G. Implementation Arrangements

Table 2: Financing Plan ($ million)

Source Foreign Exchange

Local Currency Total Cost %

Asian Development Bank 4.0 11.0 15.0 74

Government of Finland 2.8 1.9 4.7 23

Government of Cambodia 0.1 0.5 0.6 3

Total 6.9 13.4 20.3 100

Source: Asian Development Bank estimates.

G. Implementation Arrangements

1. Project Management

39. The Ministry of Interior (MOI) will act as Executing Agency (Appendix 6).46 In the context of decentralization and deconcentration,47 MOI has been tasked with building the central and local institutions that will support the operation of the entire sub-national system of governance and implementing the related capacity-building effort. While the Project will be executed predominantly at the commune level and rely on the decentralized structures strengthened under the Seila program, at the central level MOI plays a leading role in decentralization. MOI's main functions will be setting overall project direction, resolving implementation problems, reviewing project progress and performance against milestones (with reporting every 6 months), ensuring flow of funds to the communes48 and timely and adequate counterpart funding by the Government, and carrying out certain procurement under outputs 1 and 3.

40. The Ministry of Economy and Finance (MEF) will assist MOI in the smooth transfer of funds from the central to the commune levels. MEF has already created a local finance department to provide assistance and monitor the performance of sub-national administrations in the management of local finances. The Project will assign a domestic consultant to strengthen its operations. MEF also led the task force that drafted guidelines, standard operating procedures, and detailed instructions for financial management and procurement under donor-assisted projects.49 These guidelines, procedures, and instructions are expected to be formally approved by the Government in 2005, and the Project will provide an opportunity to apply them on a limited basis.

41. CARD, through its secretary general, will head a project steering committee established to provide policy and strategy guidance.50 CARD will also communicate project outcomes to the Council of Ministers. The steering committee will meet at least twice a year. An international consultant will assist CARD intermittently.

46 MOI is the Executing Agency for the Commune Council Development Project. 47 Royal Government of Cambodia. 2005. Strategic Framework for Decentralization and Deconcentration Reforms.

Phnom Penh. 48 First- and second-generation imprest accounts will be opened at the central level for this purpose (see

Disbursement Arrangements section below). 49 This reflects the commitment made by Cambodia to implement the "Declaration by the Royal Government of

Cambodia and Development Partners on Harmonization and Alignment" (December 2004), and thereby improve the management of external assistance. 50 The project steering committee will include the Cambodia National Mekong Committee, the Ministry of Agriculture,

Forestry, and Fisheries, MEF, MOE, MOI, the Ministry of Rural Development, and the Ministry of Women's Affairs.

Other ministries can join upon request.

42. MOI will also be the Implementing Agency for output 1. The commune-level committees and working bodies that were strengthened under the Seila program have been enshrined in legislation but many institutional structures at the central, provincial, and district levels are to be reconfigured in a further phase of structural change itemized in the Government's strategic framework for decentralization and deconcentration.51 Importantly, the Government is drafting an Organic Law on Deconcentration to introduce decentralized governance structures at provincial and district levels (dovetailing with those created at commune level), streamline relations between government agencies at the central and provincial levels (now clouded by overlapping responsibilities and a mix of centralized, decentralized, and deconcentrated features), and devolve own-resource financing to sub-national levels. By February 2007, when the next commune elections take place, a successor to the Seila task force secretariat will be operational. Meanwhile, the existing institutions will continue to function, perhaps with different titles, and their roles will eventually be integrated into new structures developed according to the strategic framework.52 The Project will therefore work through the existing institutional arrangements but with such management and organizational flexibility that its structures and processes can evolve and blend with those of the anticipated new administrative structures.53 As an important move toward implementing the recommendations in the strategic framework, the Project will set up commune bank accounts as the vehicle for moving funds to the communes. The provincial local administration units in MOI's department of local administration will oversee the CLFTs.

43. The TSBR secretariat, in close consultation with DOF, IFREDI, and MOE, will be the Implementing Agency to accomplish output 2. The long-awaited sub-decree on community fisheries management was approved on 20 May 2005, and the draft Fisheries Law is also expected to be ratified by the national assembly before December 2005. The Government intends to reinforce its commitment to the edicts of biosphere reserve zoning. Critical to this is stopping the operations of fishing lots in the core areas once a management system compatible with biodiversity conservation has been instituted.

44. The activities for output 3 have been composed to promote the rapid accomplishment of output 1. CARD will equip itself to improve coordination for community-driven development. Given its important and increasing role in the implementation of local development planning through decentralized and deconcentrated agencies, MOI will also act as Implementing Agency in enhancing the skills base for community-driven development. MOE will act as Implementing Agency in educating for the protection of natural resources.

