing
emphasis on social protection. Despite higher spending on social programs
relative to comparator countries, due to poor targeting social spending did not
translate into better outcomes for the poor and the vulnerable. To improve
5
targeting the Government created a national registry for the households receiving
payments through transfer programs called National Information System for
Social Assistance (NISSA).The system was designed to cover several key social
protection programs, including the Child Grants Programme (CGP), the Old Age
Pension Program, the Public Assistance Program, and the Orphan Vulnerable and
Children Bursary Program (OVC).
1.5 Revised Policy Areas
10. The policy areas and key policy areas were not revised.
1.6 Other significant changes
11. There were no significant changes in design, scope and scale, implementation
arrangements and schedule, or funding allocations for DPO1.
12. The second operation was stopped when the budget for FY 2014/15 presented to the
parliament deviated from the previous agreements between the World Bank and
government. Table 1 below displays the macroeconomic framework at DPO1 and at the
time of the budget speech of February 20, 2014. Lesotho abandoned the fiscal
consolidation efforts that started in FY 2010/11 due to political instability and higher than
expected SACU revenues and grants. The macroeconomic framework envisioned was
very different than the macroeconomic framework in the presentation to the Board at the
launch of the DPO series and the completion of the IMF’s ECF program. Non-SACU
budget deficit in 2013/14 was higher by 2 percentage points of GDP. The non-SACU
balance was expected to deteriorate by 7.2 percentage points of GDP in 2014/15, 9.8
percentage points of GDP in 2015/16, and 9.6 percentage points of GDP in 2016/17
compared to the deficit expected at the launch of the DPO1.
13. The envisioned reduction in the non-SACU deficit never materialized due to
increased expenditures that surpassed the increased revenues.3
According to the
economic update April 2014, the wage bill increased from 19.3 percent of GDP in FY
2012/13 to 21 percent of GDP in FY 2013/14, contrary to the supported policy actions to
help reduce the recurrent expenditures. The high wage bill in Lesotho, an estimated 22
percent of GDP in 2015/16, continues to be one of the most important structural problems,
Lesotho is facing in the years to come. Similarly, the use of goods and services increased
from 12.1 percent of GDP in FY 2012/13 to 13.6 percent of GDP in FY 2013/14 mostly
due to the subventions to the Queen Mamahato Hospital.
3 At DPO1 SACU revenues were expected to be at 25.4 in 2013/14, 21.9 percent of GDP in 2014/15, and
19.2 percent in 2015/16. According to the FY 2014/15 budget fiscal framework SACU revenues were
estimated to be 27.5 percent of GDP in 2013/14, 28.7 percent of GDP, and 27.4 percent of GDP.
6
Table 1: Macroeconomic Framework, 2013/14 to 2016/17
(As percentage of GDP)
Source: Lesotho Economic Update April 2014
2. Key Factors Affecting Implementation and Outcomes
14. The program was supported by one single tranche operation. The First Growth and
Competitiveness Development Policy Grant was approved subject to the implementation
of five prior actions each (see Table 2). All prior actions were satisfactorily met before
Board approval on June 3, 2013.
2.1 Program Performance
7
Table 2: Prior Actions for First Growth and Competitiveness DPO
Prior actions from Legal Agreement/ Program Document Status
Pillar I: Improving Private Sector Competitiveness
Prior Action 1: The Government through its Ministry of Trade and Industry,
Cooperatives and Marketing, submitted the Industrial Licensing Bill 2012 to its
Parliament.
Met
Pillar II: Improving the Sustainability and Efficiency of Public Spending
Prior Action 2: The Government has, through: (a) its Ministry of Finance,
submitted the revised Fiscal Year (“FY”) 2009/10 public accounts to the Office
of the Auditor General; and (b) its Office of the Auditor General, published the
audit report on the FY2008/09 public accounts.
Met
Prior Action 3: The Government has, through its Ministry of Finance,
established the Public Procurement Tribunal and appointed its members. Met
Pillar III: Improving Social Protection and Monitoring Systems
a. Strengthening Social Protection
Prior Action 4: The Government has, through its Ministry of Social
Development, developed and adopted the National Information System for
Social Assistance (“NISSA”) and is piloting said NISSA through the Child
Grants Programme.
Met
a. Improving Data and Information Monitoring Systems
Prior Action 5: The Government has, through its Ministry of Development
Planning, submitted to the Ministry of Finance a FY 2013/14 Budget
Framework Paper for the Bureau of Statistics.
Met
2.2 Major Factors Affecting Implementation:
Adequacy of government’s commitment`
15. There was government commitment to the program at the start of implementation, but
political instability weakened that commitment. In June 2014 after the suspension of the
parliament, the political instability continued until February 2015 when snap elections
were held to resolve the parliamentary crisis. The coalition government that took power
in June 2012 had endorsed the NSDP, which stressed the importance of fiscal
sustainability through promoting fiscal consolidation, containing the wage bill, increasing
public sector efficiency as well as improving the business climate. These reform areas
were supported by the DPL. However, political instability that manifested at the
beginning of 2014 was an important element that slowed down this operation’s
8
implementation.4 In addition, the already weak capacity to implement reforms was
exacerbated by new comers without experience in public sector affairs.
Soundness of background analysis
16. Applied Lessons from Previous Operations. Four main lessons from previous Poverty
Reduction Support Credit series (FY2008-11) were incorporated into this operation: (i)
Government ownership of reforms as a critical aspect for a successful outcome; (ii)
Effective donor coordination during project preparation and implementation; (iii) Strong
analytical underpinnings and links to Bank investment lending provide the foundation for
a well-designed operation, and (iv) Strong links to other Bank technical capacity and
investment operations as a critical aspect for a successful implementation of the program.
A continued technical and policy dialogue with the authorities and their technical team
was important in maintaining the country's ownership and commitment. To avoid
conflicting policy advice and provide a stronger voice in the policy dialogue with the
Government, it was important to coordinate with the AfDB, IMF, EU, and other donors
during program preparation and implementation. The key pieces of Economic and Sector
Work (ESW) and the Public Expenditure and Financial Accountability (PEFA) Reports
not only contributed to the design of previous and this lending operation, but also helped
shape the Government's reform efforts and supported a fruitful policy dialogue.
17. In past operations, the prior actions that were not linked with any other Bank
operation resulted in poor program outcomes. In a country with weak institutional
capacity, it would be better if the prior actions were supported by a capacity building
operation. Therefore, this operation was supported by Bank investment operations, trust
funds, and technical assistance operations.5
18. Analytical work. The preparation of this DPL series was based on extensive
analytical work carried out by the Bank, the government, and other partners. A
substantial body of analytical work provided the basis for an in-depth dialogue with the
Government and supported the design of the DPO. 3 below shows the links between the
components included in the DPO and the recommendations from prior analytical work.
4 On February 10, 2014, turmoil in the cabinet triggered a realignment of political interests in Parliament,
which resulted in an attempt to pass a “vote of no-confidence” against the Prime Minister on March 20,
2014. The “vote of no-confidence” failed, but raised public concerns about the survival of the coalition
Government. In February 2015, Lesotho held snap general elections to resolve its parliamentary crisis, and
a new coalition government formed in April 2015.
