Review of the Afghanistan Program - Findings and Observations

4.0 Findings and Observations

4. Findings and Observations

4.1 Results of Specific Initiatives

The following section provides information for each CIDA project covered in terms of:

1. Funds invested, both CIDA and others where applicable;
2. Expected outcomes and indicators of success according to CIDA's Program Approval Document (PAD);
3. Results Achieved in terms of outputs and outcomes;
4. Financial accountability and reporting; and
5. A general assessment of progress to date.

References and data sources are included, and footnoted where appropriate.

About half of the twelve projects selected for this review were designed to quickly roll-out the State's services in provincial and rural areas as the projects were developed to assure the population that the new central government was functioning and able to provide services. Since, historically, the state has never had a significant presence in rural areas, this goal is a profound challenge for the Afghanistan Government.

4.1.1 ARTF Operating Budget Support

Funds Invested: This is the largest CIDA investment in Afghanistan. It is a coordinated multi-donor pooled fund administered by the World Bank. CIDA accounts for 11.2 percent of total donor paid-in 2003-2006 (as of October 22, 2006), ranking fifth among 26 donors to the ARTF. From April 1, 2004 to January 31, 2007, CIDA disbursed C$60 million in the ARTF to pay for GoA recurrent expenditures, such as civil servants salaries and other government operating and maintenance expenditures.

Expected outcomes (according to RRMAF and PAD documents)

1. The government functions "effectively" as its recurrent budgetary expenses are met; and
2. The government is enabled to maintain and expand the delivery of basic services to its citizens.

Indicators (according to RRMAF and PAD documents)

1. Government machinery restructured and rationalized to ensure fiscally sustainable public administration (by 2010);
2. Review of administrative units for fiscal sustainability completed;
3. % of total external assistance going to the core budget; and
4. Number of ministries with program budgeting mechanisms introduced.

Results achieved from 2004 to 2007:

Outputs⁷

1. GoA's recurrent costs (i.e. regular salary payment to more than 270,000 civil servants, including 144,000 teachers) and operations & maintenance are reimbursed to the extent that they are consistent with the approved national budget and eligibility standards;
2. Fiscal discipline, accountability and transparency in GoA financial management is being maintained; and
3. Majority of the employees are at the provincial level:
   
   
   1. Education receives the major portion (39%);
   2. Growth in school enrolment.

Outcomes

1. GoA has improved its own revenue base, mainly through customs receipts, so that it will be able to pay the costs of day-to-day operations fully in the future; and
2. In fiscal year 2005-06, revenue collection was 55 percent above the previous year.⁸

Financial Accountability

In addition to the oversight by Multilateral Partners, as described in section 4.2.2.3, the WB produces quarterly reports for donors, including CIDA, providing consolidated sources and uses of funds (amounts of contributions received from donors and expenditures paid by the ARTF). The Bank also reports regularly on trends of the eligibility of submitted expenditures. When an expenditure is found to be 'ineligible' it does not necessarily imply misuse or wrongdoing. For example, an ineligible expenditure for ARTF financing includes any security related expenditures (military, police, etc.). In addition any expenditure that does not adhere to the government's budget and procurement rules, or to the reporting and cash management standards agreed with the Bank, would be ineligible, and recoverable from the GoA.

The Administrator of the ARTF uses the services of an external 'Monitoring Agent' (MA) (currently PriceWaterhouseCoopers) to examine eligibility of expenditures. For the year ending March 20, 2006, the MA examined 21 percent of all expenditures, of which 60 percent were for O&M. The MA found that about 13 percent of the submitted expenditures were ineligible. When examining eligibility of expenditures, the MA visited 23 of the 34 provinces.

The Auditor General of Afghanistan recently produced an audit report on the ARTF for the year ending March 20, 2006, which has been shared with CIDA. The audit covered the ARTF operational budget, which was US$268 million. The audit team, which visited 12 ministries and four provinces, identified additional ineligible expenditures, representing 2.9 percent of all yearly expenditures, among those previously charged against the fund.

The combined ARTF Monitoring Agent oversight activities and the External Auditor's audit report have demonstrated that since the creation of the fund, the number of ineligible expenditures submitted for payment have decreased, from about 34 percent at the beginning of 2004 to 0.7 percent as of March 31, 2006, according to the most recent World Bank report to the ARTF Donors, dated February 22, 2007. In addition, the GoA has an excellent record of reimbursing identified ineligible expenditures to date.

Considering the level of reporting received from the Bank, CIDA is in a position to exercise due diligence on funds transferred to the ARTF and used for the GoA budget support.

General Assessment

The ARTF has emerged as one of the main instruments for financing the country's recurrent budget deficit, and is set to evolve into a major source of technical assistance and investment support for Afghanistan. Outputs and outcomes achieved during the 2004-07 period indicate that the government is heading in the right direction with an increasing capacity to meet its recurrent budget. Results show that the GoA is developing the capacity to expand the delivery of basic services to its citizens. CIDA received pertinent reports (narrative and financial) from various credible sources, which demonstrate: a) positive progression in terms of results and b) an acceptable level of accountability in the use of funds for intended purposes. The recent report issued to the donors by the Bank confirmed the improvements of audit reports in terms of the quality and the low percentage (less than 1 percent) of ineligible expenditures.

4.1.2 National Solidarity Program (NSP)

A Multi-donor mechanism financed through the ARTF investment window, this is the GoA's flagship program for community development, strengthening of local governance, citizen participation and GoA legitimacy and credibility; Canada accounts for 21 percent of total donor paid-in 2003-2006 contributions (as of October 22, 2006), ranking second among seven donors.

The program is implemented by MRRD with the assistance of an Oversight Consultant (OC). There are 24 Facilitating Partners (FPs) under contract, mainly NGOs, who facilitate the establishment and capacity development of thousands of Community Development Councils (CDCs). The OC, currently GTZ and the consulting firm Development Alternatives Inc., employs about 700 persons (Jan 2006). "The Overall performance of the OC was evaluated as highly satisfactory by the World Bank Supervisory Mission of October /November 2006". ⁹ An evaluation in 2004 ¹⁰ of the capabilities of the FPs found, as to be expected, that the capabilities ranged from weak to very capable. Consequently, a few weaker FPs were released and the OC amplified the capacity development of the other FPs.

Funds Invested

From April 1, 2004 to January 31, 2007, CIDA disbursed C$30 million for the NSP.

Expected Outcomes:

1. Higher income generated for rural communities;
2. Effective structure and systems of public administration to plan, finance and manage development interventions; and
3. Government's operational capacity in the provinces effectively connects the central government's policies to local needs.

Indicators:

1. Rural development for the benefit of 19 million people in 38,000 villages, promoting local governance and community empowerment (by 2010);
2. Number of new Community Development Councils (CDCs) established; and
3. Number of villages with at least one national rural development program facilitated through CDCs.

Results Achieved (As of 1 October 2006)

Outputs:

1. Approximately 17,000 CDCs elected, from 274 districts and all 34 provinces;
2. 14,219 Community Development Plans completed;
3. 23,302 community-level sub-projects submitted for financing (US$60,000 maximum per sub-project made available to CDC);
4. 21,176 community-level sub-projects approved for implementation; and
5. 8,450 sub-projects completed.

Outcomes (partly attributable to this CIDA project)

1. Over 19,000 community projects have been approved;
2. Over 7,000 community projects have been completed; and
3. The Program has reached more than 11.5 million Afghans.

Sub-projects funded through the NSP programs are distributed as follows (see Figure III)

• 25% for supplying drinking water;
• 21% for the rehabilitation of irrigation systems;
• 20% to improve transport infrastructure (roads, bridges);
• 17% for the provision of energy (generators, micro-hydro, solar energy);
• 11% to improve livelihoods and generation of income;
• 5% for education infrastructure; and
• 1% for other investments.

Figure III Distribution of NSP funding according to sub-projects



Financial Accountability

The ARTF Administrator produces quarterly reports on the financial status of the fund. The reports show amounts received from donors and their attribution to each investment project, as well as the total amount of commitments and disbursements to each project. A more detailed report was produced for the first quarter of fiscal year 2005-06 explaining the process for approval of projects and transferring of funds. The report also included a status sheet (Implementation progress and Issues and Actions) and a general rating for each current investment project. The rating for NSP was "Satisfactory" for both "Achievement of grant objectives" and "Implementation".

As a member of the NSP External Review Committee, CIDA provides oversight and can commission evaluations. The Mid-term evaluation¹¹ presented 58 recommendations, four of which addressed improvements to the financial processes. The CIDA independent Monitors also agree with the proposed improvements.

