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  1. 1. Title of presentation/theme Project Implementation & Financial Management Dec 2010
  2. 2. <ul><li>This presentation is based on two guiding principles . . . </li></ul>Overview <ul><ul><li>1. INCREASE UNDERSTANDING of roles & responsibilities in project implementation </li></ul></ul><ul><ul><li>& </li></ul></ul><ul><ul><li>2. Maximize project IMPACT to benefit rural poor </li></ul></ul>Guiding Principles
  3. 3. <ul><li>To Demystify Implementation & Supervision, with particular respect to Financial Management </li></ul><ul><li>It is expected to provide you with: </li></ul><ul><ul><li>A sound platform to engage in implementation </li></ul></ul><ul><ul><li>To share multiple materials, perspectives & ideas </li></ul></ul><ul><ul><li>An opportunity to refresh skills & develop new ones </li></ul></ul><ul><ul><li>Some sections may seem too detailed, too slow, or too cursory — </li></ul></ul><ul><li>keep going! </li></ul>ESA FM Resource Pack Objectives Overview
  4. 4. <ul><li> . . .and the pack is expected to achieve various outcomes </li></ul>ESA FM Resource Pack Outcomes <ul><ul><li>Provide a common foundation for people’s work in supervision—we expect that you will continue to build on this foundation </li></ul></ul><ul><ul><li>Provide in-depth resources & materials that should support different roles </li></ul></ul><ul><ul><li>Guidance on where to find additional support </li></ul></ul><ul><ul><li>A measure of this pack’s success will be how many people seek out additional assistance, guidance & counsel </li></ul></ul><ul><ul><li>Empirical evidence shows that there is a high correlation between excellent fiduciary standards & practices and overall implementation progress & results </li></ul></ul>Overview
  5. 5. Don’t get overburdened - organize beforehand for Implementation! Overview
  6. 6. <ul><li>“ Whenever you are in doubt…recall the face of the poorest and weakest man who you have seen and ask yourself, if the step you contemplate is going to be of any use to him? Will he gain anything by it? Will it restore him to control over his own life and destiny?...Then you will find your doubts and your self melting away.” </li></ul><ul><li>Mahatma Gandhi </li></ul>Introducing Project Supervision
  7. 7. <ul><li>IFAD Action Plan is consistent with changes in international development architecture from Paris Declaration of Aid Effectiveness & “One UN” agenda . . . </li></ul><ul><ul><ul><li>Harmonization & alignment </li></ul></ul></ul><ul><ul><ul><li>Move towards: COUNTRY PROGRAMS, that use NATIONAL SYSTEMS </li></ul></ul></ul><ul><ul><ul><li>Systematic support for nationally owned strategies </li></ul></ul></ul><ul><ul><ul><li>Calls for more coordinated & predictable actions among development partners </li></ul></ul></ul><ul><ul><ul><li>Increased development effectiveness & impact </li></ul></ul></ul>IFAD Action Plan  Introducing Project Supervision
  8. 8. <ul><li>What is development effectiveness & impact? * </li></ul><ul><li>For poor rural men and women to have better & sustainable access to: </li></ul><ul><ul><ul><li>Natural resources (land and water) </li></ul></ul></ul><ul><ul><ul><li>Improved agricultural technologies </li></ul></ul></ul><ul><ul><ul><li>A range of financial services </li></ul></ul></ul><ul><ul><ul><li>Transparent & competitive agricultural input & output markets </li></ul></ul></ul><ul><ul><ul><li>Rural off-farm opportunities </li></ul></ul></ul><ul><ul><ul><li>Pro-poor local & national policy processes, in which the poor can participate </li></ul></ul></ul><ul><ul><ul><li>*IFAD’s Strategic Framework, paragraph 6 </li></ul></ul></ul>  Introducing Project Supervision
  9. 9. <ul><li>What are the outcomes of development effectiveness and impact?* </li></ul><ul><ul><ul><li>Direct : increased incomes & enhanced food security for rural poor </li></ul></ul></ul><ul><ul><ul><li>Indirect : country capacities strengthened – </li></ul></ul></ul><ul><ul><ul><ul><li>Pro-poor policy framework. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Pro–poor efficient & accountable Government Institutions </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Strengthened rural poor organizations & institutions </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Increased private sector involvement in rural economy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Enhanced national & local implementation capacity </li></ul></ul></ul></ul><ul><ul><ul><li>*IFAD’s Strategic Framework, paragraph 7 </li></ul></ul></ul>  Introducing Project Supervision