5 Some of the operations that supported this one were: the Private Sector Competitiveness Loan II, and the
Lesotho Public Financial Management Reform Support Program (P143197), all three under preparation at
time of appraisal. The Bank’s Private Sector Competiveness and Economic Diversification Project
(PSCEDP) provided technical assistance in the preparation of the Industrial Licensing Bill; and through the
Lesotho-RSA Customs Collaboration Trust Fund (P125780), the Bank provided technical assistance in the
design and implementation of the Customs Modernization Program.
9
Table 3: Links between the DPO and Prior Analytical Work
Analytical Reports – Findings and Recommendations Links to DPO Prior
Actions
I. Improving Private Sector Competitiveness
Selected Policy Notes (WB 2012)
The report recommends: “To further reduce the time to register a business, it is
necessary to fully implement the Companies Act of 2010 and the amended Trading
Enterprises Regulations. In addition, it is important to approve and implement the
Industrial Licensing Bill, which will eliminate the requirement for approval of
manufacturing licenses by the Pioneer Industrial Board, which meets only once every
two weeks, and adds an unnecessary layer to the process.”
The Government through its
Ministry of Trade and
Industry, Cooperatives and
Marketing, submitted the
Industrial Licensing Bill
2012 to its Parliament.
II. Improving the Sustainability and Efficiency of Public Spending
Selected Policy Notes (WB 2012)
The report recommends continuing with the implementation of the PFM
Action Plan.
The Government has,
through: (a) its Ministry
of Finance, submitted the
revised Fiscal Year
(“FY”) 2009/10 public
accounts to the Office of
the Auditor General; and
(b) its Office of the
Auditor General,
published the audit report
on the FY2008/09 public
accounts.
Selected Policy Notes (WB 2012)
The report recommends: “Government urgently needs to set up the
Procurement Tribunal to provide the private sector with recourse to an
independent complaint-handling process.”
The Government has,
through its Ministry of
Finance, established the
Procurement Tribunal and
appointed its members.
Public Expenditure Review (WB 2012)
The report recommends: “Monitoring is also severely hindered by
weaknesses in Lesotho's financial reporting and procurement systems. The
limited availability of budget information constrains oversight by the
legislature, civil society, and the media.”
The Government has,
through its Ministry of
Finance, established the
Public Procurement
Tribunal and appointed its
members.
III. Improving Social Protection and Monitoring Systems
Lesotho: A Safety Net to Protect Extreme Poor and Build Human Capital
(WB 2013)
The report recommends: “Lesotho implements a number of social transfer
programs, but these are not well coordinated and there is a need to better
define the overall priorities and objectives of the safety net.” Specific actions
should include:
The Government has,
through its Ministry of
Social Development,
developed and adopted
the National Information
System for Social
Assistance (“NISSA”)
and is piloting said
10
“Establish a national safety net strategy for the next 5-10 years that spells
out the country’s broad poverty reduction objectives, desired target groups
and coverage, and program choices.
Eliminate any duplication of coverage—for example, between the OAP, the
CGP, and PA, and the creation of an integrated beneficiary register.
Establish a central body with policy oversight and expenditure planning
authority over all transfer programs.
-Continue a gradual expansion of the NISSA once a clear vision for the
system has been developed and careful consideration has been made as to
how the expansion would/should take place. The system should also be
continuously monitored to determine whether it is in fact an effective way to
improve coordination and targeting.”
NISSA through the Child
Grants Programme.
Selected Policy Notes (WB 2012)
The report recommends strengthening data quality by accelerating
implementation of the National Strategy for the Development of Statistics as
outlined in the NSDP.
The Government has,
through its Ministry of
Development Planning,
submitted to the Ministry
of Finance a FY 2013/14
Budget Framework Paper
for the Bureau of
Statistics.
Lesotho: Sharing Growth by Reducing Inequality and Vulnerability:
Choices for Change. A Poverty, Gender, and Social Assessment (WB 2010)
The report recommends: “Lesotho’s fight against poverty and exclusion is
hampered by a lack of adequate quality data or disaggregated data on
household demographics, assets, livelihoods, earnings and income, shocks,
such as deaths or other major life events access to services, and social
indicators. As a result, the impact of growth and public policy is hard to
identify.”
The Government has,
through its Ministry of
Development Planning,
submitted to the Ministry
of Finance a FY 2013/14
Budget Framework Paper
for the Bureau of
Statistics.
Assessment of the operation’s design
19. The operation’s design included strong country ownership through close cooperation
and technical assistance, close coordination with other development partners (especially
the EU and IMF), alignment of the operation with the Government’s reform timetable,
and selection of critical structural reforms that would yield medium- to long-term benefits.
However, the scope of the reforms supported by this operation lacked direct support to
fiscal consolidation through structural reforms aimed at cutting expenditures and
mobilizing revenues. Given that fiscal consolidation was and still is a key element in the
sustainability of the country’s macroeconomic framework, the design overlooked actions
that would have supported fiscal consolidation more directly.
Relevance of the risks identified at appraisal and effectiveness of mitigation
20. Three main risks were identified at appraisal and were mitigated as follows:
11
i. On the institutional side, the main risk stemmed from the weak capacity of
Government institutions to implement the reform program. To reduce this risk,
the Bank worked with other donors to support the Government’s reform program
ongoing operations. During the operation technical assistance was provided
through the ongoing operations, however no separate technical assistance
operation was implemented. One venue for this coordination was the Joint Budget
Support Review meeting of February 2013. This meeting was held annually
amongst donors to coordinate budget support and to follow up on agreed
indicators.
ii. On the political side, the main risk emanated from the new Government's
unproven capacity to muster broad consensus and be able to approve and
complete the implementation of the politically difficult aspects of the reform
program. The new administration faced the challenge of managing a complex
multi-party coalition government. This arrangement limited the Government's
ability to build consensus around reforms that were critical for the sustenance of
economic growth and its capacity to mobilize enough political support to
implement its programs. To mitigate this risk, the Bank prepared a set of policy
notes on the major reform areas that were delivered to the new Government. The
Bank continued to foster policy dialogue through this operation using its
analytical work, investment operations, and coordination with other development
partners.
iii. On the economic front, the main risk centered on the possibility of further
worsening of the global economic environment. Under this scenario, the country’s
shock-absorption capacity could have faced important limitations, particularly in
applying effective countercyclical macroeconomic policies and suitable social
safety nets. However, this risk never materialized as the SACU revenues and
grants increased followed by an increase in expenditures by the government. The
operation, by not focusing more directly on measures to consolidate the fiscal
situation, was unable to mitigate the risk to the macroeconomic framework caused
mainly by high expenditures. The operation underestimated the risks to fiscal
consolidation.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:
21. Design. The 14 indicators selected by the operation were chosen to monitor progress
towards the program development objectives aimed at promoting growth,
competitiveness and public sector efficiency. They were grouped under three Pillars, but
these did not match the original PDOs. The DPOs could have been more clearly stated to
match the pillars under which the indicators were categorized. Nevertheless, the pillars
embodied the intensions of these series. Furthermore, although the indicators were
aligned to the objectives, they were weak in supporting the objective related to improving
the sustainability and efficiency of public sector spending. The selected indicators were
relatively easy to monitor. Indicators related to Pillar 1 (Improving private sector
competitiveness) were part of the Doing Business Report indicators. Indicators for Pillar
2 (Improving the sustainability and efficiency of public spending) and Pillar 3 (Improving
social protection and monitoring systems) were designed to be mostly monitored through
12
the Performance Assessment Framework (PAF) of the Joint Budget Support (JBS)
system. The JBS was developed under Government leadership supported by the EU and
IDA. However, PAF was not adjusted and the following operations were cancelled due to
macroeconomic inadequacy. The objectives of the DPO was in line with NDSP.
