November 29, 2006

Madagascar

Ownership

  1. Partners have operational national development strategies
  1. Coherent long-term vision with medium-term strategy derived from vision
  1. Madagascar Naturellement contains a long-term vision through 2015 focused on strengthening rural and industrial development, making health services and education accessible to the population and protecting the environment. The visionis included as one of the pillars of the Politique Générale de l’Etat2005adopted by the Council of Ministers and the President of the Republic in late 2004.The visionpriorities are reflected in anupdated version for 2005-06of the Document de Stratégie pour la Réduction de la Pauvreté (DSRP),Madagascar’s first Poverty Reduction Strategy (PRS), which also embeds aten-year long-term vision.
  2. The DSRP incorporates a medium-term strategy through 2006 which is subject to annual updates and has been refined on the basis of the Politique Générale de l’Etat 2005.In November 2006, the Government launched a second PRS,[1]the Madagascar Action Plan (MAP)covering the 2007-12 period,thatwill address development challenges in line with the long-term vision outlined in Madagascar Naturellement.
  3. The Government has developed a number of sector strategies which are integrated into the MAP. For example,it has prepared a National Environmental Action Plan, as well as strategies in rural development, health, primary education, rural water, transport, and HIV/AIDS.It is finalizing other sectoral medium-term development plans, including a Risk Management and Social Protection Strategy, which is expected to be completed in 2006. In the education sector, the Government plans to complete a revision of the education strategy in linewith the MAP, following a consultation process that has included stakeholders and both regional and district administrative units.A strategy for post-primary education is expected to be completed in early 2007. The Government has rationalized and integratedinto the MAPtheannual “business plans” for sector ministries that it has been preparing since 2004.
  4. Regional Development Plans were developed by all the Regions in early 2005 in line with the DSRP, and the Government has integrated them into the MAP.
  1. Country specific development targets with holistic, balanced, and well sequenced strategy
  1. Building on DSRP targets, the MAP identifies ambitious goalsfor 2012 which are linked to the MDGs but are under further refinement and costing. In the education sector, costing for primary education is updated on an annual basis.
  2. The MAP retains the focus on some of the priority areas identified in the DSRP,such as the need to improve governance and to foster environmental protection. Specifically, the MAP focuses on eight priority areas: (i) good governance,(ii) educational transformation,(iii) health and family planning,(iv) infrastructure,(v) rural development, (vi) private sector development, (vii) environment, and (viii) national solidarity. It addresses more fully the critical cross-cutting issue of HIV/AIDS.
  1. Capacity and resources for implementation
  1. Continued improvements in the budget process are expected to help shape public expenditure around MAP priorities. The Government has prepared a 2006 Priority Action Plan, building on the successful implementation of the 2004 and 2005 Priority Action Plans, which aims at improving budget preparation and execution through continued public financial management reforms. The 2006 Priority Action Plan integrates several key recommendations from a 2005 Public Expenditure Review including the need to develop a budget framework paper, to improve the budget preparation calendar, to strengthen controls for expenditures and commitments and to prepare budget execution reports. The Government has been producing periodic reports to monitor execution rates for the ministries of education, health, agriculture and fisheries, forestry, environment and justice since 2003, and it aims to produce monthly accounts of budget execution at both the central and regional levels.
  2. The Government made significant efforts to improve the links between DSRP priorities and the budget, and it is committed to establishing strong links between the MAP and the budget.Previous efforts to introduce performance-based budgeting were not fully successful.Program budgets, introduced in 2005 based on the DSRP,are expected to be fully operational in 2007, and they are integrated into the MAP. A draft MTEF for 2006-08 informed the Loi des Finances2006, which allocates resources to DSRP priority sectors. For example, the 2006 budget allocates 20 percent of resources to education, 18 percent to infrastructure, 7.1 percent to health, 5 percent to agriculture and 1.3 percent to justice.The Government has finalizedin June 2006 its update of a health sector MTEF, first prepared in 2005, to cover the period 2007-09.