The Mid-term Evaluation lays out a number of systemic weaknesses in financial operations associated with NSP, including delays in the procurement process (MRRD responsibility) and transfers to FP (OC responsibility), to slow transfers to NSP accounts (Da Afghanistan Bank responsibility) and a lack of liquidity in the Block Grant fund (donor and World Bank responsibility). The CIDA Head of Aid recently facilitated an informal meeting between donors and the GoA to improve the funds flow.

One of the Mid-term Evaluation Recommendations proposed that financial and budgeting capacity be developed in MRRD at central and provincial levels.

For the second phase of the program, the Evaluation team projected that delivery activities would represent about 37 percent of the total cost (of which 28 percent is for Oversight Consultants) and the remaining 63 percent would be used for Block Grants to Community Development Councils. Considering the level of reporting received from the Bank and the Oversight Consultant, CIDA is in a position to undertake appropriate review of the information and exercise its due diligence to ensure that funds transferred to the ARTF and used for the NSP project are being used for the intended purposes.

General Assessment

The findings of the external CIDA Monitor corroborate the conclusions of the NSP Mid-term Evaluation Report that this is a successful project. This evaluation has found evidence of at least 11 sets of benefits¹², which have been derived from the NSP. Both the Evaluation and the Monitoring report concluded that:

1. the formation of CDCs has brought the empowerment of rural communities along with unity and collective purpose to previously divided communities;
2. CDCs significantly increase contact between communities and provincial government;
3. the types of sub-projects have undoubtedly contributed to an increase in the productive capacity of the communities (although it is unrealistic to quantitatively define the microeconomic impact at this time);
4. involving women in community-level decision making continues to be a significant challenge;
5. CDCs have brought direct forms of economic development through improved productive capacity and the provision of work in relation to certain NSP projects; and
6. there are improvements in the quality of rural life.

The report also revealed some areas for improvement and concerns. For example:

• Some concerns about the sustainability of economic projects, while it was too early to conclude that the relatively few 'livelihood' projects are not sustainable, it would appear that their sustainability has not been the subject of much analysis.
• In assessing the efficiency and effectiveness of NSP financial management operation, only "very few" instances¹³ of corruption committed by members of CDCs was acknowledged and dealt with by the Oversight Consultant.
• there was evidence of CDCs developing new projects on their own initiative. The evaluation team considered this to be sign of successful skills development.

The Evaluation raised concerns about the sustainability of economic projects. And while it was too early to conclude that the relatively few 'livelihood' projects are not sustainable, it would appear that their sustainability has not been the subject of much analysis.

The Evaluation found "very few" instances of corruption committed by members of CDCs. There was evidence of CDCs developing new projects on their own initiative. The evaluation team considered this to be sign of successful skills development.

The Evaluation concluded that if the qualitative trends attributable to NSP are sustained, NSP will be able to deliver its intended impact, namely laying the foundation for improved community level governance and poverty reduction and strengthening national solidarity.

Another credible source on NSP accountability―based on its performance and its democratic transparency to Afghan citizens―commented as follows:

Compared to other reconstruction programs, there were many positive aspects and externalities related to NSP accountability. The public exposure of the program made it known and therefore increased the accountability of executors and implementers. The government capacity to account for program delivery was increased even though the reform of the administration lagged behind. The MRRD is perceived as one of the least corrupt institutions despite the big sums of money it handled. Relative trust has been built between recipients, government and donors. Yet it remains fragile because people "cannot understand the game played by donors" when there is significant waste in other programs. Building the capacity to monitor and hold actors to account at the very local level and the use of local resources are among the many other positive aspects of the NSP.¹⁴

On awareness among the population about the approximately 17,000 CDCs established by the National Solidarity Program (NSP), 37 percent of Afghans were aware of their operations while 58 percent were unaware. For those who knew of CDCs, the perceptions were quite positive, with 86 percent being either very satisfied or satisfied. Only 10 percent were dissatisfied.¹⁵

4.1.3  Microfinance Investment Support Facility for Afghanistan (MISFA)

This is financed through the ARTF investment window, and identified in the Afghanistan National Development Strategy (ANDS) as key to development of rural financial services and improving rural livelihoods; Canada leads among five donors with 47.0 percent of total paid in 2003-2006 (as of 22 October 2006).

Funds Invested

From April 1, 2004 to January 31, 2007, CIDA disbursed C$37 million for the MISFA.

The overall program was designed by the Consultative Group for Assistance to the Poorest (CGAP) and the World Bank, and was originally situated within the MRRD. Over the last decade, CGAP has been instrumental in defining international performance standards for micro-finance. MISFA follows internationally agreed best practices in micro-finance as evidenced by its design and performance.

MISFA capitalizes 15 Micro Finance Institutions (MFIs) with both loans and grants; the MFIs do the direct lending to clients. The first loan to a client was approved in October 2003; there are now about 266,000 active loans with excellent repayment rates and emerging operational and financial sustainability ratios for a number of the MFIs. BRAC Afghanistan, with about 30 years experience in Bangladesh, is the largest MFI.

Expected Outcomes

1. Increased range of financial services, including loans for income-generation and enterprise development; and
2. Increased savings services and consumer loans available to low-income people.

Indicators

1. Improved access to financial services for 22 percent of households (800,000 by 2010);
2. Proportion of households consuming less than the national poverty line amount; and
3. Poverty gap ratio.

Results achieved from 2004 to 2007 (As of January 2007)

(source: monitoring reports from CIDA Monitor January 2007, and MISFA Reports)

Outputs

1. Approximately 266,000 active loans, with 72 percent of borrowers being women;
2. US$195 million cumulative loans disbursed; $70 million gross loans outstanding; current repayment rate 98 percent; Portfolio At Risk (more than 30 days), 1 percent;
3. Overall operational self-sufficiency of the MFIs, 59.7 percent; 2 MFIs are self-financing; and
4. MISFA an independent company registered under commercial code; MFIs operate under central bank legal framework as deposit-taking financial institutions.

Outcomes:

1. MISFA has benefited more than 300,000 people, 72 percent of them are women; and
2. Most loans have helped launch small businesses, and 98 percent are repaid with interest.

Financial Accountability

The ARTF Administrator produces quarterly reports on the financial status of the fund. The reports show amounts received from donors and their attribution to each investment project, as well as the total amount of commitments and disbursements to each project. A more detailed report was produced for the first quarter of fiscal year 2005-06 explaining the process for approval of projects and transfer of funds. The report also included a status sheet (Implementation Progress and Issues and Actions) and a general rating for each current investment project. The rating for MISFA was "Satisfactory" for both "Achievement of grant objectives" and "Implementation".

The MFIs are now being audited, using auditors acceptable to MISFA. MISFA has to first train the auditors, since few of them are specialists in auditing micro-finance organizations.

Based on best practices in micro-finance, MISFA produces quarterly and annual reports. MFIs report monthly to MISFA, who in turn consolidates these reports into a report to MRRD. MISFA staff regularly visits MFI field offices. Considering the level of reporting received from the Bank, CIDA is in a position to undertake the necessary review of the information and exercise its due diligence to assure itself that funds transferred to the ARTF and used for the MISFA project are being used for the intended purposes.

General Assessment

Such growth in just over 3 years, with good financial performance ratios, is unusual and remarkable. Socio-economic client impact studies are starting.

To date there has been low rural coverage; given the security concerns in many districts, half of the MFIs are in Kabul. About 72 percent of the clients are women, and about half of these are borrowing for men in the family. Men co-sign the loan agreement so that the services have social acceptance. Even so, this has been seen to empower women in Afghanistan.

In its first 3 years, management concentrated on building the capabilities of MISFA and the MFIs. Substantial time was spent training MFIs in financial management, loan management and data systems. This was essential before expanding much further, or before targeting lower income clients. The staff numbers in MISFA are small: 20 staff in total, plus 2 advisors.

An independent evaluation of MISFA, conducted in 2006¹⁶, found that:

• MISFA's performance "has been highly satisfactory";
• Given the enormous demand for micro-finance services, there is potential for many of the MFIs to become financially sustainable in the next 3 years;
• MISFA's growth is higher than that in any other conflict affected country; and
• Its transformation into a limited liability company is a sound approach.

Key recommendations included:

• MISFA should clarify how it will reach vulnerable populations, rural areas and conflict zones;
• Donors should make longer term funding forecasts and commitments; and
• The Ministry of Finance, donors and MISFA should ensure that operational and disbursement procedures are more efficient.