22. Implementation. The Ministry of Finance led the implementation of M&E. The
institutional arrangements for implementing this operation fell within the framework of
the Joint Budget Support structure, but the PAF never adjusted to the second PRSP, the
NSDP, so most of the operations indicators that were initially expected to be monitored
through it, could not be monitored through it. The PAF was intended to be the basis for
the program’s monitoring and evaluation, but only a few of the DPO indicators were part
of the PAF, such as, the number of days to receive trading license and the timely auditing
of public accounts.. The monitoring an evaluation of the indicators measured by the
Doing Business Report, could only be followed up periodically as the Doing Business
Reports were completed.
23. Utilization. The data and information provided by the Joint Annual review of the
General Budget Support in March 2014 provided guidance regarding the state of
indicator 4 (number of days required to obtain manufacturing and trading licenses) and
indicator 12 (number of households in NISSA reached through the Child Grant
Programme). This information in addition to the one obtained through the Doing
Business platform and directly from the NMES, was utilized during the ISR to encourage
the authorities to advance with the implementation of the program. Likewise, the
information regarding the macro-fiscal situation during implementation of the first
operation initially led to in delay the second operation and eventually halted the
remaining operations in the series.
2.4 Expected Next Phase/Follow-up Operation:
24. None expected at this time.
3. Assessment of Outcomes
3.1. Relevance of Objectives, Design and Implementation
Overall relevance rating: Modest
Objectives: High.
25. The objectives of the DPO emphasizing private sector competitiveness, efficiency of
public spending and social protection and monitoring systems remains relevant to
Lesotho’s current priorities. They support the goals of the Lesotho Vision 2020 and the
National Strategic Development Plan (NSDP) for 2012–2017. These goals are also
consistent with the priorities identified in the Systematic Country Diagnostic (SCD) of
the World Bank. The two priority interventions to achieve progress on the twin goals
outlined in the SCD are redefining the role of the state through increasing the efficiency
and effectiveness of the public sector and better fiscal management and shifting to a new
13
growth model with an outward oriented private sector through improving the business
climate. They also support the WBG Country Partnership Framework for 2016-20, which
is scheduled to be approved by the Board in June 2016. Under the 2016-20 CPF the
WBG assistance will support two focus areas: (i) improving efficiency and effectiveness
of the public sector, and (ii) promoting private sector job creation. There is currently an
urgent need to increase the efficiency and effectiveness of the public sector (Pillar 1 of
DPL) to create space for the private sector to become an engine of growth and generate
enough jobs. Improving the overall business environment (Pillar of DPL) will be
essential for attracting new FDI, promoting domestic private-sector growth, and creating
new jobs.
Design: Modest
26. The DPL was designed so the prior actions selected were relevant steps to attaining
the medium term objectives of improving private sector competitiveness, improving the
sustainability and efficiency of public spending, and improving social protection and
monitoring systems. The policy areas were aligned with the PDOs; however, the design
of the DPO indicators related to supporting public sector efficiency and effectiveness
could have focused more on enhancing the effectiveness of spending. The PDOs were in
line with the NSDP. Given the country’s conditions and risks at the time of the operation
designed, they were adequate. As stated in the current CPF: “Public sector fiscal
consolidation is a prerequisite in restoring macroeconomic stability, but it could weigh on
future growth if not matched by enhanced effectiveness of spending and service delivery
institutions”. The design of the DPL took into account the potential risks for the success
of the reforms supported by the operation, but underestimated the risks to fiscal
consolidation, the key element in maintaining an acceptable macroeconomic framework.
Implementation: Modest
27. The institutional arrangements for implementing this operation fell short of initially
planned arrangements. The institutional arrangements for implementing this operation
were within the framework of the JBS structure; however, the PAF never adjusted to the
second PRSP, so most of the operations indicators could not be monitored through it.
Nevertheless, due to political uncertainty it was important to work within the framework
of the JBS and buy-in at the political level. Currently, there is no IMF program. The EU
cancelled its budget support operation in March 2016 under the EDF10 and suspended
possibilities of support under EDF11.
3.2. Achievement of Program Development Objectives
Overall Rating: Modest
28. The Program Development Objectives Results are summarized in the data sheet at the
beginning of this report and addressed in this section. The program development
objectives related to the improvement of private sector competitiveness (Pillar I) were
mostly met. Doing Business report shows a significant improvement in various areas
14
including the ones measures by the selected indicators of this operation. Only indicator 1
related to the number of sub-leases was not achieved. PDOs for improving the
sustainability and efficiency of the public sector (Pillar II) have generally not been met.
In addition, progress in the PDOs related to the strengthening of social protection and
improvement of data and information systems had mixed results, The NISSA program
surpassed expectations, while issue related to data and information monitoring systems
progressed more slowly. Therefore it is concluded that given the significant
shortcomings in this operation’s achievement of objectives, it is rated moderately
unsatisfactory.
Pillar 1. Improving Private Sector Competitiveness. (Substantial)
29. In the past few years, the Government has made some progress in implementing
reforms to alleviate constraints on the private sector. The Companies Act of 2010 was a
step forward in reducing the number of procedures to register a new firm; it was
supported by Private Sector Competitiveness and Economic Diversification (PSCEDP,
P088544) Project and Second Private Sector Competitiveness and economic
Diversification Project (P144933). The Trading Enterprises Regulations of 1999 were
amended in December 2011 to make it easier to obtain trade licenses through the
establishment of a One Stop Business Facilitation Center (OBFC). The revised law also
replaced prior inspections with post inspections for selected businesses with low health
and environmental risks. Both these reforms were supported by the PSCEDP. The OBFC
brings several functions under one roof. These include issuance of trading enterprise
licenses, industrial licenses, work permits, and import permits/rebates and export visas (a
restricted list of products still requires approval from various ministries). Already,
through the Ministry of Trade and Industry, Cooperatives and Marketing, the
Government issued the regulations to implement the Industrial Licensing Bill and rolled
out OBFC services in Maputsoe6 (triggers for DPO2). Rolling it out to other districts was
expected to follow.