  3. Implementation capacity needs and significant regional disparities have in the past been the source of important bottlenecks in achieving development results. In addition, public finances are heavily centralized with about 95 percent of revenues and expenditures managed by central authorities, resulting in weak financial capacity at the communal and regional levels. The Government is making efforts to improve this capacity, by establishing a Local Development Fund as the main instrument for channeling funds to sub-national levels.
  4. Madagascar is eligible for debt-relief under the Multilateral Debt Relief Initiative totaling US$2.4 billion, or 43 percent of GDP. The Government has plans to allocate the bulk of these resources toward priority poverty-reduction spending programs.
  1. Participation of national stakeholders in strategy formulation and implementation
  1. The Ministry of Finance, Economy and Budget (MFEB) takes the lead in setting strategic policy directions. A Government-stakeholderCellule Technique, chaired by the Prime Minister,was established for the DSRP to leadformulation, implementation and the coordination of consultations, with the help of a Secretariat Technique de l'Ajustement (STA) that also included stakeholders among its members. The Cellule Technique also ensured organization and coordination of technical monitoring activities with the collaboration of ministries and other stakeholders.For the MAP, a Steering Committee was created to coordinate formulation, with representatives from the Presidency, the Prime Minister’s Office, MFEB and the STA.Inter-ministerial coordination is strengthening around the MAP, facilitating dialogue across government institutions on policy formulation and implementation.MAP teams within each line ministry are working together on the eight MAP priority areas.
  2. A mechanism for continuous Government-stakeholder involvement was established for the DSRP. The Cellule Technique includes a wide range of stakeholders,and the STA put in place a participatory DSRPM&E system, ensuring organization and coordination of technical monitoring activities through participatory workshops held in each provincial capital every sixmonths, and quarterly thematic workshops to monitor sector achievements. During MAP formulation, the Government consulted stakeholders through a series of national, regional and thematic workshops. A first round of consultations that included a wide representation of participants from civil society was conducted in June 2006.Another round took place inOctober 2006, where stakeholders were asked to give feedback on the draft MAP.Thematic workshops are planned around MAP priorities, and their conclusions will be validated in a national workshop. Stakeholders were also consulted for thevalidation of Regional Development Plans in early 2005, and for some sector strategies, including the revised education strategy, in 2006.
  3. Civil society groups participatedin strategy formulation for both the DSRP and MAP. DSRP consultations included significant participation fromwomen. Some academics and local councilors aremembers of the Cellule Technique, and NGOs arerepresented in the STA. They participated in the national, technical and regional DRSP formulation and Progress Report workshops organized by the Government. CSOs were involved in the June and October 2006 workshops for MAP formulation.
  4. Private sector involvement in policy formulation and implementation is becoming stronger. For DSRP implementation, the private sector is represented in the Cellule Technique and the STA, and private sector representatives participated in the national, technical and regional DSRP formulation and Progress Report workshops.In addition, a public-private partnership createdin 2002, the Comité d'Appui au Pilotage de l'Entreprise (CAPE), has fueled further private sector involvement in policy-making. CAPE isaimed at supporting the launch of private enterprisesand enhancing private sector participation in issues such as the budget law and the Government’s private sector development strategy.In 2005, the Government expanded CAPE at the regional levels. The Government also periodically convenes employers associations to discuss development policy, focusing particularly on private sector development, and it has integrated the outcome of these discussions into the MAP.
  5. The National Assembly has played an important role in strategy formulation and implementation. Some members of the National Assemblyarerepresented in the Cellule Technique.The Constitution requires that the policies and goals in economic areas be incorporated into national legislation, requiring approval of the National Assembly. The National Assembly approved the DSRP in July 2003, and the Government sent the MAP to the National Assemblyfor its information.Formal approval will take place once the December 2006 Presidential elections are over and the National Assembly has returned from recess.Some National Assembly members were consulted on the MAP and theMAP team provided information and updates when requested. The National Assembly is also required by the Constitution to approve the annual budget, although this has been accomplished with significanttime delays in the past.In addition, the National Assemblyreceives regular updates from the Ministry of Finance on budget execution as well asDSRP Progress Reports andregular updates on all sectoral strategies and programs.