In March 2006, MISFA was established as a private company. The GoA wisely granted MISFA this independence. Decades of lessons in micro-finance services mandate that programming should be independent of government. The Board consists of: 3 private sector persons, 3 international MF specialists (including one Canadian) and 2 government representatives. Decisions of Board meetings are public information.

In conclusion, it is the opinion of the Review Team that this is an excellent CIDA investment.

4.1.4  National Area-based Development Program (NABDP)―Phase II

This is a multi-donor initiative. CIDA contributes 6.5 percent of Phase II; core element of Ministry of Rural Rehabilitation and Development (MRRD) integrated rural development strategy. Phase II was developed through extensive inter-ministerial consultation, with an approach and mechanisms for inter-ministerial coordination at central and decentralized levels in support of integrated rural development.

Funds Invested

From April 1, 2004 to January 31, 2007, CIDA transferred C$15.1 million to UNDP for the NABDP program. The Phase II (2005-2009) includes the following components:

• Regional economic development: implement regional rural economic regeneration strategies that contribute to poverty reduction.
• Capacity development: develop the organisational and management capabilities of the Ministry and partners at the national, provincial and district levels, mainly through the continued formations of District Development Assemblies (DDAs) which will design district development plans.
• Immediate recovery projects: to continue responding to the urgent needs of the rural communities, until the district development plans are in place and priority projects have been identified.

Expected Results:

GoA will have the policies, procedures and capacity to promote medium and long-term development projects and development cycles (production, process, market) to:

1. regenerate local economies;
2. create sustainable employment opportunities; and
3. stimulate economic interrelationships and synergies across program areas.

Indicators:

1. Rural development for the benefit of 19 million people in 38,000 villages, promoting local governance and community empowerment (2010); and
2. Number of new District Development Assemblies established.

Results Achieved¹⁷

Capacity Development:

• Provincial plans were prepared for 32 provinces. As a result, four priority projects per district were identified.
• 69 District Development Assemblies (DDAs) established, and their district plans completed. (Sept 2006)
• About 140 government officials have observed and monitored DDA elections. (Sept 2006)
• Continued training of Provincial Development Councils (including Kandahar).
• Rehabilitation of 15 MRRD provincial offices was completed.
• 43 MRRD provincial directors attended a five-month training course organized by BRAC in Bangladesh.
• The NABDP team and MRRD monitored a total of 131 subprojects. Satisfactory progress of the work was reported.

Regional Economic Regeneration:

• Feasibility studies completed: cotton mill, rose oil industry, textile mill and the preparation of other studies in sectors including textiles, foodstuff, livestock and horticulture are progressing.
• The launch of a major study to provide a planning framework for rural development planning. (Sept 2006)

Financial Accountability:

According to the grant agreement with UNDP, an annual report on activities undertaken and progress achieved in relation to the activities and annual financial statements showing project expenditures are to be provided to CIDA. Until a year ago and for all of the duration of Phase I, there were few of these reports received from UNDP, which raised concerns by the Program/Desk. In its mission of January 2006, the CIDA Monitoring team met with the implementing partners in Kabul to obtain additional information about the concerns. Since that time, more reporting was received at CIDA; the implementing partner (the Ministry MRRD) prepares quarterly reports, which include a financial table showing expenditures by project component and by donor's country.

In 2006, the Auditor General of Afghanistan conducted an audit of five UNDP projects, which included the NABDP. The audit examined expenditures listed on the Combined Delivery Report (CDR) for the calendar year 2005. The Auditor's opinion was that "the report presents fairly the cash expenditures of the project", except for four comments. One comment was the absence of the list of direct payments made by UNDP for an amount of US$5.1 million; the other was a variance of US$8,240 between the CDR and the UNDP financial system. UNDP's response to these comments were that: 1) the $5,121,531 was included in the total of $7,589,217, as reported under UNDP disbursement column of the CRD, however, a sum of $2,467,686 was not audited as it represents support services expenditures, which were out of the audit scope, in line with the Terms of Reference for the audit; 2) the difference of $8,240 between the CDR and the UNDP financial system is a generic problem well known by UNDP HQ who is working on it.

At the time of this review, CIDA received a confirmation from UNDP that a follow-up was initiated with the Auditor General's Office to resolve this issue.

Considering the level of financial reporting currently received from the implementing partners, the audit report carried out by the Auditor General of Afghanistan and other information available on the UNDP web site, CIDA is in a position to exercise due diligence on funds transferred to UNDP and used for the NABDP program.

General Assessment:

Phase I (2002 -2004) focused on responding to the emergency needs of people and establishing the presence of the GoA throughout the country, Phase II focuses on enabling the GoA through provincial and district councils to support integrated rural development as a critical element in poverty reduction.

An evaluation of Phase I in 2004 provides credible analysis of the program at that point in time.¹⁸ The NABDP stimulated the growth in MRRD capacity and outreach throughout the country―starting from essentially zero presence.

According to the new MRRD strategic plan (2006/7 - 2008/9), NABDP II will help to coordinate and/or integrate its other national programs" (i.e. NSP; National Emergency Employment Programme; Rural Water and Sanitation Program; Integrated Alternative Livelihoods Programs (IALP) nationally and in Kandahar; and MISFA. Community-level mobilization particularly at the district level leads to the development of District Development Assemblies and from them District Development Plans. This strategy is based on a tested process, the CDC formation process from the NSP. CIDA currently supports MISFA, NSP and IALP.

To begin to integrate some of the many interrelated projects in some districts, NABDP II is working with the Facilitating Partners of NSP and with another project Disarmament of Illegally Armed Groups (DIAG) and a new inter-ministerial reintegration initiative to provide employment for former combatants. CIDA has earmarked some of its funding to NABDP for Kandahar province. Consequently, there are the beginnings of a higher level of ownership across the whole of the GoA and the birth of local level governance.

In comparison to the NSP for example, reporting on and evaluation of this project is not as thorough. In Phase I there had been a lack of results-based reporting and data on the trends in results, and delays in reporting. However there have been subsequent improvements in the reporting on Phase II after CIDA expressed its concerns.

The essential point to grasp in approaching NABDP II is that the program is not simply another of several programs implemented through MRRD. NABDP II is in fact the organizational pillar of a sector-wide approach to rural development, a key element for realizing the MRRD Strategic Plan, and consequently the building of state capacity.

The UNDP has experienced delays in the recruitment of technical assistance. Continued close monitoring of the UNDP to improve performance in recruitment and reporting will continue to be an essential element of CIDA's due diligence.

In summary, NABDP II has made very significant progress compared to Phase I.

4.1.5  Mine Action National Development Budget

Consistent with its promotion of the Ottawa Convention, Canada is the 'focal point' for mine action in Afghanistan with the UN Mine Action Centre for Afghanistan (UNMACA), contributing 30 percent of total humanitarian mine action (ranking second among 17 donor agencies).

Funds Invested

From April 1, 2004 to January 31, 2007, CIDA transferred C$15 million to the UN Mine Action Services (UNMAS) for the Mine Action project.

Expected Results

1. GoA has capacity to assume long term coordination and policy making responsibility for mine action;
2. Mine action integrated into national development strategy and plans;
3. Land with most economic potential is available for use; and
4. Greater physical/psychological security for Afghan population; fewer mine accidents/deaths from unexploded devices.

Indicators

1. Increase in the amount of land available for productive use as a result of the reduction of anti-personnel mines (2010); destruction of all stockpiled anti-personnel mines (2007);
2. Number of impacted communities;
3. Number of stockpiled anti-personnel mines destroyed; and
4. % of surveyed unserviceable surplus ammunition destroyed.

Results achieved from 2004 to 2007:

(source: monitoring reports from CIDA Monitor Dec 2006)

1. Little progress toward target of handover to GoA by 2009: no enabling legislation, little sign of political will, resistance by local and international Implementing Partners (NGOs);
2. ANDS Security Sector benchmark: 70 percent reduction by end-2010 in land area contaminated by mines;
3. 421 km² cleared January 2002-March 2006 (720 km² yet to clear), with high impact priorities identified through Landmine Impact Survey (using Rapid Rural Appraisal techniques); 87,262 Anti Tank Mines/Anti Personnel Mines destroyed January 2002-March 2006;
4. 55 percent decline in monthly average number of victims since 2001 (i.e. from 140 to 63/month in 2006); and
5. 8.3 million persons received Mine Risk Education (MRE), January 2002-March 2006; 2005 survey shows positive results among MRE beneficiaries. Close to 2 million Afghans benefited from mine risk education activities in 2005. Seventy-six community-based mine risk education teams from seven implementing agencies have provided community liaison networks, teacher training, peer education, police and religious leaders training, radio, television and community monitoring of risk (victim and incident data collection) and mine risk education impact monitoring. The Program focuses on the needs of individual communities. In addition, seven mine risk education teams from three implementing agencies have targeted repatriating Afghans through activities provided at the UN High Commissioner for Refugees' "encashment" and transit centers near the borders of Pakistan and Iran. Over 500,000 people passed through these centers in 2005. Six mine risk education quality assurance teams provided activity and impact monitoring, evaluation and the certification and maintenance of national standards.

