51905 NOVEMBER 2009 ABOUT THE AUTHORS CHRISTOPHE PREVOST Senior Water and Sanitation dsas Scaling Up Rural Water Supply Service in Benin: A Programmatic Approach and Budget Support Specialist, joined the Bank in 2001 and worked in the Africa Region. He has managed Rural Water People in rural areas of Benin have a greatly increased access to safe drinking Supply (RWS) projects in Rwanda water, thanks to government vision, donor support, and the investment and and Madagascar, conducted Public Expenditures Reviews in 7 West advisory assistance of the World Bank. In 2000, the government of Benin African countries, and participated began preparing the ministries of key sectors for a shift from a project in 15 Development Policy Lending (DPL) operations in five countries approach to a programmatic approach with enhanced budget support. The to lead the policy dialogue on RWS reforms. He then joined the World Bank, through Budget Support Operations1 and other donors, has Water and Sanitation Program in supported Benin's reforms in budget preparation and management and in South Asia in 2008. implementation of the country's Poverty Reduction Strategy Paper. The SYLVESTRE BEA Ministry of Rural Water Supply was part of this move, and Benin is on track Financial Specialist and Senior Consultant with the Africa Region, to meet the Millennium Development Goals (MDG) target for its rural coordinates a Public Expenditure drinking-water supply. The SmartLessons below share how the World Bank Review project in the Water and Sanitation sector in five contributed to Benin's remarkable progress in this sector, and what we Sub-Saharan Africa countries. learned along the way. Previously, he worked on Subnational Finance, a PRSC Impact Assessment in the RWS sector in Madagascar and Benin, and Municipal Finance in Burundi. CLAUDE LEROY-THEMEZE Senior Economist, joined the Bank in 2000 as Country Economist for Benin. She managed various Economic Sector Works and was task team leader of the first four DPL operations in Benin, and then prepared DPLs in Burundi and Congo. She joined the Indepen- dent Evaluation Group in 2007. APPROVING MANAGER Jaime Biderman, Manager, Africa Region. In 2004, Benin constructed more than 1,200 water points. A water point is a borehole with a hand pump that can serve 250 people. Or it may be a small supply system with communal standpipes--the equivalent of many water points. (Photos by Sylvain Adokpo-Migan) Background The program contained policy measures and outcome indicators for each operation. Then Initially, the World Bank's Budget Support a gradual transition toward a consolidated Operations (BSO) series was intended to programmatic approach was launched at support the implementation of Benin's both government-wide and sector levels. Poverty Reduction Strategy Paper with concessional financing through the national The first reason for including Rural Water budget processes. These operations focus on Supply (RWS) in the BSO was to enable the key policy and institutional reforms in Ministry of Rural Water Supply to continue priority areas and are designed to assist the to benefit from World Bank support, since government with establishing priorities and no new project could be prepared. Secondly, implementing a rolling core reform program. 1 Adjustment Credit (PERAC) and Poverty Reduction Support Credit (PRSC 1­6). IFC SMARTLESSONS -- NOVEMBER 2009 1 all of the sector stakeholders viewed policy dialogue Finance. The program budget became the reference through the BSO as the way to improve overall planning, framework for strategic and operational programming and strengthen relationships with the Ministry of Finance, boost for the monitoring and evaluation of all sector activities. All reforms of a difficult sector, strengthen harmonization and projects or capacity-building activities were de facto alignment of donors' interventions, and develop an effective included in the program budget, discussed, and validated monitoring and evaluation (M&E) system. by the Directorate of Water and the donors. The government RWS reform program included: i) Also, we supported the development of a roadmap setting implementing a sector-wide approach; ii) improving budget out clear annual targets for the acceleration of physical planning, execution, and monitoring through a medium- service delivery and financial investment/expenditure to term program budget; iii) increasing access to a reliable, achieve the MDGs in 2015. In Benin, the target was delivery affordable, and sustainable provision of water service; and of at least 1,350 new water points per year from 2005 to iv) improving the governance and management practices 2015. This roadmap provided a clear plan--a critical step for the small piped-water systems through a local public- toward harnessing the efforts of all sector players and private partnership (PPP) arrangement. promoting collective and coordinated action toward achieving the MDGs. Also, involvement of communes and As a result of all these efforts, Benin is on track to meet the regions in the formulation of investment plans and budgets MDG target of a 67 percent rate of access to potable water has increased progressively since 2002. In addition, a by 2015. Since 2001, the government has made significant procurement plan and an annual work plan were prepared progress in increasing the rural population's access to along with the program budget. potable water (from 33 percent in 2001 to 49 percent in 2008), and the sector execution capacity has been multiplied Introducing a planning procedure based on objectives gen- fourfold. In 2004, for the first time ever, Benin constructed erates a strong dynamic of responsibility, accountability, more than 1,200 water points against a target of 700, and and results. In Benin, for example, all programs and projects more than 2,000 in 2008. More than 500,000 people gained were