30. The process for getting a permit to start a business in Lesotho was streamlined. The
Ministry of Trade and Industry, Cooperatives and Marketing, submitted the Industrial
Licensing Bill 2012 to Parliament (prior action #1). The Industrial Licensing Bill of
2014 was approved by Parliament on September 5, 2014.7 The Bank’s PSCEDP
provided technical assistance in the preparation of the Industrial Licensing Bill. Its
purpose is to facilitate and promote industrial development of small, micro, and medium
enterprises (SMMES) through a new regulatory regime that is simple, short, and cost
effective. Licensing powers are vested in the Director of Industry, making processing
shorter and simple. Currently, the Pioneer Industrial Board must approve manufacturing
licenses. The board meets once every two weeks, adding an unnecessary layer to the
6 The One Stop Business Facilitation Centre (OBFC) substation was launched at Maputsoe on January 28,
2015. From Lesotho Trade Portal at: http://www.lesothotradeportal.org.ls/?r=site/display&id=180
7 http://www.lesotholii.org/ls/legislation/bill/2014/47/.
15
process. The Industrial Licensing Bill eliminates Pioneer Industrial Board approval,
reducing the number of days required to obtain manufacturing licenses. However, by
April 2014, the number of days to obtain manufacturing and trading licenses was still 5
days, as the baseline of Indicator 4. Currently, recent Doing Business reports do not
measure this indicator. However, according to the Director of Industry, it currently takes
2 days to obtain an industrial license if there are no queries on the application. In
addition, it takes one day to obtain a trading license. Therefore, this indicator is judged
met.
31. The Industrial Licensing Bill eliminated the Pioneer Industrial Board approval. This
also cut the process of registering a firm to 7 days according to the Doing Business 2016.
Lesotho has also improved its ranking in registering and starting a business. In 2012, the
average days to start a business in Sub-Saharan Africa was at 37 days as opposed to 40
days in Lesotho. Today, Lesotho stands at 112 in the ranking of 189 economies, better
than the regional average (Sub-Saharan Africa) of 128. Therefore, Indicator 3, reduce
number of days to register a firm from 40 to 7 days by 2016, was met).
32. Regarding the number of days to obtain a construction permit (Indicator 2) the target
was surpassed. Doing Business report of 2015 and 2016 report that it takes 179 days to
obtain a construction permit. It took 330 days in 2012 and the target for 2016 was 240.
The Government took measures to reduce the number of days to obtain a construction
permit. According to the World Bank (2013), dealing with construction permits required
11 procedures, 330 days, and cost 950 percent of per capita income. Various regulations
supported by this operation streamlined the process: The Government issued regulations
and guidelines to require environmental impact assessments only for construction
projects for industries that pose high environmental risk, rather than for all projects
(Trigger for DPO2). This is in line with international best practices which recommend a
risk-based approach. This one measure alone is estimated to have cut 25 days off the
process of obtaining construction permits for most firms. Under Component 1 of the
Second Private Sector Competiveness and Economic Diversification Project the
government is working with the World Bank for the construction permits reform. The
Task Team of Chief Legal Officers from MCC and various bodies has been established.
The automated system to obtain permits is not yet live, but complete. The user testing
training took place in July 2016 and the system is expected to go live in September 2016.
33. The Government has taken steps to reduce barriers to land access by investors,
including foreigners. Subleasing is now possible under the amended Land Act of 2010.
The Land Act of 2010 gives specific rights to lessees but not to subleases. The
authorities have submitted to Parliament a sectional title bill, which allows citizens to sell
or transfer a section of their property with an accompanying title for ownership.
However, the Government has not yet submitted to Parliament the Amendments Land
Bill of 2013 which has specific clauses that give rights to subleases8 (Trigger for DPO2)
8 In the Land Act 2010 - the duties on subleases are no longer charged as was the case in
the repealed Land Act of 1979 - an improvement both on the lead time and cost. But the
16
and provides them greater certainty and security in occupational rights. As a result of
these changes, it was expected that the number of subleases would have increased from 8
in 2012 to 64 by 2106 (Indicator 1). However, the number of sub-leases in the FY April
2015 to March 2016 was only 10. Therefore, it is considered that this indicator was not
met.
34. Trading across borders has shown some improvements before and during the
implementation period of this operation. Time to import has been reduced from 49 days
in 2007 to 35 days in 2013 and to 33 days by 2014; the number of procedures has been
cut from eight in 2007 to seven by 2014. Time to export has been reduced from 44 days
in 2007 to 31 days in 2013 but has remained the same through 2015.9 The number of days
required for import clearance (Indicator 5) and export clearance (Indicator 6) were
expected to be reduced from 4.5 and 4.7, respectively to 1 day by 2016. Although, the
way this indicators is measured has changed10
, it takes. 7 hours to obtain and import or
export clearance according to DB 2015 and 2016. Therefore, we judged indicators 5 and
6 to have been achieved. The trigger for DPO2 linked to these indicators was completed.
Through the Lesotho Revenue Authority, the government has completed the Preferred
Trader Program Pilot11
at the end of March 2014 and reported on recommendations for
implementation of the full scheme.
Pillar 2. Improving the Sustainability and Efficiency of Public Spending (Negligible)
35. Results in this area have been slow, with some progress recorded more recently. This
pillar of the DPO was closely linked to the PFM Reform Project (P143197) approved by
the Bank Board on February 2014.12
Political turmoil in 2014 also delayed the
implementation of this project. Nevertheless, the Office of the Accountant General
progressed during the second half of 2014 with the implementation of various issues
related to IFMIS, which allowed for: (i) the link between the IFMIS and the Central
Bank for electronic payments to be functional, and the planning to pilot such payments in
the MoF and Ministry of Development Planning (MoDP) to advance; (ii) data cleaning
on the IFMIS to progress to such an extent that the FY14 Public Accounts were
sub-lessees rights are still not in included in the Land Act 2010 as amended - inter alia is
the recent High Court Judgement that has set precedence and entrenched the sublease's
rights
9 The last year that the Doing Business report measured these indicators was 2015. For imports and
exports, the mentioned indicators have remained unchanged.
10 Doing Business Reports in 2015 and 2016 measures these indicators in hours and separates the time to
obtain Border Compliance and time to obtain Documentary Compliance.
11 http://www.sacu.int/docs/pr/2014/pr0724a.pdf
12 Became effective July 25, 2014.
17
submitted within the legal timeframe, although revisions from the Auditor General
delayed the process somewhat. Indicator 8 aimed at a timely and reliable budget
expenditure data from IFMIS and aimed at having reconciled quarterly reports from it.
Currently there is some reconciliation, but reports are not reliable, deeming the indicator
as not achieved. Fiscal reporting is still hampered by the lack of reliable information,
because of data and reconciliation problems.
36. Indicator 7, reducing the number of months delay in publishing the audit reports on
public accounts to zero showed progress, but was partially achieved. The PFM Act
determines in section 37 that audited consolidated financial statements need to be
presented to Parliament within 8 months after the end of the financial year they relate to.