  10. 10. <ul><li>Supervision is key instrument for Impact, Sustainability & Effectiveness/efficiency of IFAD-funded projects </li></ul><ul><li>Legal basis for policy: IFAD’s Supervision & Implementation Support Policy was approved by the Executive Board (EB) (December 2006) </li></ul><ul><li>EB Decision to fully supervise projects (December 2006) </li></ul><ul><li>Supervision Guidelines – prepared to facilitate implementation & guide supervision practices in IFAD </li></ul><ul><li>Training of all levels of staff </li></ul>IFAD is implementing IFAD supervision . . . Enhance IFAD’s development effectiveness & IMPACT Introducing Project Supervision
  11. 11. <ul><li>Improved results under IFAD supervision </li></ul><ul><ul><li>Strengthen direct dialogue with stakeholders at country level </li></ul></ul><ul><ul><li>Address IFAD’s priority concerns </li></ul></ul><ul><ul><li>Create a learning loop between project implementation & design </li></ul></ul><ul><li>Evaluations of IFAD’s effectiveness & impact in the field indicated that : </li></ul><ul><ul><li>Supervision = “ outmoded and unsuited ”; costs are increasing (despite fewer projects) </li></ul></ul><ul><ul><li>Reduced chance for IFAD to be proactive </li></ul></ul><ul><ul><li>Absence of systematic learning & knowledge management </li></ul></ul>Rationale IFAD had several rationales to accelerate the move to implement full supervision . . . Introducing Project Supervision
  12. 12. <ul><li>Based on the following elements: </li></ul><ul><li>Flexible supervision arrangements </li></ul><ul><li>IFAD’s direct responsibility for management of full supervision function </li></ul><ul><li>Main supervision modalities. </li></ul><ul><li>Direct and Full IFAD supervision , comprising different “blends” of: </li></ul><ul><ul><li>Headquarters staff </li></ul></ul><ul><ul><li>Country presence staff & contracted service providers </li></ul></ul><ul><ul><li>Reputable international/regional/national institutions & local partners </li></ul></ul><ul><li>2. Supervision by CIs , including Direct Supervision, being reduced, but still required in some cases, but with better-specified roles for IFAD & CIs with active IFAD participation </li></ul><ul><li>In all cases: </li></ul><ul><ul><ul><li>Substantial strengthening of implementation support function </li></ul></ul></ul><ul><ul><ul><li>IFAD responsible for Supervision in any modality </li></ul></ul></ul>Supervision Policy Introducing Project Supervision
  13. 13. <ul><li>Supervision – Administration of loans for the purpose of its disbursement & Supervision of the implementation of the project; ensures compliance with loan covenants, procurement, promoting economy & good governance </li></ul><ul><li>Implementation Support – focuses on development impact, based on assessment of progress, embedded in an effective M&E system, joint identification of problems, agreement on suitable actions to achieve project’s development objectives, respecting safeguards </li></ul><ul><li>Cooperating Institution or Full IFAD Supervision = whatever the modality - Supervision is IFAD’s fiduciary responsibility. </li></ul>Supervision Definitions     Introducing Project Supervision
  14. 14. <ul><li>1: Institutional </li></ul><ul><li>IFAD takes direct responsibility for supervision </li></ul><ul><li>2: Human </li></ul><ul><li>Adequate financial & human resources must be mobilized </li></ul><ul><li>Strengthen capacities & processes within departments/ divisions at all levels, including dedicated training programme </li></ul><ul><li>3: Financial </li></ul><ul><li>Most incremental costs covered by reduced CI payments </li></ul><ul><li>Some incremental costs to be incurred </li></ul>Operational Implications of the Supervision Policy Introducing Project Supervision
  15. 15. Project Cycle     Introducing Project Supervision