45. The CLFTs will oversee the implementation of livelihood support at commune and village levels. Each CLFT will be headed by the chief of the provincial local administration unit and will have a permanent administration and a representative from each of the provincial departments of rural development, environment, and women's affairs, and the provincial office of fisheries. It will also include commune facilitators,54 posted in each commune,55 to assist communities in (i) identifying activities suitable for funding under the CLF,56 and (ii) preparing the activities for

51 The strategic framework was expected to be approved by the Council of Ministers in August 2005. 52 The new decentralization and deconcentration systems and processes will be introduced in two phases: a transitional phase of 2 years (2006–2007) and a consolidation phase of 3 years (2008–2010). 53 Retaining CLFT staff in the new structures would further guarantee sustainability. 54 Commune facilitators were created under the Seila program (some 800 have been appointed in 24 provinces) to assist commune councils in planning and to monitor the implementation of works. 55 An additional 74 commune facilitators (48 for Battambang, Kompong Chhnang, and Pursat; and 26 for Siem Reap and Kompong Thom) will be selected and appointed. Each commune will be represented by two facilitators. 56 The CLFTs will take the opportunity to promulgate the technical packages based on sustainable natural resource management that are being designed under component 2 of the TSEMP.

submission to the CPBC.57 Additionally, the Project will attach to each CLFT domestic consultants responsible for guiding, training,58 fielding, and supporting the line agency staff and commune facilitators in the performance of their duties. An international consultant to be based in each of the CLFTs in Pursat and Siem Reap will manage and coordinate CLF implementation.59 The CLFTs will approve the activities, monitor procurement by the commune councils, and report on CLF-related activities to MOI through the provincial local administration units.

2. Implementation Period

46. The Project will span 4 years (Appendix 7). All project activities are expected to be fully completed within this time. But much will depend on a speedy start-up to output 1. During the first 6 months there will be an intensive effort to build skills and awareness for sustainable livelihoods. In each commune, information dissemination workshops will be held and awareness-raising materials (e.g., pamphlets, posters, and samples of activity proposals) in the Khmer language will be distributed to villages through their CPBC representatives. Commune facilitators60 will be recruited, and a first round of priority activities61 for funding under the CLF will be identified in consultation with the CPBCs. Activities will be screened by the consultants to eliminate any that are unsuitable, and a combined list will be submitted to the commune councils for approval. Detailed designs, cost estimates, business plans, and implementation arrangements will be prepared for approved activities, and then contracts for their implementation will be prepared and awarded.62 The consultants will use this first cycle to provide direct, hands-on training to the commune facilitators and other agents (e.g., village representatives, administrative staff of commune councils, and CPBC members) in identifying, screening, designing, and implementing activities under the CLF. Adherence to this plan of action should ensure that later activities for output 1 proceed smoothly. The accomplishment of outputs 2 and 3 is not expected to present difficulties.

3. Procurement

47. Civil works, goods, and related services will be procured in accordance with ADB's Guidelines for Procurement. Civil works for output 1, such as water supply and sanitation, schools, and small village works, that cost less than $500,000 will be procured through local competitive bidding procedures acceptable to ADB. Their small and scattered nature is not likely to attract international bidders. Vehicles, machinery, and office equipment will be procured through international shopping if the cost per package is from $100,000 to $500,000, and through local competitive bidding if the cost is less than $100,000. Goods with a value of less than $50,000 can be purchased directly. Service contracts may be given to NGOs. The commune councils, through the bidding committee, will procure civil works, goods, and related services for eligible activities. Details of procurement packages will be determined during project implementation. The training packages under output 3 will be procured by MOI.

57 The commune facilitators will have extensive experience in facilitation, including presenting, synthesizing, and responding to organizational issues raised. 58 Training will focus on awareness raising, group formation, planning, coordination, quality assurance, and reporting. 59 Pursat has 13, Siem Reap 10, Battambang 8, Kompong Chhnang 3, and Kompong Thom 3 target communes. 60 The long list of candidates will be drawn up by the commune councils based on criteria agreed with CPBCs and line agency staff assigned to the CLFTs. 61 Most of the activities are expected to be drawn from existing commune development plans—those that were not funded in the current development budget or multi-year plans. 62 The Project will aim to complete these operations in time for the communes to receive the CLF funds together with the development funds, which are released each February by the national treasury.

4. Consulting Services

48. The Project will require 841 person-months of consulting services—708 person-months by domestic consultants and 133 person-months by international consultants (Appendix 8). The consultants will be selected and engaged according to ADB's Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the selection and engagement of domestic consultants. In view of its experience, capacity, and commitment, the WorldFish Center of the Consultative Group on International Agricultural Research will be appointed by direct selection for output 2.63 Live and Learn Environmental Education64 will be appointed by direct selection for the activities in output 3 that relate to education for the protection of natural resources. ADB's quality- and cost-based selection method will be used in recruiting all other consultants. Two international consultants and 20 domestic consultants will be based in the project provinces. A team of international and domestic consultants will be attached to MOI's department of local administration65 in Phnom Penh.

