Use of Country Systems to Meet WB Safeguard Policies

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Use of Country Systems to Meet WB Safeguard
Policies
Agi Kiss Zagreb, May 7, 2009
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Operational Policy/Bank Procedure 4.00

• Piloting the Use of Borrower Systems to Address
  Environmental and Social Safeguard Issues in
  Bank-Supported Projects
• Covers all fiduciary aspects Financial
  Management, Procurement, Safeguards

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OP 4.00 key points

• Definition use of the countrys national,
  sub-national, or sectoral implementing
  institutions and applicable laws, regulations,
  procedures for an activity being supported by the
  Bank
• Can refer to central government, sub-national
  governments or specific agencies/entities or
  utilities (e.g., in infrastructure) 
• To be used where, in the Banks judgment, the
  countrys system would materially satisfy the
  objectives and operational principles of the
  applicable Bank policies

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Objectives of UCS

• Greater efficiency move beyond
  project-by-project approach accelerate project
  preparation and appraisal facilitate
  harmonization, reducing transaction costs imposed
  by requirements of multiple donor systems
• Greater development impact improve policies,
  procedures, practices for all investment, not
  just WB-financed encourage and buiod country
  capacity
• Enhance country ownership Improve nature of
  relationship and strengthen community of interest
  between Bank and Borrower (particularly part of
  the MIC agenda)

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UCS History

• UCS already in place for years for financial
  management and for procurement through national
  competitive bidding
• Sept 2004, Management proposal to Board for
  pilot program extending UCS to environmental and
  social safeguards and to international
  competitive bidding (ICB) procurement and
  international selection o f consultants where,
  in the Banks judgment they are equivalent to
  the Banks policy framework applicable to the
  operation, and where relevant country
  implementation practices, capacity, and track
  record are satisfactory.

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UCS History (cont.)

• October 2004 Issues Paper --focusing on UCS for
  ES SG-- posted on WB website
• Followed by face-to-face consultations with
  governments, bi/multilateral development
  partners, NGOs, private sector in all 6 Region
• Endorsed by borrowers and devt partners
• NGOs more cautious emphasized need to ensure no
  dilution of SG policies or WBs responsibility
  for due diligence

Expanding the Use of Country Systems in
Bank-supported Operations Issues and Proposals
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Following consultations, Issues Paper and OP 4.00
revised to clarify

• No certification of country systems, just use
• No commitment to using country systems for every
  operation in a given country. Only for specific
  aspects of operations where country systems
  (including implementation capacity) are judged
  acceptable
• No dilution of Bank policy or performance
  standards
• No ignoring risks. Instead, risks will be
  identified and the documentation will set out how
  they would be addressed/mitigated

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UCS History (cont.)

• February 2005 First UCS pilot program for SG
  mandated by WB Board (12 pilot projects)
• 12 pilot projects identified, including
• Romania Water, Sanitation and Flood Protection
  Project and Roads and Highways, Railways
  Project
• Others in Bhutan, Ghana, Jamaica, Tunisia,
  India, South Africa, Uganda, Morroco
• OP 4.01 piloted in all projects OP 4.11 in four,
  OP 4.04 and OP 4.12 in one country each

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UCS History (cont.)

• November 2007 Evaluation Report on first 2
  years based on 7 active pilots main findings
• Limited uptake -- project-by-project approach
  very limited in impact (12 projects in portfolio
  of 1600)
• High transaction costs upfront preparation
  costs are prohibitive (averaged 104,000 extra
  expenses)
• Promising approach for OP 4.01 and OP 4.11 less
  so for OP 4.12 due to fundamental gaps between
  national laws and WB OP
• Gap-filling measures have policy and practical
  benefits beyond the project
• Too early to judge costs, effectiveness of
  implementation, supervision
• To expand program, will need clear and
  consistent management signals

Evaluation of the initial phase of the pilot
program for use of country systems for
environmental and social safeguards lessons
learned and management proposal for an
incremental scale up of the program
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Nov 2007 Evaluation Report - selected
recommendations

• Scale up to sub-national or country level, as
  free-standing exercise not linked to a project.
  Focus SDR on overall systems, not specific
  implementing agencies. Apply results to selected
  projects with gap-filling, capacity building as
  needed
• In large country with diverse systems and
  capacity, take sub-national approach (provincial,
  state, municipal, sectoral, level institutions)
• Select further pilots based on county interest,
  lending opportunities in pipeline, high level of
  mutual trust between WB and Borrower
• Use Country Environmental Assessments, Strategic
  Environmental Assessments, etc. to identify
  candidate countries, programs
• Clarify benefits of UCS to Borrowers and staff
  and provide clear roadmap to accessing these
  benefits
• For MICs with well-developed systems (e.g. new EU
  members) move from SDR to full application of UCS
  without intermediate pilot project step. For new
  EU members, collaborate with EC, EBRD, EIB on SDR
• Distinguish between risk of harm and reputational
  risk to WB (latter is not Borrowers
  responsibility)

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UCS History (cont.)

• January 2008 Board approved extension of UCS
  pilot program for SG, with scaling up from
  project level to country level

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UCS Approach 2 Part AnalysisSafeguard
Diagnostic Review (SDR)

• Equivalence Borrowers env soc. SG system is
  considered equivalent to WBs if borrowers
  system is designed to achieve objectives and
  adhere to principles outlined in Annex A not
  necessarily 11 match in methodology
• Acceptability Assessment of Borrower's
  implementation practices, track record, and
  capacity (assessment carried out only in areas
  where equivalence analysis was positive)

UCS may cover one or more of the OPs
Acceptability analysis limited to OPs selected
based on Equivalency analysis
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Steps in UCS Analysis

• Identify relevant national/sub-national or other
  implementing entities
• Review national/sub-national/corporate policies,
  laws, and regulations applicable to the project
  and Bank policies triggered or applicable
• Compare the objectives and operational principles
  that underpin Bank policies, with country systems
  (rules, regulations, practices, and capacity of
  relevant institutions) to determine
  acceptability. Identify any actions needed to
  fill gaps.
• Assess country system and implementation agency
  experience and track record. Identify strengths
  and weaknesses, and agree with borrower on any
  actions needed to fill gaps.

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UCS Approach Gap-filling

• If SDR identifies significant gaps between
  borrower policies or capacities and SG
  policies/principles
• Borrower indicates commitment to fill gaps
• Borrower commitments are incorporated in Equ/Acc
  analysis
• Legal documents indicate gap filling to be
  completed prior to initiating relevant activities

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Illustrative Draft Framework for Assessing EA
Systems
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CROATIA UCS Pilot
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preliminary thoughts

• Take a comprehensive view of Country Systems (not
  just EIA law)
• e.g., OP 4.01 requirement for analysis of
  alternatives analysis might be addressed
  through national spatial planning process and
  Strategic Environmental Assessment law
• e.g., OP 4.01 requirement for EMP might be
  addressed through legal permitting process
  (location, construction and operating permits)
• For consultation process, emphasis on meaningful,
  informed consultation not specific steps
• Attempts to harmonize large body of legislation
  with EU in short time frame may raise
  Acceptability issues

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Bye Now