  16. 16. <ul><li>Result-based COSOP – Main instrument to pursue Action Plan goals & manage development results at country level </li></ul><ul><li>COSOP should describe: </li></ul><ul><ul><li>Supervision modalities to be used & why they are most appropriate. </li></ul></ul><ul><ul><li>How Supervision will improve impact, knowledge management, learning & partnerships </li></ul></ul><ul><ul><li>How projects operate within specific country context </li></ul></ul><ul><li>Country Programme Management Team established by CPM-COSOP stakeholder members from within IFAD (e.g.: legal, finance) & in-country (e.g.: Minister of Finance, Agric., civil society) </li></ul>Supervision of the Country-Level Engagement     Introducing Project Supervision
  17. 17. <ul><li>Government (executing agency) </li></ul><ul><ul><li>Ensure development effectiveness & impact </li></ul></ul><ul><ul><li>Overall responsibility for project execution & implementation in accordance with loan agreement, letter to the borrower, amendments </li></ul></ul><ul><ul><li>Ensure alignment with national strategies & Coordination with other development efforts </li></ul></ul><ul><ul><li>Ensure fiduciary oversight , proper use of all funds </li></ul></ul><ul><ul><li>Approval & supervision of AWPB </li></ul></ul><ul><ul><li>Participate in supervision missions </li></ul></ul><ul><ul><li>Use of government systems consistent with IFAD guidelines </li></ul></ul>Responsibilities during Project Supervision Introducing Project Supervision
  18. 18. <ul><li>Project </li></ul><ul><ul><li>Ensure development effectiveness & impact </li></ul></ul><ul><ul><li>Project implementation in accordance with financing agreement, letter to the borrower </li></ul></ul><ul><ul><li>Develop AWPB , seek approval from Government & IFAD, and operate within its agreed parameters </li></ul></ul><ul><ul><li>Set up procurement methods utilizing Government systems, consistent with IFAD Guidelines </li></ul></ul><ul><ul><li>Develop appropriate financial, M&E other systems to ensure proper impact, operational, financial & administrative information is available </li></ul></ul><ul><ul><li>Responsible for proper use of all funds utilized by projects </li></ul></ul><ul><ul><li>Organise supervision missions with IFAD , prepare reports beforehand, provide all pertinent information </li></ul></ul>Responsibilities during Project Supervision     Introducing Project Supervision
  19. 19. <ul><li>IFAD </li></ul><ul><ul><li>Ensure development effectiveness & impact </li></ul></ul><ul><ul><li>Ensure harmonization & alignment of IFAD’s actions in country as per Paris declaration on Aid Effectiveness </li></ul></ul><ul><ul><li>Fiduciary responsibility & “general rules of engagement” for proper use of IFAD financing - on all types of supervision modalities – according to IFAD legal documents & AWPB </li></ul></ul><ul><ul><li>Flexibility to reach development impact </li></ul></ul><ul><ul><li>Provide implementation support </li></ul></ul>Responsibilities during Project Supervision     Introducing Project Supervision
  20. 20. <ul><li>CPM, Country Presence & Support Staff </li></ul><ul><li>Ensure development effectiveness & impact </li></ul><ul><li>Gather information & provide technical analysis </li></ul><ul><li>Listen to borrower, stakeholders & solve problems, or convey messages to management. Sometimes good reasons exist for NOT doing what IFAD wants </li></ul><ul><li>Ensure solutions serve broadest range of interests </li></ul><ul><li>Fiduciary oversight, “no objections” to use of financing proceeds </li></ul>Who plays what role in Supervision at IFAD? (1)  Introducing Project Supervision
  21. 21. <ul><li>Country Presence </li></ul><ul><li>Ensure development effectiveness & impact </li></ul><ul><li>Gather information from borrower & stakeholders; report & propose solutions to CPM </li></ul><ul><li>Carry out technical analysis on portfolio & COSOP performance and provide trouble-shooting </li></ul><ul><li>Within CPMT, represent IFAD in Donor/ Government fora to develop & strengthen partnerships, KM & policy dialogue </li></ul><ul><li>Fiduciary oversight – monitor implementation of AWPB & general compliance with IFAD guidelines </li></ul>Who plays what role in Supervision at IFAD? (2)      Introducing Project Supervision