(Source: UNMAS, Annual Report 2005)

1. Landmine impact survey, completed in January 2005, indicated that 2,368 Afghan communities are affected by 716 million square meters of suspected hazardous areas, affecting as many as 4.2 million people spread across 32 of 34 provinces.
2. Manual teams including 30 mine-detecting dog sets have technically surveyed the territory and released 19.35 percent of known landmine contaminated areas, a reduction of 34 percent of highly affected communities.

Based on the Program documentation received, the following results have been reported:

1. Almost 19.35 percent of known landmine- and ERW contaminated area was released through survey and clearance activities (a total of 138.6 million square meters). All known ammunition stockpiles have been sorted and legitimate ammunition in good condition has been moved to ammunition consolidation points established in each region. These consolidation points are temporary in nature and will be shifted to permanent sites being built by US military's combined security transition command.
2. All stockpiles of APMs and ammunition deemed unsafe are being safely destroyed by the implementing partners in central destruction sites, which are maintained in each region. The details of ammunition consolidated and destroyed are as under:
   
   
   Ammunition Surveyed 28,866 TONS
   Ammunition Consolidated 8212 TONS
   Ammunition destroyed 12,401 TONS
   Anti-Personnel Mines destroyed 334,025 PCS
   Anti-Tank Mines destroyed 12,755 PCS
   Total number of caches surveyed 1302 Caches
   

Implementation of Afghanistan's State Party obligations under article 4 of the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of AP mines and on their Destruction is effectively furthered.

Outcomes:

1. Reduction of almost 20 percent of known landmine-/explosive remnants of war-contaminated areas;
2. 34 percent reduction in the number of highly affected communities; and
3. Close to 2 million Afghans benefited from Mine Risk Education activities in 2005.

Financial Accountability

According to the grant agreement with the UN, an annual report on activities undertaken and progress achieved in relation to the activities and annual financial statements showing project expenditures are to be provided to CIDA. These reports are available on the UN web site or the implementing partner, but often as a result these are rarely found in CIDA files. This could make it more difficult for the project team to conduct a good due diligence exercise, before releasing a new payment.

A short report received from UNMACA (the UNMAS delivery centre in Afghanistan) in December 2006 and requesting additional funding provides some details about the use of the second payment of $5 million received from CIDA in 2005-06. The report outlines for what activities the Canadian funds were used and to which implementing partner the funds were transferred, but do not indicate what expenses were paid with the Canadian funds. Other progress or annual reports in file provide a lot of information on mine action operations but little financial information; those found show details about contributions received from the various donors, rather than providing information about expenditures. The same is true for most reports found on Mineaction web site. The desk obtained a two-page document presenting the background, context and general findings of an audit of the Mine Action Programme for Afghanistan NGOs, which was carried out by Price Waterhouse Coopers in 2005, electronically. The Afghanistan Program is following up on further results.

General Assessment

The project has significant achievements in de-mining and neutralizing other explosives―using a variety of NGOs and contractors to carry out the work. An independent evaluation of one of the biggest de-mining NGOs (HaloTrust) was conducted in 2006 with very favourable findings.¹⁹

Over the past few years there has been good leadership in the project by UNMACA. But given the staff turnover in UNMACA, it is a continuing challenge for the Centre to post highly capable personnel.

It is planned to hand over much of the project management responsibly to the GoA, but to date there has been little progress.

4.1.6 Support to Parliamentary Elections, and Provincial Councils

The project was managed by the UNDP using international technical advice, with operational support to the Interim Afghan Electoral Commission and the Joint Electoral Management Board Secretariat (JEMBS). These elections in 2005 followed the much simpler (operationally) Presidential Election in 2004, the first election held in Afghanistan in 30 years. The United Nations was the guarantor responsible for delivering on the Bonn Agreement, including elections.

Funds Invested

For the fiscal year 2005/06, CIDA transferred grants for an amount of C$13 million to the Election project. Assuming a US exchange rate of 0.8, Canada's contribution represents approximately 6.5 percent of the final budget.

The total donor funding: US$139 million, including pledges (August 2005) from 22 donor countries. Funding shortfall: US$21 million.²⁰ The original budget was US$149 million²¹, while the Final budget was US$159 million. This project was supported by a smaller CIDA project supporting election monitors (C$100,000, FY 2005/06). CIDA also gave an additional $450,000 in the summer of 2006 to lead the way for other donors to contribute to cover the shortfall.

Purpose of the Project

The political participation of citizens and civil society in elections that are deemed free and fair by the international community.

Expected Results

• The electoral process is effectively conducted in accordance with international standards;
• Men and Women Parliamentary candidates stand to run for the parliament; and
• National and international election observation.

Results Achieved:

• About 5,800 candidates (582 women) stood for election;
• 6.8 million persons voted (51.5 percent turnout, 43 percent women) producing 13 million ballots for both Parliamentary and Provincial Councils; and
• Accredited election observers: 10,000 national and 780 international observers, and 1280 media representatives.

A 2005 report by the Joint Electoral Management Body shows that: the project supported a full range of election services: civic education programs and information campaigns, training of polling station officials, providing adequate security, training candidates on the Electoral Law and legitimate campaign processes. Special working groups were established to promote participation by women, "kuchis" (nomadic people), and the 2 million Afghans who are disabled. At its peak, about 180,000 national and 540 international staff were employed by the election secretariat.

Financial Accountability

Although the Review Team was not able to find any financial report on the JEMBS Web site and CIDA's files, showing actual election expenditures, we have obtained the following information from the JEMBS Final Budget Report:

• Ballot printing costs were much higher than planned. The additional costs (7 percent over the original budget) and variances are extensively analyzed in a JEMBS report.²² It was decided to use 69 different tabloid sized ballots more suitable for a largely illiterate population. In Kabul alone, this meant an 8 page newspaper-size ballot with over 400 names on it. To partly compensate for the extra cost, project management reduced the costs of international management and national staff. Based on the data available, satisfactory budgetary controls were in place. Costs per voter were about $13, compared to Kosovo 2000, C$37 per voter; Nicaragua 2001, C$14 per voter; and Cambodia 1993, C$45 per voter. With an election management organization now in place, future election costs per voter are expected to be about half.

General Assessment

The project's purposes were achieved.

External Evaluation:²³

An independent evaluation concluded that the United Nations, the international community and citizens "contributed to the successful delivery of two complex inaugural elections…" (Presidential and Parliamentary)―despite many constraints and complex management challenges. "The timeframe in the Bonn Agreement was unrealistically tight": Security, time and political imperatives drove the process, and the costs. The baseline was zero: no working institutions, no effective government, no electoral law, no viable economy, no reliable civil register, and no security. "Experience in electoral administration was nil." Focusing on long term capacity development "was not an option". However, many short term capacity development activities were included.

Survey of Citizen Perceptions of the Election:²⁴

This representative survey in 2006 found that 54 percent of the population felt that the elections were free and fair. Regarding future elections, 64 percent felt that the GoA could manage free and fair elections on its own.

Subsequent related projects funded by CIDA include: Support to the Establishment of the Afghan Legislature (SEAL), to develop the national Parliament into an effective institution, a project described below; and support to the Independent Electoral Commission, 2006/07.

4.1.7 Support to the Establishment of the Afghan Legislature (SEAL)

This is a multi-donor initiative, with France as lead donor, for the institutional development of the Parliament. The project is implemented by the United Nations Assistance Mission to Afghanistan (UNAMA), with the funding flowing through the UNDP.

Funds Invested: During fiscal year 2005/06, CIDA transferred C$1.2 million to UNDP for the project. The CIDA contribution is 7.4 percent of total funding, ranking seventh among eight donors.

Purpose of the Project: Institutional development of the Parliament.

Expected Results: A fully operational and efficient Parliament, recognized by the people of Afghanistan as their representative institution, functioning on an accountable basis, and in a transparent manner.

Results Achieved²⁵:

• An elected Parliament convened on 19 Dec 2005 for first time in 33 years; 9 month session completed;
• Secretariats of Wolesi and Meshrano Jirgas (Upper and Lower Houses) established and operating; Rules of Procedure established; 30 Parliamentary Commissions established in substantive issue areas;
• Ministerial and Supreme Court appointments debated and approved;
• About 500 Secretariat staff and 300 MPs have received various types of training and capacity development sessions; and
• No legislation debated or approved yet.