So the “delay” is calculated as the time taken to present it to Parliament beyond 8 months
of the end of the fiscal year to which it relates. The FY 13 (end March) public accounts
should have been submitted by end November 2013, and the FY 14 public accounts by
end November 2014. For FY13 the delay was therefore 24 months, and it reduced to 12
months (and not zero) for the FY14 public accounts. The Public Accounts for 2014/15
were received for auditing by the Ministry of Finance on September 1, 2015, and have
not yet been published as of June, 2016, although they are expected to be published very
soon. Public sector auditing is carried out in accordance with standards set by INTOSAI
and the International Auditing Standards. However, the operations of the Office of the
Auditor General are hampered by, amongst other things, significant weaknesses in the
fiduciary systems in the country. Accounts, and in turn audits, are therefore still prepared
with delays. However, under the PFM reform program supported by this operation13
and
the PFM project, both the backlog of audited accounts and the time publish the accounts
have been reduced. The Auditor-general is also receiving support from an operation
already approved by the AfDB. Prior action and trigger for DPO2 were completed.14
37. According to the SCD the Medium Term Fiscal Framework process is still weak.
Projects and programs are not always linked to the NSDP priorities. The MTFF’s outer-
year spending plans are seldom used in preparing subsequent years’ budgets, and the
approach to budgeting remains largely incremental and line item-based. Indicator 9
calls for the MTFF and medium term budget policy statement to be approved by the
Cabinet. There is no separate formal approval of the budget policy statement and the
MTFF by the cabinet, but the budget ceilings which are approved by cabinet include a
budget policy statement and MTFF. Therefore, one can argue that the MTFF has implicitly
been approved by Cabinet deeming this indicator as met.
13 The PFM Reform is being supported by the World Bank, EU, AfDB and IMF.
14 The Government through the Office of the Auditor General publishes the audit report on the FY2009/10,
FY2010/11 and FY2011/12 public accounts.
18
38. Regarding Indicator 10 (reduction of number of approved waivers allowing non-
competitive bidding to 30 by 2016 from 79 in 2012), the limited progress registered by
June 2014 when they decreased to 48, regressed back to 79 by July 2015. Therefore, this
indicator was not achieved. Indicator 11 (increase in the number of non-approved
waivers allowing non-competitive bidding to 70 by 2016 from 23 in 2012), was partially
achieved. It became worse by mid-2014 (31), although it improved somewhat by mid-
2015, to 56 non-approved waivers for non-competitive biddings. The trigger for DPO2,
that is, the publicizing of contract awarded above 100,000 maloti on the web and media
through the Ministry of Finance is not currently being done.
Pillar 3. Improving Social Protection and Monitoring Systems (Modest)
I. Strengthening Social Protection
39. Lesotho’s spending on social transfer programs is relatively high, but targeting is
weak, resulting in poor outcomes in terms of reducing vulnerability and poverty.
Coverage of social protection transfers is small, especially among the poorest households.
However, since 2012 the Government has taken some important steps in improving the
performance of the sector, creating a Ministry of Social Development (MSD) to lead and
coordinate the social protection agenda and introduced a National Information System for
Social Assistance (NISSA) to serve as a national registry for beneficiaries of safety-net
programs and piloted the NISSA through the Child Grants Programme (CGP) (Prior
Action 4). Before establishment of the new ministry in June 2012, the Department of
Social Welfare in the Ministry of Health and Social Welfare led the social-protection
agenda. The new MSD runs three of the six main social protection programs, the Child
Grants Programme, the Nutrition for Malnourished and Other Vulnerable Groups (OVC),
and the Public Assistance Program (PA). The MSD also elaborated the National Social
Protection Strategy (NSPS), which was endorsed by Cabinet in December 2014 and
officially launched in February 2015.
40. NISSA is at the basis of harmonization of program delivery, which the NSPS
identifies as the back bone of the social protection system. The social registry of NISSA
contains social-economic information for around 100,000 households in the country
(roughly a quarter of the population), representing the basis for targeting of the CGP. The
World Bank and EU/UNICEF, carried out reviews of the NISSA, which provide evidence
of the quality of the targeting tool and describes the potential of the NISSA as the basis
for a harmonized mechanism for selecting poor households for all social assistance
programs. Based on the recommendations of the most recent NISSA review, MSD is
revisiting the strategy of community-based targeting to strengthen its importance in the
beneficiary selection process.
41. Furthermore, data from the Continuous Multipurpose Survey (CMS) of 2013/14
suggest that the CGP is the most effective program at reaching the poor, with 65% of its
beneficiaries belonging to the bottom two quintiles. By end 2013, the number of
households in NISSA had reached through the CGP 19,500 households, up from 6,920 in
19
2012. Most recent data shows that number at 25,400, above the target for 2016 of 25,000
(Indicator 12).15
Therefore, this indicator was fully achieved.
II. Improving Data and Information Monitoring Systems
42. Lack of accurate and timely information hampers the Government’s decision-making.
Data from household surveys, ministries, public service delivery units, and public-sector
spending reports are sporadic and vary in quality, imposing constraints on the ability of
decision-makers to assess alternative policies and make informed decisions. As a result,
decisions regarding the allocation of scarce resources and options for reforming and
improving public services often lack a sound analytical foundation, and program
evaluation is at best difficult.
43. The Government recognizes this weakness. It has taken important steps to improve
the quality of its statistics. The Bureau of Statistics (BoS) published a definitions and
concepts manual in August 2013, which harmonized concepts and definitions with
international standards. This operation’s indicator 13 aimed at having 14 line ministries
using the harmonized concepts or definitions by 2016. This indicator was not made
available to the Bank, because the progress is not regularly followed up by the BoS.
Hence, the progress towards the harmonized concepts and definitions with international
standards is considered to be on halt. Therefore, we consider this indicator not achieved.
44. In addition, the BoS has adopted in early 2014 the 2008 System of National
Accounts methodology (trigger DPO2). Following the new methodology, the BoS has
already incorporated the effects of innovation and R&D as well as the central bank’s
output into the GDP estimation. The BoS has undertaken an Economic Census to get
additional data needed to fully implement the 2008 Systems of National Accounts
methodology. However, amendments to the Statistics Act of 2001 (trigger for DPO3)
which will grant autonomy to the BoS, has not yet been submitted to Parliament.
45. The Government has already taken the first steps toward giving administrative
autonomy to the Bureau of Statistics. The Government has, through its Ministry of
Development Planning, submitted to the Ministry of Finance a FY 2013/14 Budget
Framework Paper (BFP) for the Bureau of Statistics (Prior Action 5) and allocated
resources to activities leading to its administrative autonomy. The BFP calls for:
(i) reviewing the Statistics Council’s terms of reference to ensure the body’s
appropriateness and relevance for governing an autonomous BoS; (ii) amending the
Statistics Act 2001 to grant the BoS operational autonomy to enhance its effectiveness in
managing and coordinating the country’s statistical activities; and (iii) reviewing and
15 The trigger for DPO2 was completed, that is, that through the Ministry of Social
Development, the Government has increased coverage of NISSA reached through the
CGP by an additional 10,000 households.
20
aligning all relevant laws of other agencies to make them consistent with the amended
Statistics Act.
46. Most citizens lacked a national ID when this operation was launched. The only
formal ID was a passport which was available to a very small number of people. This
hindered targeting of service delivery and social transfers and access to credit, among
other things. The national ID system is linked to the Credit Bureau since December 2014
and still is expected that it will be linked to the National Voter’s Registry, NISSA and the
Health Service Database. This operation supported the establishment of a national ID
system and aimed that a 100% of the population would have it by 2016 (Indicator 14).