consistent and aligned with the country's national de- access to safe water in 2008, against fewer than 100,000 in velopment strategies, regardless of their modes of financ- 2001--an outstanding performance in scaling up investment, ing and implementation. Donors' contributions to capacity since over the previous two decades no more than 500 building in the sector have increased. The program budget water points were constructed annually. Also, the water- has been critical in shifting the focus from a project ap- facilities functionality rate improved from 77 percent in proach to a programmatic approach in the RWS sector. At 2003 to 87 percent in 2006, due to better postconstruction the same time, it has contributed considerably to improved follow-up. (See Figure 1.) communication and coordination among donors, predict- ability of funding, harmonization of donor objectives, monitoring, and alignment with country sys- People Served 160,000 (1997) - 500,000 (2008) tems. And it has optimized the impact of both government and 600000 external financing. 500000 400000 This experience also has had a 300000 demonstration effect, with the 200000 program budget and the sector 100000 RWS roadmap being introduced in other countries: Mauritania, 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Rwanda, Madagascar, Mali, and Burkina Faso. Figure 1: Number of additional people served with safe drinking water per year. 2) Develop an accountability framework, including a credible Lessons Learned M&E system and participatory reviews. 1) Focus on sector planning first. First, to properly track physical achievement and financial disbursement, it is important to define performance Generally, this sector is heavily dependent on external indicators. But keep it simple--and make sure there are financing and is supported through multiple donors' internal resources and capacity to sustain the M&E system. projects, but coordination and planning are weak. In Benin, the Ministry of Water in 2002 put in place an M&E Introducing a medium-term program budget and MDG system, and it has been continually improved over time to roadmap can make a big difference. Including these new capture the physical and financial progress made by the planning tools prior to the second World Bank BSO had a sector. Indicators were simple and sufficient, and the great impact on the sector stakeholders' practices, and processes for gathering and storing information were ultimately on the performance of the sector as a whole. The clearly defined and easily implemented. The system includes sector program budget was used as an inclusive planning a central database for water points and an information vehicle for all stakeholders, including the Ministry of system for financial management. Annual program 2 IFC SMARTLESSONS -- NOVEMBER 2009 execution reports were improved over the period and arrangement for improving the management and produced in time to be presented to the Ministry of Finance sustainability of the water-supply systems of small towns was and for the joint government/donors annual sector review. one of the most difficult reforms to achieve in Benin. All of the stakeholders talked about it for years, but nothing really Second, the participation of all stakeholders is required in moved. Then, a decision to require implementation of the reviewing the progress achieved in implementing a national sector reform as a prior action for the third World Bank BSO program. This is an excellent way to ensure transparency played a key role in moving the reform process forward. As and build confidence among partners, including all of 2008, 23 percent of small- town water-supply systems are donors--nongovernmental organizations, the private under PPP arrangements. sector, and the several sector ministries. In Benin, the process strengthened sector coordination and efficiency. It included 4) Review and address quickly the sector bottlenecks-- three types of sector meetings: i) a bimonthly group meeting and understand other factors beyond the sector. of donors; ii) an annual sector review with all stakeholders, generally in May, to review progress in national program It is important to thoroughly understand the overall implementation against the agreed target, exchange best situation. In Benin, a public expenditures review that we practices, and discuss the way forward; and iii) another conducted with DANIDA revealed a number of critical meeting organized in September by the Directorate of issues to be addressed. For instance, financial management Water to discuss sector budget allocation and the next systems and procurement were flagged as major areas for year's program. Those meetings have seen the involvement improvement. So we prepared an action plan that of all donors and have led to a greater percentage of donor included implementation of a rigorous tracking system of funds reported in national budgets since 2005. all the contract-procurement steps and a strong boost to the decentralization of procurement to the regions. This The Benin experience is a good example of the need for this action definitely led to a progressive increase in sector sort of framework. Initially, the sector had four major absorption capacity. sources of external financing: DANIDA (Danish International Development Agency), KfW (Kreditanstalt für Wiederaufbau, This transition toward more decentralization of service Germany's development bank), CTB (Coopération Technique delivery, including procurement, was facilitated by the Belge, Belgian Technical Cooperation), and JICA (Japan introduction of a prior action in the fourth BSO. As a International Cooperation Agency). Since 2004, two more result, 29 percent of the budget was delegated to the have been added: AFD (Agence Française de Développement) decentralized level for sector operational expenditures in and AfDB (African Development Bank). Funds have