5. Disbursement Arrangements

49. The Government will open a first-generation imprest account at the National Bank of Cambodia into which grant funds from ADB will be deposited. The amount to be deposited into the first-generation imprest account will not exceed the equivalent of $1 million. A secondgeneration imprest account will be established in the name of MOI in a commercial bank, acceptable to the Government and ADB, for the purpose of replenishing and liquidating the CLF and for other activities under the Project. The ceiling of the second-generation imprest account will not exceed $500,000. ADB's statement-of-expenditures procedure will be used to reimburse eligible expenditures and to liquidate advances to the imprest accounts. The ceiling on the statement of expenditure is $100,000 per payment. The first- and second-generation imprest accounts will be established, managed, replenished, and liquidated according to ADB's Loan Disbursement Handbook of January 2001, as amended from time to time, and detailed arrangements agreed upon between the Government and ADB. The CLF grant funds will be transferred from the second-generation imprest account to the account of each of the 37 commune councils at a commercial bank acceptable to ADB and MOI (Appendix 9).

6. Accounting, Auditing, and Reporting

50. MEF, MOE, MOI, the TSBR secretariat, and the CLFTs will maintain separate accounts strictly for the Project. The CLFTs will maintain ongoing and up-to-date accounts for the Project according to sound and acceptable accounting principles and will submit quarterly reports to MOI through the provincial local administration units. The CLFTs will use the financial management procedures in the Financial Management Manual and its supplement.66 MOI will prepare an annual financial report on the Project's accounts and submit it to MEF and ADB. The imprest accounts and statement of expenditures will be audited as part of the regular audit of

63 The WorldFish Center works on inland and marine fisheries in developing countries. It has existing collaboration arrangements with DOF on issues dealing with institutional frameworks, livelihood analysis, and economic valuation. It has just opened a regional center in Phnom Penh. 64 Live and Learn Environmental Education is a regional nongovernment organization specializing in environmental education. It works with poverty-stricken communities to develop community-based problem-solving models and with government to integrate these models into national curricula and education strategies. It has been tasked with delivering the national environmental education and awareness campaign under component 1 of the TSEMP. 65 A project manager no lower in rank than a director will serve full time throughout the Project. 66 ADB and World Bank. 2005. Financial Management Manual for Investment Projects Financed by ADB and the

World Bank. Manila. Also relevant here is the Manual on Operating Procedures for Externally Assisted Projects

Under the Purview of the Ministry of Economy and Finance (undated). Manila.

the Project's accounts and financial statements, and audit opinions on the imprest account and statement of expenditures will be set out separately according to ADB procedures. The Project's accounts will be audited each year by independent external auditors acceptable to ADB. The audited accounts, together with the auditor's report, will be submitted to ADB not more than 6 months after each financial year. MOI's decision in June 2005 to establish provincial and municipal C/SF accountability working groups is also expected to promote the transparent, accountable, and effective use and implementation of the CLF. The annual audit report should specify the auditor's opinion on the imprest accounts and statement of expenditures.

7. Anticorruption Measures

51. ADB's Anticorruption Policy was explained to and discussed with the Government. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent collusive or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB's Anticorruption Policy are included in the Loan Regulations and the bidding documents for the Project. In particular, all contracts financed by ADB in connection with the Project will include provisions specifying the right of ADB to audit and examine the records and accounts of the Executing Agency and all contractors, suppliers, consultants, and other service providers as they relate to the Project.

8. Project Performance Monitoring and Evaluation

52. Project performance monitoring and evaluation will be based on the design and monitoring framework and the baseline surveys specified in it, as set out in Appendix 3. Monitoring will also be undertaken by the Executing Agency as part of the standard procedures required by ADB through the disbursement of funds and the semiannual and annual reporting. The Implementing Agencies will be responsible for providing the Executing Agency with quarterly progress reports on their respective outputs.

9. Project Review

53. ADB will conduct semiannual reviews facilitated by CARD. The reviews will (i) examine the appropriateness of implementation arrangements and schedules of activities, (ii) assess the procedures for village and commune development plans, (iii) review compliance with agreed procurement procedures, (iv) analyze the outcomes of the capacity-building and training programs, and (v) monitor, in consultation with the TSBR secretariat, the effectiveness of safeguard procedures. At mid-term, a comprehensive project review will be jointly undertaken by ADB and the Government. Within 3 months of project completion, MOI will submit to ADB a project completion report in the standard ADB format.

10. Gender Action Plan

54. The analyses conducted during project preparation confirmed gender inequality and the particular vulnerability of women, especially those who head households.67 Women have few opportunities to take action because of traditional gender roles in Khmer society.68 Thus, they

67 Women-headed households constitute about 25% of all households in the project area. 68 Issues raised by women included (i) high levels of indebtedness, (ii) lack of technical know-how for livestock raising, (iii) the passive roles expected of them in community decision-making meetings, (iv) lack of educational opportunities for the children of poor households, (v) heavy workloads for women heads of households, (vi) child labor especially among children of poor households, (vii) lack of maternal and child health facilities, (viii) lack of