Alignment

  1. Reliable country systems
  1. The Government is making efforts to strengthen public financial management through its 2006 Priority Action Plan. In addition, Madagascar is a pilot country for the Public Expenditure and Financial Accountability (PEFA) initiative,and a self-assessment was completed in July 2006.The Government remains committed to monitoring progress in implementing its public expenditure reform program under the HIPC Public Expenditure Assessment and Action Plan.It has committed to monitoring progress on its public financial management reform plan through annual PEFA assessments. The Government has also established an Integrated Financial Management System, which is operational in Antananarivo and six provincial Treasuries, covering about 80 percent of expenditures.ACour des Comptes reports both to the National Assembly and to Government.The Government is working with external partners to strengthen internal auditing practices and to harmonize financial reporting practices with international standards. The 2005 World Bank Country Policy and Institutional Assessment (CPIA) performance criterion that measures the quality of budgetary and financial management places Madagascar at 3.0 on a scale of 1 (very weak) to 6 (very strong).
  2. Following approval of a new Procurement Code in 2004, the Government has developed implementing rules and regulations as well as standard bidding documents approved by the Cabinet in May 2006. The Government has established a Procurement Oversight Institution and key ministries (education, health, agriculture and transport) have put in place procurement management units. These units are already operational, and additional units are being established in other ministries.
  3. Madagascar ranks 84thof 163in the Transparency International 2006 Corruption Perceptions Index; on a scale from 0 (highly corrupt) to 10 (highly clean) it receives a score of 3.1. The establishment of an Anti-Corruption Commission, the Conseil Supérieur de Lutte Contre la Corruption, in July 2003 and the creation of the Bureau Independent Anti-Corruption(BIANCO) in September 2004 reflect important efforts to improve governance. The activities undertaken by the Anti-Corruption Commission in 2005 focused mainly on a public information campaign to address corruption in government services and on the preparation of an independent anti-corruption survey. In March 2006, the Government enhanced the mandate of the Anti-Corruption Commission to include the development of a national integrity framework and renamed the Commission Comité pour la Sauvegarde de l’Intégrité. Since its inception, BIANCO has focused on examining corruption complaints,promoting corruption prevention through training and sensitization of public servants, and conducting further investigations. BIANCO has also undertaken independent audits of public services, such as a 2005 audit for the land titling service and independent procurement reviews for the transport program and for the Education For All program, and it is undertaking additional audits for 2006-07 in the forestry and mining sectors.
  1. Aid flows are aligned on national priorities
  2. Government leadership of coordination
  1. The Government is moving towardtaking a leadership role in development assistance coordination, primarily through its efforts to lead dialogue on a common policy framework for budget support, although coordination is largely still managed by external partners. The Government and some external partners, including the AfDB, the EC, France and the World Bank, have finalized a Partnership Agreement aimed at providing a framework for aid procedures and modalities and at ensuring better coordination among external partners in those sectors where strategies are in place.Some line ministries are taking the lead in coordinating activities of external partners at the sectoral level. For example, the Ministry of Education has been leading the dialogue with external partnersby organizing joint Government-donor reviews of implementation progress on a biannual basis and by providing for information sharing on appraisal missions, TA and other studies to ensure support is delivered around the education strategy.Different external partners rotate in chairing sector groups that meet on a monthly basis.
  2. Partners’ assistance strategy alignment
  3. External partners have strongly supported the DSRP, and they are working with the Government to align their development assistance strategies with the MAP. The five major external partners are the World Bank, the EC, France, USA and the IMF, accounting for approximately 86percent of gross ODA in 2003-04. Net ODA accounted for 28.9 percent of GNI in 2004.[2]The World Bank is preparing a Country Assistance Strategy for FY2007-11 which mirrors the timeframe and priorities of the MAP. The EC is also updating its Country Strategy Paper for the period 2008-13 to align its development assistance with the MAP.The EC and the World Bank are collaborating closely on the preparation of their respective strategies. A three-year Poverty Reduction and Growth Facility agreement was signed with the IMF in mid-2006 in line with the forthcoming MAP. The AfDB finalized its Country Strategy Paper for 2005-09 in late 2005which reflected the priorities of the DSRP.Switzerland is also planning to align its assistance for the 2007-11 period with the MAP. Assistance from Norway has been fully aligned with the DSRP, and the planned review of Norwegian cooperation envisaged for 2007-08 will be used to ensure further alignment of Norwegian assistance with the MAP. Japan also intends to develop its Country Assistance Strategy in 2007 in line with the MAP. The UN is also updating its Development Assistance Framework for 2005-09.Madagascar was among the countries eligible for the US Millennium Challenge Corporation assistance in 2005, and a Millennium Challenge Account (MCA) Compact in line with the DSRP was signed in April 2005. The USAID FY03-08 Integrated Strategic Planis also supportive of the DSRP.
  4. Partnership organization
  5. Action has been taken to develop strongerpartnership structures. Many development assistance agencies have taken steps to increase their presence in the country and to delegate decision making locally in order to participate actively in day-to-day dialogue. An increasingly large proportion of externally-financed projects and programs are being managed from Madagascar, facilitating external partner harmonization and resulting in better coordination of activities. The EU and World Bank both have large offices in Antananarivo with most sectoral programs managed from there. The AFD program is managed by an office in Antananarivo. The US has both a USAID office and a MCA office in Madagascar. The AfDB hasestablishedits local office in late-2005.
  1. Strengthen capacity by coordinated support