been 2007, and over 90 percent of contracts are now procured flowing more predictably (from the central to local entities) at the local level within 75 days. However, continued since 2004, thanks to the implementation of the program efforts are needed to speed up the procurement process budget and increased donors' information and coordination. and increase the budget execution rate. Total funding to the rural water-supply sector has increased by 214 percent over the past six years--from $14 million to But just fixing the sector bottlenecks is not enough. $44 million. However, the percentage of project funds Successful implementation of the programmatic approach flowing through project implementation units has not gone involves a number of other factors, such as strong down, because donors would like to see tangible budget- government buy-in and ownership, sound budgetary support results in the field before shifting completely from reform, alignment of strategies, effective donor the project approach to budget support. coordination, and a sound analytical basis. It should be noted that other reforms and prior actions included in 3) Be smart in using budget-support leverage. the World Bank BSO strengthened public procurement, improved government financial management, and Generally, a ministry's operating budget is not sufficiently streamlined internal control and audit. All of these robust to handle pure state tasks, such as carrying out proper improvements had a strong positive impact and planning, improving national procedures, and ensuring contributed to the achievement of RWS sector objectives. proper post-construction activities. So in order to ensure greater sustainability for the sector, BSO leverage is necessary 5) If you want to go fast, go alone. If you want to go far, to increase the operating budget and overall domestic go together. funding--a key issue we had to address in Benin. Then, in 2001­02, the operating budget increased from $50,000 to Moving the reform process forward is not a one-man $1.5 million, and the budget for investment increased from show! Every stakeholder has some comparative advantages, $1 million to $5 million, due to intensive discussions between and spending time and energy to build alliances is the Ministry of Finance and the Ministry of Rural Water. These necessary--and pays off. It is also important to understand discussions, directly facilitated by the World Bank team, other partners' constraints, make the best use of the constituted a critical step in helping the RWS sector adjust the potential synergies, and look ahead. Achieving results amount of operational budget to the sector needs, and these takes time. amounts have been increasing. A good illustration of this team approach in Benin is the Another example of our having to use the leverage provided Small Towns Water Initiative to provide potable water for by the BSO was implementation of management reform for 2 million people living in 500 localities with populations the rural piped-water system. Introducing a local PPP between 2,000 and 25,000. This initiative was adopted IFC SMARTLESSONS -- NOVEMBER 2009 3 during the 2004 government/donors joint procedures and to financing water-supply annual sector review, and the framework infrastructures. Also, sector prior actions and agreement for it was signed by the Ministry sector policy dialogue, carried out through of Finance and the donors (the European the World Bank BSO with the Ministry of Rural Union, DANIDA, AFD, and KfW) in February Water Supply and other donors, contributed 2007. The World Bank supported the initiative significant support to the government's efforts process through a policy action included in to implement major reforms: the BSO. Finally, the donors' pooled fund was established, and 20 million committed. · Introduction of a results-oriented Funds are disbursed based on the country medium-term program budget that system procedures and managed by national radically improved planning and capacity. In 2008, 25 small-town water-supply achievements systems were constructed through this · Management reform of small piped-water initiative--a good example of working systems that introduced a new governance together and contributing the best each one framework to ensure sustainable service can offer. · Strengthening of decentralization, with a Conclusion regional program budget and procurement at the local level, to increase sector Results achieved in scaling up investment and absorption capacity and empower local reforms in the RWS in Benin are due to a governments combination of: i) government vision and ownership of the budgetary reform and Government vision and ownership, planning programmatic approach, and ii) the and accountability, analytical work and results- complementary mix of donor support and oriented approach, stakeholder coordination, instruments used (sector investment projects, and a learning-by-doing approach are key capacity building, and BSO). Donors directly elements of this success story in Benin. contributed to building national capacity and The Small Towns Water Initiative provides potable water for localities DISCLAIMER in Benin with populations of 2,000 to 25,000. (Photo by Sylvain IFC SmartLessons is an awards Adokpo-Migan) program to share lessons learned in development-oriented advisory services and investment operations. The findings, interpretations, and conclusions expressed in this paper are those of the author(s) and do not necessarily reflect the views of IFC or its partner organizations, the Executive Directors of The World Bank or the governments they represent. IFC does not assume any responsibility for the completeness or accuracy of the information contained in this document. Please see the terms and conditions at www.ifc.org/ smartlessons or contact the program at smartlessons@ifc.org. IFC SMARTLESSONS -- NOVEMBER 2009 4