Financial Accountability

Quarterly and annual reports on the SEAL project, produced by UNDP, include a short Finance section showing donors' contribution funding status and a statement of expenditures by project activity. The annual report for the calandar year 2005 shows "Expenditures broken down by Donor" and by the six actvities of the project. The CIDA contribution transferred at the end of March 2005, does not appear on the 2005 Annual Report.

The last report on file is the third quarter report for the year 2006, dated October 2006. The report shows the CIDA's contribution, but no CIDA expenditures have yet been accounted for as of that time. The total amount of expenditures since the start of the project are about 43 percent of the total contributions received. Considering the level of reporting received from UNDP at this stage of the project, CIDA is in a position to exercise due diligence on funds transferred to UNDP for the SEAL project and to determine which activities the CIDA funds were used for.

General Assessment

An independent evaluation found, not surprisingly, the expectation of Parliament to be "fully efficient, accountable, representative and transparent" in two years to have been unrealistic and recommends further technical and financial support to assure development of an effective institution.²⁶ (In the project, there were 7 outputs, 20 sub-outputs and 138 activities.) While the evaluators deemed the project "remarkably successful", other reviewers are less positive.²⁷ In our view, it is a bit premature to label the project as "remarkably successful". It may be more appropriate to say the project was successful, in that it has helped to establish the infrastructure and lay the foundations for future success if progress continues.

4.1.8 Strengthening the Rule of Law in Afghanistan (SRLA)

The project is implemented by the International Development Law Organization (IDLO), an international NGO based in Rome, which had been working in Afghanistan since 2002. The local partners are the Ministry of Justice (MoJ), the Supreme Court and the Law Faculty at Kabul University. Prior to approving the project, there was a CIDA mission to Afghanistan to assess programming options in the justice sector.

Funds Invested: A contribution agreement was signed between CIDA and IDLO on March 15, 2005, for the project with 33 months duration and a value of C$6.34 million. Since that date, CIDA has transferred C$4.3 million to IDLO.

The Contribution Agreement was amended in August 2006 with a revised budget and to recognize changes in the expected outcomes as the project evolved.

Purpose of the Project: To improve the Afghan judicial system.

Expected Outcomes

• Enhanced capacity of the judiciary in first level courts to resolve civil and commercial disputes;
• Improved administrative capacity and effectiveness of pilot court(s); and
• Increased access to legal aid for poor defendants, particularly women and minors.

Results Achieved

• 90 judges (16 women) trained in civil, commercial and criminal law and procedure;
• 75 judges trained in other areas;
• one-year 'training for trainers' course for 20 judges underway;
• 75 public prosecutors (12 women) trained in one of three areas: financial crime, gender justice or juvenile justice;
• A year-long training course for 50 public defenders is underway;
• A 'Gender and Criminal Justice' project component to replace the stalled 'Revision of Civil Code' component; and
• A component to improve Court Administration is stalled; IDLO is searching for alternatives.

Financial Accountability

CIDA's Financial Compliance Unit (FCU) conducted an initial visit to IDLO, in May 2005, to review the contribution agreement, IDLO's financial reporting system and internal control procedures and to ensure that the recipient is capable of producing adequate financial information that meet CIDA requirements. The report presented several recommendations suggesting changes to the contribution agreement (CA), to IDLO's financial and reporting system, and the addition of a new audit clause. The audit report was received from the FCU on August 31, 2005, but the CA was only amended a year later. The Amendment included a new clause on "Auditing Procedures" in the CA and changes to all five appendices.

The examination of financial reports, including those received after the date of the Amendment, revealed that:

1. the budget column has been the same since the beginning of the project and some items show an amount different from the approved budget;
2. the budget was never structured to report on an activity basis, which was a requirement of Appendix A―Financial and Progress Reporting clause;
3. the total amount of advance payments received as well as the remaining unutilized funds were not submitted to CIDA; and
4. there is no indication of interest earned on unutilized funds.

When these concerns were discussed with the Desk, it became apparent that it was difficult to exercice due diligence on financial reporting, since the reports show insufficient detail. The last advance requested by the organization is currently being withheld by CIDA.

General Assessment

Beyond training, results will be difficult to achieve in terms of institutional change. Local commitment is weak. There seems to be different views within the GoA on who will lead some of the project components. The MoJ has not attended some Project Steering Committee meetings, and prefers to construct physical infrastructure and not focus on capacity development. IDLO has not always fielded appropriate managers, and has not used the LFA in reporting. In general, outside this project, reforms in the justice sector will be profoundly difficult. There are non-functioning courts, alleged extensive corruption, and a wide-spread belief that the courts do not produce fair results.

This finding underlines the importance of ensuring that NGOs funded to work in Afghanistan have substantial experience in working in a post conflict country, in development project design and implementation, and strong financial reporting systems. The foundations for future success if progress continues.

The project is implemented by the International Development Law Organization (IDLO), an international NGO based in Rome, which had been working in Afghanistan since 2002. The local partners are the Ministry of Justice (MoJ), the Supreme Court and the Law Faculty at Kabul University. Prior to approving the project, there was a CIDA mission to Afghanistan to assess programming options in the justice sector.

4.1.9 Disarmament, Demobilization and Reintegration (DDR)

This multi-donor project is implemented by the United Nations Assistance Mission to Afghanistan (UNAMA), with the funding flowing through the UNDP. It is part of the Afghanistan New Beginnings Program (ANBP), which also includes three other projects also supported by CIDA. The design of the DDR is based on the UN's previous experience in many parts of the world where there has been armed conflict.

Funds Invested: For the fiscal year 2004/05, CIDA transferred grants for an amount of C$6.5 million to the DDR project. According to the last UNDP report received (second quarter June 2006) Canada's contribution represents approximately 11.3 percent of total disbursements, ranking it third among eight donors.

Purpose of the Project: To disarm, demobilize and integrate ex-combatants into civilain life.

Expected Outcomes: Ex-combatants are participating in the legal economy in both rural and urban areas and there is a weakening in the culture of violence.

Results Achieved:

• Disarmament and demobilization of over 62,000 ex-combatants (approx C$1000 per person);
• Over 53,000 ex-combatants provided reintegration assistance; and
• 90% employment rate among 5,010 ex-combatants surveyed:²⁸
  
  
  • 15%, making less than C$1/day;
  • 41%, $1-2/day;
  • 44%, more than C$2/day;
  • 72% expect a better future if there are better access to health, education, water and other basic needs; and
  • 67% of income spent on food, a subsistence level of existence.

Financial Accountability

The Final Report for CIDA Grant produced by UNDP in September 2004 (the previous phase of the Program), provides details about the achievements of the project. Annex 2 of the report shows the breakdown of Budget and Expenditures of Canadian Funds for the period of January to September 2004. The report lists operating cost, as well as activity cost, with the available balance at the end of the period.

The UNDP Second Quarter Report for the period ending June 30, 2006 provides some financial summary tables on DDR expenditures and commitments for the quarter, broken down by project activities. The tables show contributions received from each donor and expenditures allocated per donor. They list cumulative amounts for a period beginning as early as March 2003. The cutoff period used by UNDP differs from CIDA's. A 3-year phase II project started in 2005.

The Program/Desk prepared a short report for the file describing the due diligence it has exercised in assessing whether or not CIDA should continue to support the DDR project and provide additional funds to UNDP. Considering that a dedicated Law and Order Trust Fund (LOTFA) was establish to receive funds for DDR, UNDP provides donors with regular progress and financial reports and an International Observer Group (of which CIDA is a member) oversees management of the DDR program, CIDA is in a position to exercise due diligence on funds transferred to UNDP for the DDR project.

General Assessment

Since armed conflict has not fully stopped, DDR is a profoundly challenging endeavour. The reintegration has been difficult to achieve. Legal formal and informal employment/work opportunities for ex-combatants are few and generally low paying. Trend data on progress is not readily available; and it is difficult to accurately estimate the numbers of combatants still existing.

"Coordination and mutual support among agencies involved in the process is minimal.²⁹ The absence of an outcome perspective in the provision of assistance and adequate monitoring of reintegration as outcome put at risk success in reintegrating ex-combatants to a civilian life of gainful employment.³⁰

4.1.10 Afghanistan Stabilization Program (ASP)

This project was intended to support the Government of Afghanistan, was financed through the ARTF Investment Window, and managed by the World Bank. CIDA and the WB have discussed how the ASP funds were to be re-preferenced and have agreed that CIDA would be able to exercise its preference towards existing and proven programs such as MISFA and NSP. Expenses will be reported against these programs. This project was suspended and not implemented for the reasons explained below.