Coherent and coordinated capacity support

  1. Some elements of coordinated capacity-building support are materializing. In 2005, the Government prepared a national strategy for strengthening public financial management based on 3 pillars:(i) the Program de Renforcement de l’Efficacité de l’Administration, (ii) the National Integrity Program, and (iii) the Program for Participation of Citizens. There is a Priority Action Plan for each of the three pillars, allowing for a dialogue platform for discussion between Government and external partners and facilitating integration of all externally-financed capacity building programs with the national strategy. UNDP, EC, AFD, AfDB, GTZ, USAID, DFID, France, Norway, Switzerland, the IMFand the World Bank are among the external partners that are aligning withthis strategy.Capacity-building support in other areas remains largely fragmented.
  1. Use of country systems

Donor financing relying on country systems

  1. Some external partners are providing financing that relies on country systems. The AfDB, the EC, France and the World Bank are providing budget support around a common policy framework.
  2. CertainSWAps under preparation, such as in the health sector,are expected torely on national procurement and financial management systems as these country systems are strengthened.External partners are also moving towards the use of country M&E systems to monitor externally-financed projects.
  1. Strengthen capacity by avoiding parallel implementation structures

PIUs progressively phased out

  1. The Government has requested that PIUs be increasingly integrated, where possible, within Government structures, although it has recognized that this goal can take some time. Some World Bank-financed projects have moved away from the use of parallel PIUs and rely on Government structures for project implementation. For example, in the education sector, multiple PIUs have been consolidated into one that coordinates external financing for primary education through Ministry structures. In the transport sector, a parallel PIU has been abolished and implementation activities are now undertaken directly by the Ministry of Transport, with an independent private sector company carrying out fiduciary activities. A single PIU is in place for the health sector and one executing agency is in place for HIV/AIDS. The Government is also putting in place a Fonds du Développement Local which would combine all community-driven development activities under one umbrella agency.
  1. Aid is more predictable

Disbursements aligned with annual budgetary framework