INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
               INTERNATIONAL DEVELOPMENT ASSOCIATION




                     PROGRESS REPORT NO. 2


 ON THE IMPLEMENTATION OF MANAGEMENT’S ACTION PLAN IN RESPONSE TO

THE INSPECTION PANEL INVESTIGATION REPORT (REPORT NO. 9184-ET) ON THE



                             ETHIOPIA
    PROMOTING BASIC SERVICES PROJECT (CREDIT NO 51620)




                          FEBRUARY 23, 2017




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                 ABBREVIATIONS AND ACRONYMS

BoFED    Bureau of Finance and Economic Development
CDP      Commune Development Program
DA       Development Agent
EIO      Ethiopian Institution of the Ombudsman
FTA      Financial Transparency and Accountability
GRM      Grievance Redress Mechanism
IBEX     Integrated Budget and Expenditure
IDA      International Development Association
MAP      Management Action Plan
MoFEC    Ministry of Finance and Economic Cooperation
OFAG     Office of the Federal Auditor General of Ethiopia
PBS 3    Promoting Basic Services Project Phase III
PFM      Public Financial Management
SA       Social Accountability


        Fiscal Year:   From July 8 to July 7 of the following year




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                                                              Ethiopia
                                                  Promoting Basic Services
                                                       (Credit No 51620)
                                                    Progress Report No.1
                                   Implementation of Management Action Plan


ABBREVIATIONS and Acronyms .......................................................................................... 2
EXECUTIVE SUMMARY ......................................................................................................... 4
I.        INTRODUCTION ........................................................................................................ 5
II.       PROGRESS OF MANAGEMENT ACTION PLAN IMPLEMENTATION............................... 5
III.      NEXT STEPS.......................................................................................................... 12




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                                   EXECUTIVE SUMMARY

  i.   This is the second report to the Board on the implementation of the Management Action
       Plan (MAP) for the Ethiopia Promoting Basic Services Project Phase III (PBS 3). Since
       the last report, actions have been completed regarding production of a safeguard
       management manual for communities (woreda); support for smallholder agriculture in
       Gambella; support for public financial management (PFM) in the woredas; and
       benchmarking of woreda PFM performance. Two actions remain outstanding, concerning
       improvement of the link between social accountability and financial transparency, and
       training of grievance redress officers.

ii.    The Ethiopia PBS project operates nationwide and contributes to expanding access to, and
       improving the quality of, basic services such as education and health by supporting direct
       grants to local authorities that ensure adequate staffing and operations for such basic
       services, and by strengthening local capacity, transparency, accountability and financial
       management systems. The project has been instrumental to Ethiopia’s process of poverty
       reduction, economic growth, and increasing citizens’ voice through the delivery of quality
       basic services and improving accountability at the grassroots level.

iii.   The Bank’s Board of Executive Directors authorized an Inspection Panel investigation of
       PBS 3 in July 2013. It followed claims made by Anuak community members from Ethiopia
       that the World Bank’s support to PBS 3 was linked to alleged human rights abuses. Those
       allegations concerned the government’s Commune Development Program (CDP) in
       Gambella. The government, which cooperated with the Panel during this investigation, has
       denied the allegations.

iv.    The Panel concluded that the alleged harm did not stem from PBS 3. However, the Panel
       found that there was an operational interface, due to geographical and sectoral overlap,
       between the PBS and CDP, which the PBS 3 risk assessments did not adequately take into
       account. In response, Bank Management submitted a Management Action Plan (MAP) to
       address concerns, in particular with regard to risk assessment, financial management, and
       livelihoods.

 v.    More than half of the actions of the MAP were successfully completed and reported on
       during the first Progress Report, which was conveyed to the Board of Executive Directors
       on February 11, 2016. Many of the remaining activities have been completed since the last
       report was issued.

vi.    A six-month state of emergency was declared by the Government of Ethiopia on October
       9, 2016. After a short initial delay following the proclamation of the state of emergency,
       the implementation of activities related to Grievance Redress Mechanism (GRM),
       Financial Transparency and Accountability (FTA) and Social Accountability (ESAP) is
       now progressing well. The World Bank and other partners are closely monitoring the
       current situation in Ethiopia to ensure that the citizen engagement activities in the MAP
       can be implemented as expected.




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                                     III.    NEXT STEPS

8.      Next Progress Report to the Board. The next progress report will be provided in 12 months’
time, or when the remaining actions in the MAP have been completed, whichever comes first.




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