Document of

The World Bank

Report No: [TBA]

Restructuring PAPER

ON A

PROPOSED Project restructuring

of

Afghanistan ICT Sector Development Project

APRIL 26, 2011

TO THE

GOVERNMENT OF THE ISLAMIC REPUBLIC OF AFGHANISTAN

February 22, 2012

ABBREVIATIONS AND ACRONYMS

GOIRA / Government of the Islamic Republic of Afghanistan / PDO / Project Development Objective
ICT / Information and Communication Technologies / PICU / Program Implementation and Coordination Unit
MCIT / Ministry of Communications and Information Technology / PMS / Project Management Specialist
M&E / Monitoring and Evaluation / PMO / Project Management Office
MOF / Ministry of Finance
Regional Vice President: / Isabel Guerrero
Country Director: / Josephine Bassinette
Sector Director:
Sector Manager: / Jose Luis Irigoyen
Philippe Dongier
Task Team Leader: / Tenzin Dolma Norbhu

Afghanistan

Afghanistan ICT Sector Development Project

P121755

Contents

Page

A. SUMMARY 4

B. PROJECT STATUS 4

C. PROPOSED CHANGES 4

Afghanistan ICT Sector Development Project

RESTRUCTURING PAPER

A.  SUMMARY

  1. This Restructuring Paper proposes changes to the Financing Agreement for the Afghanistan ICT Sector Development Project (“Project”). The proposed changes will enable the adoption of an incentive-payment program for selected Project-interfacing employees of the Ministry of Communications and IT (MCIT). The incentive program will enable capacity building of the selected MCIT employees who support the Project.
  2. Changes will be made to the Financing Agreement in the Project Description (Schedule 1, Part D) and in the definition of Incremental Operating Costs to the proposed incentive payments. Furthermore, selection of individual consultants will be added as a procurement method.

B.  PROJECT STATUS

  1. The Project was declared effective on June 14, 2011. Implementation of prioritized activities has been launched. The first supervision mission took place in December 2011. At the time of restructuring, the Project Management Office (PMO) has been activated and key positions staffed. Contracts are being negotiated under the backbone connectivity component. Detailed design of the innovations support program is being finalized and various technical assistance activities to support implementation of all three components are underway.

C.  PROPOSED CHANGES

Description of proposed changes

  1. The Project Implementation and Coordination Unit (PICU) has proposed an incentive-payment program as part of project management capacity building activities for Project-interfacing employees of the MCIT.
  2. Between three to eight employees in each of specific Departments of MCIT, including Procurement, Finance, Planning, and ICT, will be providing dedicated support to the implementation of the Project. As part of sustainable capacity development within MCIT, these Project-interfacing employees will be trained by the PMO and by consultants hired under the Project. The staff will also be required to seek training, under their own arrangements, on topics such as English language skills, accounting procedures, administration, management, computer operation, and project management.
  3. The staff selected for these capacity-building activities will be required to work additional hours, undertake training, and organize logistics to accommodate their extended schedules. Consequently, the PICU has proposed an incentive as part of the capacity-building program.
  4. The proposed Capacity Building Incentive provided to each staff included in the program will depend on each staffer’s level of responsibility and the involvement in Project implementation. In line with instructions from the Ministry of Finance, the amount of incentive paid in each case will be less than the original salary of the selected staff.[1] About 25 staff will be included in the program, selected through nomination by the PICU. The list of selected staff may be modified by the PICU on a quarterly basis, with the concurrence of the World Bank.
  5. The incentive will be paid to the selected staff from Component 4 (Project Management), sub-component on capacity building. Estimated budget for capacity building under Component 4 is US$400,000. This allows for incentives for capacity building to total about US$100,000 per year, or about US$8,000 per month.
  6. The PICU and PMO will strictly supervise the capacity-building program and the performance of each candidate. Incentives will be paid to selected staff only after monthly reports are approved by the Chairman of PICU, duly recommended by the Head of the PMO.

Justification for financing under the Project

  1. The team has analyzed the proposed incentive-payments program. There is precedence for incentive payments in other projects in the Afghanistan portfolio (Emergency Irrigation Rehabilitation project ( Cr 3845 and Grants H 284, H 398 , H 498); the Irrigation Restoration and Development Project ( IDA Grant H 681) and the Water Resources Development Technical Assistance Project financed by ARTF grant TF 93637 ). The proposed program will support overall capacity building for MCIT staff and will support high-quality Project Management. The Project is being implemented by MCIT with support from a number of Project-interfacing staff. The participation of these staff is critical for timely implementation of the Project, and capacity will need to be improved to ensure that MCIT will be able to manage Project activities. The limited capacity of the mid-level staffers of MCIT was identified as a concern during Project preparation, and hence this capacity development arrangement is proposed as a means to ensure successful Project implementation. The incentive payments will enable high-performing staff to maximize their contribution to the Project by allowing them to seek new training and take on an increased workload. The proposed program does not change or impact the Project Development Objectives.
  2. The program will be implemented over the limited Project period, thus allowing for a credible exit strategy for the arrangement. Project-interfacing MCIT staffs who receive the incentive payment will be made aware of the limitation of the payment in terms of duration. Moreover, given the focus of the payment on encouraging capacity building, the staff will have the opportunity for promotions and greater pay as the arrangement winds down. The incentive payments will be essential to motivate the Project-interfacing staff to work additional hours, seek out and pay for the required training programs to allow them to contribute towards the Project, and will raise the standard of contributions in a manner that ordinary arrangements cannot provide. Absent this incentive, the participating staff will have no support for their enhanced capacity-building or performance.
  3. . The Government has confirmed, through both the PICU and MOF approvals for the proposal that the program will not lead to unmanageable distortions in pay policy.
  4. No reallocation of funds is required.

Proposed changes to the Financing Agreement

  1. Revision to Schedule 1, Part D: Provision of implementation support to MCIT by: (i) supporting the Project Management Office (PMO) in recruiting staff and acquiring equipment for the office operation; (ii) building capacity of staff in Project management and performance-based incentives for Project interfacing MCIT staff.
  2. Revision to Appendix, Section I, Definition of Operating Costs: “Operating Costs” means reasonable expenditures incurred by the PMO on account of Project management, supervision, monitoring and reporting including banking services, costs of consumables, in country travel and per diem allowances for Project staff conducting supervision, office utilities and supplies, communication costs, fuel and maintenance costs for vehicles, advertising expenses, operation and maintenance of equipment, which costs would not have been incurred absent the Project, performance based allowances to project interfacing MCIT staff, but excluding salaries of civil servants.
  3. Revision to Schedule 2, Section III C 2, Other Methods of Procurement of Consultants’ Services to also include the use of Selection of Individual Consultants.

6

[1] The Ministry of Finance has already given an official No Objection Letter regarding the proposed incentive program to MCIT through letter BS1-4632 dated 14/03/1390.