  22. 22. Who plays what role in Supervision in IFAD? (3) <ul><li>Management </li></ul><ul><li>Ensure development effectiveness & impact </li></ul><ul><li>Approves Supervision plan & budget </li></ul><ul><li>Take account of macroeconomic, social & political factors, as well as technical & economic aspects - for country & within the region </li></ul><ul><li>Make decisions based on information from staff & others </li></ul><ul><li>Post-mission letter to Government </li></ul><ul><li>Supervision Quality </li></ul><ul><ul><li>Managers comment on quality of Supervision </li></ul></ul><ul><ul><li>Annual Portfolio Review process: Department & IFAD-wide </li></ul></ul>Introducing Project Supervision
  23. 23. <ul><li>Always keep project development effectiveness & IMPACT - benefiting rural poor - at the forefront </li></ul><ul><li>Flexibility ! Learn rules and regulations so know how & where to be flexible . </li></ul><ul><li>Learn from past experiences </li></ul><ul><li>Concentrate efforts on performance improvement & demonstrable development impact–adopt a problem-solving approach </li></ul><ul><li>Ensure project is driven by beneficiary demand , to develop stakeholder commitment </li></ul><ul><li>Promote a participatory approach to implementation, problem solving, innovation, sharing information </li></ul><ul><li>Establish clear objectives, guidelines, expectations reflected in AWPB </li></ul><ul><li>Maintain IFAD’s fiduciary oversight </li></ul>How to get best results from Supervision    Introducing Project Supervision
  24. 24. <ul><li>Monitor progress of the projects against targets, development objectives & indicators </li></ul><ul><li>Monitor procurement made & disbursement of funds </li></ul><ul><li>Review effectiveness of financial management system and reports </li></ul><ul><li>Review compliance with loan covenants </li></ul>General Principles (1) Supervising Project Implementation
  25. 25. General Principles (2) <ul><li>Assess risks and problems to successful implementation & sustainability, & offer practical solutions </li></ul><ul><li>Review the continued relevance of the project to the recipient country, beneficiary, IFAD development priorities; modify if appropriate </li></ul><ul><li>Assess implementation quality, safeguard adherence & IMPACT! </li></ul><ul><li>Do not lose sight of IMPACT on rural poor </li></ul>Supervising Project Implementation
  26. 26. <ul><li>Primary objective of financial management process: </li></ul><ul><ul><li>To optimise financial and economic benefits from investment </li></ul></ul><ul><ul><li>It includes multiple processes including financial, management, assets, cash & funds accounting; financial reporting; internal controls; internal audit; external audit </li></ul></ul><ul><ul><li>Priority to use national systems consistent with IFAD guidelines </li></ul></ul>Objective Supervising Project Implementation : Financial Management
  27. 27. <ul><li>FIDUCIARY ROLE: What is it? </li></ul><ul><li>“ Fiduciary” – A person who occupies a position of power and confidence with regards to the property of another that the law requires him/her to act solely in the interest of the person whom he/she represents. It is illegal for a fiduciary to misappropriate money for personal gain. </li></ul><ul><ul><ul><ul><ul><li>Derived from Roman Law, Encyclopedia Britannica </li></ul></ul></ul></ul></ul>   Supervising Project Implementation : Financial Management
  28. 28. <ul><li>FIDUCIARY RESPONSIBILITY </li></ul><ul><li>How much power and confidence? </li></ul><ul><li>How much trust? </li></ul><ul><li>Too much trust could be risky; but distrust could be very expensive too Striking the right balance is the challenge </li></ul>Supervising Project Implementation : Financial Management
  29. 29. <ul><li>IFAD Loan Documents </li></ul><ul><li>IFAD Procedures and Guidelines (Handbook/ LTB) </li></ul><ul><li>Government procedures </li></ul><ul><li>Project Implementation Manual </li></ul><ul><li>Project Financial Management Manual </li></ul><ul><ul><li>Internal Controls </li></ul></ul><ul><ul><li>Project Accounts </li></ul></ul><ul><ul><li>Separate Bank Accounts </li></ul></ul><ul><ul><li>Annual Audit of Accounts </li></ul></ul>Reference Documents Supervising Project Implementation : Financial Management
  30. 30. Thank You