In March 2005, CIDA made a grant of C$12M to the ARTF for the purpose of co-financing the Afghanistan Stabilization Program (ASP). The project, to be implemented by the Ministry of Interior, was expected to improve the government services available to people outside Kabul, thus lifting standards of living and contributing to greater prosperity. The total value of the project was estimated at US$239 million with support from other major donors including the UK, US, and Japan.

During the summer of 2005, the WB identified management problems, slow progress and other issues that were later confirmed in a DflD Interim Assessment and Audit. At CIDA's request, the CIDA C$12 million was held in a secure financial environment within the Trust Fund and remained unallocated. CIDA was able to redirect the funds to more effective projects, namely NSP and MISFA, also funded through the ARTF.

Lessons learned

Multi-donor mechanisms and prudent management and due diligence by CIDA have significantly mitigated the risks with this project.

4.1.11 Support to the Development of Free Media in Afghanistan (ASP)

The project was implemented under a contribution agreement between CIDA and the Institute for Media Policy and Civil Society (IMPACS), a Vancouver-based NGO.

Funds Invested: For the fiscal year 2004/05 and 2005/06, CIDA disbursed C$1.6 million of the C$2.1 million Phase II project. Multilateral Branch invested C$700,000 on a prior Phase I project with IMPACS.

Purpose of the Project: to increase the technical capacity and journalistic skills of women and support the development of women's media, using community radio.

Expected Outcomes

• Improved capacity of women to broadcast radio programs addressing the most pertinent issues for women;
• Support to community-based radio stations;
• Contribution to the development of media legislation in Afghanistan; and
• Promotion of the integration of Afghan journalists into the regional network of journalists in South Asia.

Results Achieved

• Of the 60 radio programs planned, only 34 were produced. (56 percent)
• Over 75 adults (mainly women) have been trained, with approximately 56 percent of these working in the Afghanistan media.
• The launching of four radio stations and one newspaper.

Financial Accountability

CIDA signed a contribution agreement with IMPACS on October 29, 2003 for $2 million for a project aimed at supporting the development of free media in Afghanistan. The project which was supposed to be in effect until August 31, 2005, was later amended for an extension to January 31, 2006 and a budget increase of C$100,000. At the request of CIDA Financial Compliance Unit, an initial visit was carried out in February 2004 to review the terms and conditions of the agreement, to examine the internal control system in place and to clarify CIDA's expectations with regard to financial reporting. An evaluation of the project was conducted in April-May 2005 and the final version of the report was released in September 2005. The report raised concerns about the financial management and records maintained at the radio stations level and suggested that these "be externally audited every year".

The recipient, as required by the contribution agreement, produced quarterly Annual and Final Financial Reports. Variances between forecast and actual expenditures were explained in the narrative report or in the transmittal letter when appropriate. Reporting in general was improved as a result of the evaluation. Considering the context in Afghanistan and the inexperience of the recipient, CIDA has exercised appropriate due diligence on funds invested in this project.

General Assessment³¹

In setting up the radio stations, IMPACS failed to provide adequate and appropriate capacity building in planning, technical assistance and training so that these stations could become financially and managerial self sustainable, and legally constituted under Afghanistan law. There was a lack of understanding of what was required in a fully sustainable radio station besides its media product/service. After the project ended, a US NGO (InterNews) integrated them into their community radio program. As well, the overhead costs were high: community radio programming and associated capacity development are generally much lower in cost per station. IMPACS did not sufficiently use the international best practices in community radio projects.³²

This finding reinforces the need to ensure that NGOs funded to work in Afghanistan have substantial experience in working in a post conflict country, in development project design and implementation, and strong financial reporting systems.

4.1.12 Western Basins Water Resources Project

The Western Basins Water Resources project with the Asian Development Bank (ADB) will rehabilitate and upgrade existing irrigations systems in the provinces of Badgis, Ghowr, and Herat in Western Afghanistan. The Ministry of Energy and Water (MEW) is the primary GoA partner.

In 2004/05 with a grant of C$1 million, CIDA co-financed the feasibility studies for the project: the "Hari Rud River Basin Study". These studies (12 components, including a gender analysis) have been completed, and are comprehensive and professional.³³

Funds invested: C$15 million co-financing grant (budget) to the ADB, FY 2005/06 to FY 2007/08. ADB is contributing US$14.5 million as a grant, and US$60.5 million as a loan. The loan agreement was signed in March 2006. Disbursements for this initiative for the review period were C$10 million.

Purpose of the Project: This project will improve rural livelihoods for 400,000 persons, most of who are now classified as poor or very poor.

Expected Outcomes

• Improved water management;
• Irrigation and water resources infrastructure;
• Increased agricultural productivity and rural livelihoods; and
• Stronger institutions for water resource management and irrigated agriculture.

Activities include: water management training for farmers, income generating opportunities for women and landless farmers, women's participation in water resources management, as well as establishing an effective river basin organization to manage and distribute the water on a sustainable basis.

General assessment

Slow decision making by the government has been problematic. After considerable delays, requiring the placement of an advisor in MEW, the GoA approval of the Request for Proposals for the implementation consultant is expected within the next few weeks. After proposal submissions and the selection of the implementation consultant, the Inception Mission is scheduled for mid-2007 and CIDA will participate.

Since implementation has been delayed, the project has not yet produced any results. CIDA has closely tracked the progress of the project's start-up.

4.1.13 Equality between Women and Men

There are a host of issues relating to equality between women and men to be addressed in Afghanistan.³⁴ It is acknowledged by a representative of the GoA that their government has a poor record on equality between women and men and a long way to go to improve the situation. While the Afghanistan National Development Strategy (ANDS 2006) incorporates equality between women and men issues and there is now a Ministry of Women's Affairs (MOWA), improving women's rights―particularly for rural and poorer women―may take decades in terms of both cultural and institutional reform. But there are encouraging signs according to the recent survey by the Asia Foundation. Perceptions about some aspects of equality between women and men are changing for the better. In response to the question "some people say that women should have equal opportunities to men in education: do you agree or disagree?" 59 percent agreed strongly and 33 percent agreed somewhat.³⁵

Summary of the CIDA Program and Results in Equality between women and men

There are already known examples of results in equality between women and men in the sense of reaching large numbers of women: for example, the significant percentage (more than 70 percent) of women clients in MISFA, and women's participation in the Community Development Councils in the NSP. In reviewing all the major CIDA supported projects, the most positive results on a significant scale tend to be within the ARTF/World Bank and related MRRD managed programs (MISFA and NSP). In comparison, the equality between women and men results in UNDP managed programs are relatively unknown partly because its reporting on equality between women and men is weak as discussed further below.

Mainstreaming and funding on a significant scale to equality between women and men specific projects began in 2006. In mid-2006, partly based on recommendations after a scoping mission, CIDA restructured its strategy in Afghanistan to include the Role of Women and Girls in Society as one of its three strategic sectors; the two others are Democratic Development and Effective Governance, and Rural Livelihoods. A strategy on equality between women and men is in draft form with three interlinked elements: girl's education, economic livelihoods and human rights. A Gender Working Group was formed in 2006 but has had little time to meet given the workload with communications and daily Program demands in particular, as described elsewhere in the Report.

In the human rights element of the strategy, the Women's Rights in Afghanistan Fund (WRAF), implemented by Montreal-based Rights and Democracy (R&D), was one of the few equality between women and men-specific projects undertaken so far. An evaluation of this project found that, while there were some successes, there were no significant organizational development results and the reporting was very weak.³⁶ The final report on the first phase submitted by R&D in January 2007 did not provide much insight on the implementation challenges and how these could feasibly be addressed in future.

Another gender-related CIDA project, Media Support implemented by IMPACS, is reviewed in the overall project results section of this Report.

Below is an overview of the larger CIDA supported equality between women and men initiatives in process and progress to date:

Recently approved, the C$15 million Girls Primary Education Project to establish 4000 schools is being implemented by BRAC through a Contribution Agreement with BRAC and involving the Ministry of Education. Given that BRAC has outstanding and recognized experience in delivering results in primary education for girls³⁷, and that the Ministry of Education is considered as having one of the best Ministers, there is a high probability that this project will improve access to quality education for girls. Choosing an experienced partner such as BRAC would appear to be a sound decision.