By April 2014, only 5 percent of the population were issued an ID. Two years later,
information from April 2016 shows that 43 percent of the eligible population (16 years
and above) have been issued National ID cards. The NPR has 58 percent of the
population registered. The Government has recently procured 6 mobile registration units
to help reach out to the rural areas. It is expected by the end of the current Lesotho’s
financial year (March 31, 2017), there will be about 80% of the population into the NPR
and about 60% to 70% of eligible population issued ID cards16
. Although this indicator
has been partially achieved (43%) the likelihood of achieving it in the next two years
seems to be high. Furthermore, the priority is currently on Registration of Births and
issuance of ID while the other variables, namely Registration of Marriages, Deaths,
Divorce, Adoptions and Orphans are registered on a voluntary basis. The NPR is
currently piloting registration of deaths in selected health facilities and they hope to roll
out in all health centers and mortuaries soon.
3.3.Justification of Overall Outcome Rating
Rating: Moderately Unsatisfactory
47. With the program remaining highly relevant in terms of objectives, moderately
relevant in terms of design and implementation, and moderately unsatisfactory for
achievement of objectives, the overall outcome rating is moderately unsatisfactory
3.4.Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development 48. The policy actions supported by this proposed operation were expected to have
positive poverty and social impacts. Actions under Policy Area I, Improving Private
Sector Competitiveness, were expected to lead to higher private-sector investment and
growth in the medium and the long run. Hence, higher growth was expected to lead to an
16 Once the percent of population covered reached 50%, then trigger for DPO3 would be
completed. Trigger for DPO2 was completed, that is to roll out the ID program and cover
10% of the population.
21
acceleration in poverty reduction. However, private sector investment appears to have
fallen due to AGOA uncertainty, political instability, and lower global and regional
growth prospects. Lesotho lacks reliable poverty estimates and the poverty statistics are
based on estimated data. Based on the estimated data from the 2010/11 household
surveys, there has been almost no progress in poverty and unemployment reduction,
despite the considerable spending on social sectors and transfers. The latest data shows it
at 57 percent of total population.
49. Policy actions under Policy Area II could have helped reduce poverty, however
almost no progress was made. Therefore, the fiscal space needed to protect the social
safety net program in case of an external shock was mostly absent. The financial
management reforms would have allowed the Government to have a better control and
management of its resources. Potential savings in the management of these resources
could have been used to improve and expand services in rural areas where poverty is
concentrated.
50. Policy actions under Policy Area III had positive social impact. The CGP had positive
impact on food security, health and education according to a rigorous impact evaluation
conducted in 2013-14 by Oxford Management Policy. While the CGP is an unconditional
cash transfer, in practice beneficiaries receive a very effective messaging that the cash
transfer should be spent on children, which was closely followed by beneficiary
households. The CGP contributed to retaining children ages 13-17 in primary school,
particularly boys who would have otherwise dropped out. It contributed to a 15
percentage point reduction (from a baseline of 39 percent) in the proportion of both boys
and girls ages 0-5 who suffered from an illness (generally flu or cold) in the 30 days prior
to the survey. The program reduced the number of months by 1.5 during which
households experienced extreme food shortage, and the proportion of CGP households
that did not have enough food to meet their needs at least for one month in the previous
12 months decreased by five percentage points. The CGP was not associated with a
significant reduction in poverty rates amongst beneficiary households two years after the
introduction of the pilot in the study areas, however beneficiaries’ welfare has improved
and trends are encouraging.17
This DPO reforms were expected to be gender neutral.
(b) Institutional Change/Strengthening
51. This operation strengthened the Cabinet Level Committee which was created to
oversee the business environment. It brought to the attention of the Cabinet the
importance of the initiatives to improve the business climate in Lesotho. The Deputy
Prime Minister which was part of the previous government, still is part of this Committee.
(c) Other Unintended Outcomes and Impacts
17 World Bank, September 2015. Draft PAD for Social Assistance Project, Report No: PAD1377.
22
52. The DPO supported one of the weakest areas in need for reform that is, procurement
reform, through the establishment of the Procurement Tribunal. However, what was
intended as a punctual reform went beyond what was envisioned. The creation of the
tribunal changed the mentality of this unit, which started simple, but they went beyond
their mandate by, for example, monitoring newspaper publication of bids. This led to the
AFDB to become more engaged and pave the way to their support through an investment
loan.
3.5. Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
N/A
4. Assessment of Risk to Development Outcome
Rating: High
53. The risk that developments outcomes will not be maintained or realized is high and is
associated with three main risks: political, economic, and institutional.
54. On the political side, the main risk derives from the Government's ability to approve
and complete implementation of the reform program, fiscal consolidation reforms.
Lesotho’s first coalition government, which came into power in 2012, collapsed in 2014
amidst much turmoil, including the suspension of parliament and conflict among the
security services. Despite early elections in February 2015 and a smooth transition to a
new coalition government, tensions once again escalated a few months later, particularly
within the army. In addition, opposition party leaders fled the country. Implementation of
Lesotho’s National Strategic Development Plan 2012/13-2016/17 (NSDP) has stagnated
in this environment, while disruptions in parliamentary procedures have delayed a
number of legislative proposals. Business investment has slowed and, most recently,
some development partners have expressed concerns that political and security
developments could dampen their economic support for Lesotho.18
The Bank has
continued to maintain policy dialogue through its analytical works, investment operations,
and coordination with other development partners.19
55. On the economic front, the main risk centers on Lesotho’s ability to respond in a
timely manner to the current effects of reduced SACU revenue and other spillovers from
South Africa’s slower growth. Lesotho’s shock-absorption capacity faces important
limitations because of much reduced fiscal space. Without an appropriate fiscal
adjustment, the magnitude and duration of the drop in SACU revenues would lead to
unsustainable fiscal deficits, which would jeopardize debt sustainability and the
18 IMF, February 2016. Staff Report for Article IV Consultation.
19 When this DPO series was approved, the Bank had prepared a set of policy notes on the major reform
areas that was delivered to the Government to assist them with their reform agenda.
23
maintenance of adequate international reserves. For Lesotho, the main transmission
channels of the shock are likely to be the same as they were in the 2008 crisis. First, the
United States and South Africa were Lesotho’s largest trade markets, and exports fell
significantly. Second, workers’ remittances from abroad were about 30 percent of GDP,
and 90 percent of them originated in South Africa. Like exports, they declined. Third,
official development assistance was limited. In addition, there is a drought emergency
currently in Lesotho. To reduce macroeconomic risk, the Government had committed to
maintaining macroeconomic stability and Lesotho’s current stock of international
reserves mitigates them temporarily. The Bank and other development partners, including
the IMF, are providing analytical support and policy dialogue to aid the Government to
face these shocks. The recent IMF Article IV conveys that there was broad Government
agreement to undertake the necessary fiscal adjustment in steps, as recommended by
Fund staff. However, recently, the EU has pulled out its budget support from Lesotho.