In terms of the economic livelihoods component, the initiatives are just starting. A new CARE/WUSC project will transform a 10+year old food aid project to destitute women in Kabul into a vocational training/micro business development program based on a model WUSC has used in Sri Lanka. The previous phase of this project (2001-2006) implemented by CARE received $15.5 million from Multilateral Branch.

In the human rights element of the strategy, the main project under consideration is a second phase of the Women's Rights in Afghanistan Fund (WRAF) implemented by Rights and Democracy (R&D) based in Montreal.

A CIDA education mission was recently in the field to explore other investments such as potential support to the World Bank designed Education Quality Improvement Program, and assistance with the National Education Plan.

Mention must also be made of the resource person CIDA has provided as a technical advisor to the Ministry of the Interior. This resource has significant knowledge on tackling gender issues, police reform, and institutional and donor programming realities. Her work has focused on guiding reform, for example, in the effective use of women police officers, establishing family violence units, and posting women police officers in parks and schools.

Given the large proportion of CIDA funding through the UNDP, in late 2005 CIDA commissioned a desk review of the quality and extent of equality between women and men components in the nine UNDP projects CIDA was currently supporting. The desk review found the equality between women and men elements to be very weak and subsequently conducted discussions with the UNDP both in Kabul and New York. The outcomes of these discussions are not yet clear, and the CIDA Afghanistan Program has not devoted the required time to address these reporting challenges experienced with this UNDP project.

After the CIDA desk review, the subsequent scoping mission recommended that CIDA not directly support the Ministry of Women's Affairs (MOWA). Weak leadership and the common capacity weaknesses in many ministries led CIDA to this conclusion. Nine other donors (lead agency UNIFEM) were already supporting MOWA and expressed frustration with the progress. A new minister of MOWA, who visited Canada in 2006, presented a proposal to CIDA to fund via the UNDP a project to promote equality between women and men capacity within the public sector. An internal CIDA analysis concluded that the proposal is too ambitious. CIDA is currently reviewing potential support to a portion of this proposal.

Other Evaluations on equality between women and men Programming

There are many equality between women and men reports and equality between women and men "talk" (as one informant said). A brief review of two other donor evaluations³⁸ point to acute challenges―both in Afghanistan and within donor agencies. Relevant findings from these reports are:

• The Gender Advisory Group (of donors and the GoA) is not very effective and donor coordination is weak;
• Norwegian NGOs understand the importance of equality between women and men; however, "there is a lack of institutional competence about how to go about this work in relation to specific projects"; and
• Identify a few basic objectives to foster women's participation (i.e. keep it simple).

General Assessment

Focused CIDA programming in equality between women and men, with a strategy and timeframe, is in its early stages. Earlier gender specific projects (now completed) have had mixed results. With much more understanding of the issues and the terrain, CIDA is moving, to some extent, towards working with more experienced and capable partners.

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4.2 Use of Funds and Accountability Framework

4.2.1 Use of funds

All major projects or initiatives on the Afghanistan Program, with disbursements of $1 million or more for the period covered by the Review, are reflected in the Annex 2. For each project, it is indicated which funding channel was used, and whether the funds were transferred using a grant or a contribution agreement. Projects are also categorized by sectors. The projects for which disbursements were less than $1 million are grouped under a separate line. The total disbursement for the review period (i.e. from April 2004 to January 31, 2007) was $285 million.

Our review of the numerous reports related to the 12 projects examined from various credible sources and partners confirmed that Program funds have been used for intended purposes as outlined in the RRMAF. Indeed, based on:

• the planned budget allocation, and
• our analysis of financial and activity reports submitted by the World Bank, United Nations Organizations, implementing partners, CIDA monitoring reports and Joint donors evaluation reports.

We conclude that the Afghanistan funds were generally spent for the intended purposes. In addition, audit reports of projects examined by the Auditor General of Afghanistan attested to the fairness of information presented in the financial statements produced by implementing partners

4.2.2 General Accountability Framework

One of the objectives of this review was to review the accountability framework used by the CIDA Afghanistan Program/Desk and its partners in order to assess the adequacy of controls over the use of project funds.

The Review Team examined the adequacy of the oversight mechanisms used by CIDA and its Partners, as part of the accountability regime. There are four categories:

1. CIDA corporate accountability;
2. Afghanistan Program oversight;
3. Oversight at the level of multilateral partners, and
4. Oversight at the Donor/Partner Country Level―The Joint Coordination and Monitoring Board (JCMB).

4.2.2.1 CIDA Corporate Accountability (Audit and Evaluation)

At the Corporate level, CIDA has Evaluation and Internal Audit policies in place. Independent audits of CIDA programs are periodically conducted by the Internal Audit Division and reported to the Audit Committee (AC), which includes non-CIDA members and is chaired by CIDA's President. Independent Evaluations and Reviews of programs are conducted by the Evaluation Division and reported to the Evaluation Committee (EC), which meets on a regular basis to review, discuss and follow-up on corporate issues. This Review of the Afghanistan Program was part of the approved annual Evaluation Plan, and will be presented to the Evaluation Committee for review and approval for public release.

4.2.2.2 Afghanistan Program Oversight

The Afghanistan Program has access to the following tools to assist it in ensuring that funds are used for the intended purposes:

a) Financial audits of contribution agreements are regularly conducted by the CIDA Financial Compliance Unit of Human Resources and Corporate Services Branch. The Unit is responsible to assess whether funds transferred to the recipient are used in compliance with the terms of the agreement. CIDA proceeds with a two-step approach: an initial visit to the new CIDA partner to explain the terms and conditions of the CIDA agreement and reporting requirements, followed by a financial audit of the contribution on site a year later. Among the projects selected by the Review, the Unit conducted financial audits on 2 of the 12 projects examined as required in the criteria outlined in the Agency cost audit policy.

b) Afghanistan Desk-led evaluations: CIDA reinforces its oversight with the periodic use of external Consultants to conduct Desk-commissioned evaluations of its projects. In the Afghanistan Program, third-party evaluations have been done on 3 projects: the NABDP, the Support to the Development of Free Media, and the Rights and Democracy projects.

c) Monitoring by CIDA HQ and Field staff: This oversight mechanism is use by CIDA HQ and Field staff to follow-up on project activities during their implementation. In addition to periodic field visits to project sites by Program staff and periodic reports from implementing partners, the Program is supported by external CIDA Monitors, (a team of two independent consultants hired by the Afghanistan Program to provide information on the progress of projects that make up the program at six-month intervals). The reports of the Monitors are based on clear TORs, and provide adequate and detailed information to CIDA program managers on progress in terms of results and funds used for intended purposes. Significant issues are also highlighted. These reports are subject to a challenge process by the Afghanistan Program staff. The Program has benefited from 3 such reports from the Monitors to date.

A good example of project monitoring exercised by the HQ and field staff is the Afghanistan Stabilization Program (ASP). In March 2005, CIDA made a grant of C$12 million to the ARTF for the purpose of co-financing the Afghanistan Stabilization Program (ASP). The total value of the project was estimated at US$239 million and other major donors included U.K. U.S. and Japan. During the summer of 2005, the WB identified management problems, slow progress and other issues that were later confirmed in a DflD Interim Assessment and Audit.

The due diligence exercised by the CIDA was particularly valuable for the ASP project. At the Program's request, the CIDA $12 million was held in a secure financial environment within the Trust Fund. CIDA was able to redirect the funds to other efficient WB's projects, namely NSP and MISFA, also funded through the ARTF.

In our review of Program documentation, the Review team noted some areas for improvement. In order to facilitate due diligence and decision-making by Program staff, the Program needs to ensure that monitoring reports include the following types of information:

• Financial and development results presented in a cumulative fashion i.e. include the trends and relative progression between monitoring periods with variance analysis when possible;
• Measurement of the progress on a periodic basis for each major initiative; and
• Recommendations on necessary corrective actions clearly laid out.

Our review of Program documentation also revealed that monitoring and intelligence gathering activities performed by staff could be documented on a more systematic basis to facilitate the Program to build and maintain a corporate memory for knowledge sharing and use in subsequent decision-making (e.g. mission reports, annotated reports received by CIDA's partners, etc.).

4.2.2.3 Oversight by Multilateral Partners

As mentioned in the previous section, the majority (more than 80 percent) of the funding for the Afghanistan Program is channelled through the WB and UN Agencies as grants for the benefit of National Programs with the GoA as the implementers. Grants are used as the transfer instrument because these partners are experienced and well known to CIDA. The appropriateness of reports received by CIDA's partners and the actions taken to follow-up on the recommendations were reviewed.