56. On the institutional side, the main risk stems from the weak capacity of Government
institutions to implement the reform program. To reduce this risk, the Bank has been
working with other donors to support the Government’s reform program through
technical assistance and ongoing operations. In particular, the Lesotho-RSA Customs
Collaboration Trust Fund was supporting technical assistance in implementing reforms
aimed at improving trade facilitation, and the Technical Assistance to the National
Information System for Social Assistance is supporting reforms aimed to strengthen the
social safety net. The Bank’s Public Financial Management Reform Support Project aims
to provide technical assistance for implementing reforms in public financial management
and public procurement. Finally, the Second Private Sector Competitiveness Project is
supporting the implementation of reforms aimed at improving private-sector
competitiveness.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Unsatisfactory
57. The DPO supported the government’s reforms under the National Strategic
Development Plan. The program supported three strategic goals of the NSDP: (i) pursue
high, shared and employment creating economic growth; (ii) improve health, combat
HIV and AIDS and reduce (social) vulnerability; and (iii) promote peace and democratic
governance and build effective institutions. It also supported the CAS’s two of the three
pillars: (i) fiscal adjustment and public-sector efficiency; and (ii) competitiveness and
diversification. The DPO series was fully aligned with the Bank’s Africa Region Strategy.
58. The operation was underpinned by solid analytical work conducted by the Bank, IMF,
and others. The substantial body of analytical work provided the basis for an in-depth
dialogue with the Government and supported the design of the DPO series (see Table 2).
24
Continuous dialogue with the Lesotho authorities and development partners were carried
out during preparation of the program. It was prepared within the joint framework of
budget support developed under Government leadership supported by the EU and IDA.
AfDB, WHO, UNICEF, UNAIDS, Irish Aid, and GTZ were not providing direct budget
support, but they participated in the process.
59. The design of the operation applied lessons learned from the previous Poverty
Reduction Support Credits series (FY2008-11). The lessons included the need to ensure
that the operation: (i) exclusively supported Government-led initiatives; (ii) had strong
analytical underpinnings and links to Bank investment lending; (iii) coordinated with
donors effectively during project preparation and implementation; and (iv) had strong
links to other Bank technical capacity and investment operations. With these lessons in
mind, during preparation, and implementation, there was continued technical and policy
dialogue with the authorities and their technical teams to try maintaining the country’s
ownership and commitment. To avoid conflicting policy advice and provide a stronger
voice in the policy dialogue with the Government, it was important to coordinate with the
AfDB, IMF, EU, and other donors during program preparation and implementation. In a
country with weak institutional capacity, the prior actions must be supported by a
capacity building operation. Therefore, this operation was supported by Bank investment
operations, trust funds, and technical assistance operations. Moreover, key pieces of
Economic and Sector Work (ESW) and the Public Expenditure and Financial
Accountability (PEFA) Reports helped shape the Government’s reform efforts and
supported a fruitful policy dialogue.
60. The main shortcoming during preparation was the difficulty in choosing reforms that
were thought to be the ones that could move forward with most success. On one hand,
there was a very energetic new government that wanted to implement reforms. On the
other hand, there were many new and inexperienced officials that could not deliver a
reform package. The team struggled somewhat with the government in choosing reforms
that were relevant and plausible to implement at the same time.
(b) Quality of Supervision
Rating: Moderately Unsatisfactory
61. Supervisor focused on monitoring the development of development objectives and
outcome indicators. There were several economic monitoring missions in 2014 and 2015
that aided the follow up of this operation and preparation of the following one that never
materialized.20
Since the first quarter of calendar year 2014, there already was
acknowledgement that Pillar 2 objectives were not been met. The ISR of April 2014
concluded that the operation had achieved moderately unsatisfactory results in general,
and the objectives for Pillar 2 had not been met. The Bank maintained a continuous
20 Macroeconomic monitoring missions took place on the following dates: Jan 26-31, 2014; Feb 10-14,
2014; March 19-20, 2014; April 1-4, 2014.
25
dialogue with the authorities to try keep their engagement and commitment, but the
political situation made it difficult to maintain the momentum. The continued
engagement identified in time that the macro framework was not keeping up with
previous commitments. Efforts to improve it were not successful given the political
obstacles. As a result, this DPO series was cut short of initially programmed. The main
shortcoming during supervision was the complicated political situation which did not
allow the government to address the macroeconomic challenges, in particular, fiscal
consolidation.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Unsatisfactory
62. Given that the Bank performance for quality at entry and quality of supervision is
rated moderately unsatisfactory, the overall Bank Performance is rated moderately
unsatisfactory.
5.2 Borrower Performance
(a) Government Performance
Rating: Moderately Unsatisfactory
63. The Government failed to maintain macroeconomic stability, and therefore,
jeopardized the attainment of the development objective to “improve the sustainability
and efficiency of public spending through fiscal consolidation and public financial
management and public procurement reforms”. The fiscal consolidation did not take
place as envisioned at the launching of the DPO series. The prior actions, indicators and
even the triggers for the operations were thought to be relatively easily attainable, but the
Government failed in the macroeconomic arena and in attaining several of the indicators
and envisioned triggers21
. Nevertheless, the Government’s commitment to Pillar 1 and 3,
were more robust and various development objectives related to the improvement of the
private sector competitiveness and improvement of social protection were attained.
Currently, the situation has not yet improved for re-engagement of the Bank through
programmatic lending. Moreover, it has proven difficult to obtain information to assess
some of the indicators despite efforts by the Bank to obtain answers from the authorities.
Therefore, the Government performance is rated moderately unsatisfactory.
21 For example, trigger for DPO2 on the amendments to the Land Act of 2010 to facilitate
the use of sub-lases did not materialized. In the Land Act 2010, the sub-lessees rights are
still not in included in the Land Act 2010 as amended - inter alia is the recent High Court
Judgement that has set precedence and entrenched the sublease's rights. Another example
is the DPO2 trigger related to the publication of all tenders and contracts awarded above
1000,000 Maloti on the web or print media which has not been done yet.
26
(b) Implementing Agency or Agencies Performance (see Borrower Performance)
(c) Justification of Rating for Overall Borrower Performance (see Borrower
Performance)
6. Lessons Learned
64. There were three main lessons learned from this operation that could aid future ones
and could have wider general application.
Lesson 1. Future DPOs should chose indicators that support the objective of fiscal
consolidation more directly and should address components of fiscal spending and
revenues. If future DPOs support fiscal consolidation, then they should support structural
reforms specifically aimed at cutting expenditures and mobilizing revenues. This DPO
envisioned a fiscal consolidation framework but it did not provide the support needed to
attain it. For example, Lesotho with a wage bill of 22 percent of GDP has one of the
highest wage bills in the world, however there were no indicators on the wage bill.
Recent evidence shows that the composition of fiscal spending is favoring recurrent
expenditures as opposed to capital expenditures, which might have adverse consequences
on long term growth potential of Lesotho.
Lesson 2. Programmatic lending limited to no more than 2 year programs could give
more flexibility to adjust the program to changing circumstances. Lesotho’s economy is
very dependent on the external environment because of its dependence on SACU
revenues and remittances. When faced with a more favorable environment, the
government tends to relax fiscal conditions which leads to delays in the reform agenda.
Lending that is limited to more than 2 year programs can help in adjusting to the
changing political and external economic conditions.