For each transfer of funds to International Institutions that we examined, there was an official agreement or a modification to the agreement. Agreements contained a clause requiring the recipient organisation to produce an annual report on activities and annual financial statements. In addition, the WB agreement specifies the requirement to prepare quarterly report on its activities, including disbursements made out of the grant funds.

a) World Bank Trust Fund

All CIDA funds disbursed to the WB are transferred to the Afghanistan Reconstruction Trust Fund (ARTF). The Fund was established in May 2002 to serve as a coordinated financing mechanism for the GoA budget support (the Recurrent Cost Window) and for priority reconstruction programs and projects (the Investment Window).

Since commencing operations, the ARTF has successfully mobilized US$1.36 billion in grant contributions from 25 bilateral donors and is the primary instrument for financing the civilian operating budget. Canada's contribution represents about 10 percent of all contributions and ranks fifth among all donors. For the three years period covered by the Review, CIDA has contributed C$139 million in grants to the Fund, which represents about 50 percent of the total CIDA Afghanistan disbursements.

Governance Structure and Oversight: The size of funds made available, the large number of donors involved, and the political importance attached to the success of donor support to Afghanistan, has meant that the governance of the ARTF has been of particular importance. A multi-layered and multi-dimensional governance system was put in place to provide assurance that funds going to the ARTF are used for the intended purpose.

ARTF Administrator: As the Administrator of the ARTF, the World Bank regularly monitors the utilisation of funds in all ARTF components and is responsible for all disbursements, in conformity with its own procedures. The World Bank provides an annual report to donors with a management assertion, together with an attestation from the Bank's external auditors, on the satisfactory performance of the procedures and controls used by the Bank in administering the ARTF.

Management Committee (MC): A Management Committee (MC) consisting of representatives from the Asian Development Bank (ADB), the Islamic Development Bank (IDB), the United Nations Development Program, and the World Bank oversees the ARTF. A representative of the GoA attends meetings as an observer. Meeting on a roughly quarterly basis, the MC is responsible for reviewing progress against agreed recommendations and for making key management decisions. These latter include the approval of investment projects proposed for ARTF funding and of expenses eligible for reimbursement under the Recurrent Window.

Steering Committee (SC): The Steering Committee (or Donors Meeting) is made up of the MC members, all donors contributing more than US$5 million per year, plus two seats for smaller donors on a rotational basis. The Donors Meeting is held on a quarterly basis, and provides a forum for updating donors on the status of activities, with a focus largely on administrative and performance matters.

Monitoring Agent (MA): The World Bank is also supported by an external Monitoring Agent (MA), a competitively contracted management and accounting firm, (currently PriceWaterhouseCoopers), which monitors and reviews disbursements, payments, accounting and reporting. The MA is charged with the provision of information for a variety of oversight tasks, including but not limited to:

• providing timely reviews of withdrawal applications to World Bank;
• screening GoA withdrawal applications for consistency with grant agreement and eligibility criteria;
• monitoring expenditures of ARTF to ensure that they are disbursed for designated purposes; and
• working with MoF to ensure that rules for eligibility are widely understood.

Internal Audit Department: As the ARTF Administrator, the World Bank request its Internal Audit Department to conduct audits of the ARTF. Results of the internal audit are shared in summary form within the MC, where issues arising are discussed and agreements reached on required actions. The Administrator subsequently shares with donors the principal issues raised in the internal audit and the MC's decisions.

Assessment of WB Oversight Mechanisms

CIDA's projects funded through the WB are generally well documented and have good controls mechanisms in place to ensure that funds transferred to the projects are used for the intended purpose. All funds received from donors are deposited in a unique Trust Fund administrated by a good governance structure (Administrator, Management Committee, Steering Committee). An independent oversight Monitoring Agent (PriceWaterhouseCoopers) examines recurrent cost expenditures (GoA Budget Support), based on established criteria, to ensure that only eligible expenses are paid by the Trust Fund.

Progress and annual reports prepared by the Bank are usually quite comprehensive and include valuable financial information. They are usually published on the WB web site and automatically distributed to country donors. Considering the size of investment projects and the number of donors, evaluations performed on projects usually involve many donors, are transparent, reports are widely published when received and results/issues are discussed by the Steering Committee. If an external audit is carried out on one of the projects financed by the WB, the report is made available to donors.

b) Projects through UN Organizations

All CIDA grant agreements signed with UN organizations contain a standard clause requiring that an annual report on activities undertaken and progress achieved in relation to the activities, as well as annual financial statements showing project expenditures are to be provided to CIDA.

The UNDP National Execution Guideline, which defines and clarifies UNDP's overall policies and procedures and provides practical steps on how to best apply national execution in the country, provides good description of the Financial Management System, payment modalities for expenditures and financial reporting requirements. The Guide indicates that the UNDP financial system has the capability to report revenues and expenses by donor country.

As the UNDP works on a project basis, different implementing partners implement each of them. There are variations from one project to another. Some have better reporting than others. We found projects where reports contain tables showing expenditures broken down by activity and by donors, while for other projects there was no information on expenditures.

The Review Team found occurrences where funds were withheld by CIDA, because there was not enough information received on project progress from the UN implementing institution. In one case, a letter requesting additional funding was later received from the institution and indicated where the CIDA previous year funds were used or disbursed to which implementing partner.

Assessment of Oversight Through UN Organizations

Projects funded through UNDP or other UN organizations show inconsistencies in the type and quality of information reported by different UN organizations. Our examination of existing documentation for UN projects demonstrates that, in general, the project-planning phase is well documented, but little documentation exists to support the execution and monitoring phase. Common problems include:

• More focus on activities than outcome and results;
• Vague executive summaries, omitting which parts of the program are working well versus which are not and steps being taken to address the problems; and
• Limited financial data and where it exists, the focus is more on donor contributions than project actual expenditures.

Oversight Mechanism at the Donor/Partner Country Level

The GoA and the international community have established a Joint Coordination and Monitoring Board (the JCMB) for the implementation of the Afghanistan Compact. The JCMB is co-chaired by a senior GoA official appointed by the President and the Special Representative of the UN Secretary General for Afghanistan, with participation of senior GoA officials and representatives of the international community, and supported by a small Secretariat and experts. It meets on a semi-annual basis and ensures coherence of efforts by both the GoA and the international community to implement the Compact, including providing regular and timely public reports on its execution. The JCMB receives input for its assessment from Afghan state institutions and sectoral coordination mechanisms involved in implementation of the ANDS as well as the international community.

In addition to progress on the policy and sectoral indicators in the Compact, the JCMB also looks at the financial aspects. The JCMB issues semi-annual reports, which are published on the GoA Website. The reports are balanced and informative.

c) Projects Funded Directly by CIDA

For projects directly funded by CIDA, a contribution agreement was used as the transfer instrument to specify conditions for payment to the recipient and to describe the project LFA, budget and reporting requirements. All agreements contain a clause allowing CIDA to conduct an audit, where necessary. For one project selected, an initial visit was carried out to a new Executing Agency to ensure that the recipient is capable of producing adequate financial information that meets CIDA requirements. The report presented numerous recommendations that resulted in an amendment to the contribution agreement.

4.2.3 General Assessment of the Accountability Framework

An appropriate accountability framework is in place and being followed to ensure that funds are being used for the intended purpose.

In order to be more effective and efficient and avoid duplication of controls, most of the Donors, including CIDA, decided to work together in the spirit of the Paris declaration and according to the commitments made during the international conferences. The idea was to support Afghanistan by using international multilateral organizations such as the World Bank and UN Organizations. These international organizations have their own infrastructure including control and oversight mechanisms. Our review confirmed the existence and the use of these independent and objective oversight mechanisms. The reporting was providing sufficient information to support CIDA's accountability vis-à-vis the Parliament and the Canadian public.

Our analysis of the Program accountability framework confirmed the existence of various tools and oversight mechanisms (e.g. internal audit, Desk-led evaluations, financial audits, and monitoring) that provide the required information for decision-making and accountability purposes. Our analysis also confirmed that the Afghanistan Program has used these tools to complement its own internal control mechanisms such as: monitoring missions of HQ staff, intelligence gathering from the field staff, due diligence exercised in the selection of Partners, etc. With regard to risk management, we observed that mitigation actions were taken by management to minimize financial risks (e.g. working in conjunction with donor community and multilateral organizations that have good track record and infrastructure on site) and operational risks (e.g. working closely with DND with regard to security measures to protect CIDA's field staff and its partners and adhering to standard operating security procedures).

In summary, appropriate oversight mechanisms exist and the level and quality of information provided allowed CIDA to protect its contribution and obtain information about the use of funds and results achieved. However, our review revealed that the reporting related to projects managed by UNDP need to be improved to fully meet CIDA's requirements.

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