Lesson 3. In the context of Lesotho, which has low capacity of implementation, all
operations should include capacity building or should be linked to other ones that
provide it. Most critical is providing capacity building in the area of fiscal policy given
the central role that fiscal consolidation plays in the sustainability of the countries macro-
framework.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/Implementing agencies
65. GOL endorsed this ICR and noted the appreciation of the GOL for World Bank’s
support in various development programs.
(b) Cofinanciers- None
27
(c) Other partners and stakeholders- None
28
Annex 1: Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Macmillan Ikemefule Anyanwu Senior Country Officer SACAA
Christian Yves Gonzalez
Amador Senior Economist AFCS1
Carolina Biagini Majorel E T Consultant LCSPE -
HIS
Melis Ufuk Guven Senior Social Protection Econo GSPDR
Fernando Gabriel Im Economist GMFDR
Melanie Jaya Program Assistant AFCS1
Smita Kuriakose Senior Economist GTCDR
Tuan Minh Le Senior Economist GMFDR
Phindile Abigail Ngwenya Research Analyst GMFDR
Pedro Olinto Program Leader LCC5C
Gert Johannes Alwyn Van Der
Linde Lead Financial Management Spec GGODR
Supervision
(b) Staff Time and Cost
Stage
Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending/ Supervision/ICR
Total: 44.4 247,715.5
29
Annex 2: Beneficiary Survey Results
Not applicable
30
Annex 3: Stakeholder Workshop Report and Results
Not applicable
31
Annex 4: Summary of Borrower's ICR and/or Comments on Draft ICR
Incorporated in the main text in Section 7.
32
Annex 5: Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable
33
Annex 6: List of Supporting Documents
World Bank, Doing Business Reports 2013, 2014, 2015 and 2016.
World Bank, Doing Business Profile 2016.
World Bank, April 2014 and June 2015. Lesotho Economic Update, Africa Poverty
Reduction and Economic Management – AFTP1.
World Bank, May 2014. Lesotho - Review of the National Information System for Social
Assistance (NISSA), Report No. ACS14183.
World Bank, December 17, 2013. Lesotho- ICR for Private Sector Competitiveness and
Diversification Project, Report No. ICR00002957.
World Bank, March 2016, Lesotho: Aid Memoire for Second Competitiveness and
Economic Diversification Project.
World Bank, September 29, 2015, Lesotho: Credit for a Social Assistance Project, Report
No. PAD1377
World Bank, October 6, 2014. Letter to Minister of Development Planning and Minister
of Finance from WB Country Director.
World Bank, June 2, 2016, Country Partnership Framework, Report No. 97823-LS
World Bank, June 25, 2015, Lesotho: Systematic Country Diagnostic
World Bank (2013) LESOTHO: A Safety Net to End Extreme Poverty and World Bank
(2015), A Lesotho: Review of Public Assistance and the OVC Bursary Scheme; and
World Bank (2015), Lesotho Old Age Pensions Program Diagnostic.
Aide memoire of Joint Annual Review of General Budget Support, March 31-April 1,
2014.
UNCEF/EU, April 2014, Review of the National Information System for Social
Assistance (NISSA) in Lesotho. Analysis of NISSA and current PMT, Carraro, L. and
Marzi, M. (2014).
IMF, various Article IV documents.
34
Annex 7: The Status of Prior Actions and Triggers
Prior Actions Status The Government through its Ministry of Trade and
Industry, Cooperatives and Marketing, submitted the
Industrial Licensing Bill 2012 to its Parliament.
Complete
The Government has, through: (a) its Ministry of
Finance, submitted the revised Fiscal Year (“FY”)
2009/10 public accounts to the Office of the Auditor
General; and (b) its Office of the Auditor General,
published the audit report on the FY2008/09 public
accounts.
Complete
The Government has, through its Ministry of Finance,
established the Public Procurement Tribunal and
appointed its members.
Complete
The Government has, through its Ministry of Social
Development, developed and adopted the National
Information System for Social Assistance (“NISSA”)
and is piloting said NISSA through the Child Grants
Programme.
Complete
The Government has, through its Ministry of
Development Planning, submitted to the Ministry of
Finance a FY 2013/14 Budget Framework Paper for the
Bureau of Statistics.
Complete
Triggers for DPO2 Status The Government through the Lesotho Land Authority
Administration has submitted to its Parliament
amendments to the Land Act of 2010 to facilitate the use
of sub-leases. In particular, the amendments will define
the rights of a sub-lessee.
Incomplete
The Government through the Ministry of Tourism,
Environment and Culture has issued regulations and
guidelines to require environmental impact assessments
only for construction projects in industries with high
environmental risks.
Complete
The Government, through its Ministry of Trade and
Industry, Cooperatives and Marketing, issued the
regulations to implement the Industrial Licensing Bill
and rolled out OBFC services in Maputsoe.
Complete
The Government through its Lesotho Revenue Authority
has completed the Preferred Trader Program Pilot and
reported on recommendations for implementation of the
full scheme.
Complete
The Government through its Ministry of Public Service
has reconciled the establishment list with the payroll in
at least one ministry.
Incomplete
The Government through the Office of the Auditor
General publishes the audit report on the FY2009/10
public accounts.
Complete
The Government through its Ministry of Finance has
issued the regulations detailing responsibilities,
procedures, controls and systems covering all stages of
the budget cycle (as outlined in the PFM Act of 2011)
and developed training needed to implement them.
Incomplete
The Government through its Ministry of Finance
publicizes all tenders and contracts awarded above
M100,000 on the web and in printed media.
Partially complete
35
Through its Ministry of Social Development, increase
the coverage of the NISSA reached through the Childs
Grants Programme by an additional 5,000 households.
Complete
The Government through the Bureau of Statistics has
published the Definitions and Concepts Manual and has
adopted the 2008 System of National Accounts
methodology.
Complete
The Government through its Ministry of Home Affairs
has rolled out the National ID and covers at least 10
percent of the population.
Complete
Triggers for DPO3 Status The Government through the Lesotho Land Authority
Administration has submitted to its Parliament the
Sectional Titles Bill.
Complete
The Government introduces streamlined procedures to
better integrate approvals from the various utility bodies
prior to obtaining building permits from the Maseru City
Council.
Partially complete
The Government, through its Ministry of Trade and
Industry, Cooperatives and Marketing, submitted to its
Parliament the Business Registration Bill.
Partially complete
The Government started to roll out the Preferred Trader
Program and has adopted an Integrated Border
Management Strategy.
Complete
The Government through its Ministry of Public Service
has: i) reconciled the establishment list with the payroll
in at least two additional ministries; and ii) adopted an
action plan based on a study on civil service
restructuring.
Incomplete
The Government through the Office of the Auditor
General publishes the audit reports on the FY2010/11
and FY2011/12 public accounts.
Complete
The Government has taken actions to implement the
recommendations of the Audit Report to the FY 2008/09
public accounts.
Complete
Reconciled quarterly expenditure reports are produced
from IFMIS to monitor budgetary targets. Incomplete
The Government implements an annual mid-term budget
review. Incomplete
The Government through its Ministry of Finance
monitors the waivers that allow non-competitive
bidding.
Complete
The National ID System covers at least 50 percent of the
population. Partially complete
36
MAP IBRD 33434R1
37