SUPPORTING ECONOMIC MANAGEMENT IN THE CARIBBEAN (SEMCAR) TERMS OF REFERENCE CONSULTANCY SERVICES (FIRM)

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1 SUPPORTING ECONOMIC MANAGEMENT IN THE CARIBBEAN (SEMCAR) TERMS OF REFERENCE CONSULTANCY SERVICES (FIRM) ON INTRA-REGIONAL BENCHMARKING TOOLS TO ASSESS THE PERFORMANCE OF STATE-OWNED ENTERPRISES IN THE CARIBBEAN I. BACKGROUND 1. State-Owned Enterprises (SOEs) continue to play an important role in Caribbean economies, as they do in many other countries globally. Not only are these enterprises viewed as necessary for the efficient delivery of public services, but they are also used as a means of correcting market failures and creating social value. Consequently, SOEs span a number of important sectors, including infrastructure, banking and financial services, oil and gas, and industry and services. As a result, the performance of SOEs has a notable impact on the ability of regional economies to achieve their development goals. 2. In contrast, the performance of SOEs in the Caribbean is generally characterized by major weaknesses, like high costs and low quality service provision. Following less than hoped for success in reforms to improve performance in the 1980s, a privatization trend followed in the coming decades, but slowed in the late 2000s as the financial crisis hit. Since then, there has been a renewed interest to improve SOE performance. 3. Notwithstanding the recent attention and relative importance of the sector, there is yet a lack of systematic cross-country data to evaluate SOEs or their performance in the region. The challenges associated with collecting such data are magnified by the fact that a number of countries do not have proper performance monitoring systems to capture statistics on SOE performance. This serves both as a challenge for conducting substantive diagnoses of current issues, as well as a signal of the one of the sectors key problems lack of quality information. At the same time, there is a demand for practical tools to help countries advance SOE reform processes. 4. SEMCAR is a development assistance program that was designed to address economic challenges in the Caribbean, like those mentioned above, by way of strengthening public sector institutions, policies, processes and information systems. The program is financed by the Government of Canada, managed by the World Bank and implemented in partnership with the IMF. The beneficiaries of the program are Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. Preliminary work has been carried out under SEMCAR to collect data and identify some of the key challenges that affect SOE performance in selected countries. However there is much to be done. A comprehensive picture of the institutional, operational and financial performance of SOEs in the Caribbean region and their budgetary and fiscal impacts is still currently lacking. 1 P a g e

2 II. OBJECTIVES AND SCOPE OF ASSIGNMENT 5. In contributing to fill this identified gap, the selected firm (hereafter referred to as the Consultant ) is being contracted to develop and pilot intra-regional Benchmarking Tools to assess the relative performance of water utility SOEs that operate in a sample of at least five (5) SEMCAR beneficiary countries. Specifically, the objectives of the assignment are to: (i) benchmark the relative performance and operational indicators of the region s water utility SOEs; (ii) assess the key drivers of performance in this sector; and (iii) identify successful reform strategies that can guide future policy action. Given their known impact on performance, particular attention should be given to the legal, regulatory, governance, and monitoring frameworks of each SOE per country. 6. The benchmarking component of this assignment is intended to lay the foundation for understanding the scope for improving water utility operations, efficiency and quality, and lowering the cost of service through effective regulation. Among other things, it would focus on outputs such as rates, coverage levels, and quality of service; selective inputs such as labor levels or energy costs; and operating and financial ratios that reveal efficiency, profitability and sustainability. A Benchmarking Database Tool should be developed to offer a user-friendly framework for measuring the multiple dimensions of successful SOE performance, assessing and comparing relative strengths and weaknesses of the companies across the pilot countries. III. DELIVERABLES AND TIMELINE 7. It is expected that this work will be completed in approximately five (5) months, commencing as early as September 2016 and concluding no later than end February The Consultant shall provide a range of deliverables which can be categorized broadly as: (i) Monitoring Reports, and (ii) Technical Reports. The Consultant will conduct mission to collect data and participate in a one week training event to disseminate initial findings and best practices. 9. The following deliverables shall be classified as Monitoring Reports: a. Inception Report: The Consultant shall produce and submit an inception report no later than four (4) weeks after a contract is signed. The inception report shall include a detailed work plan, refinement of the agreed methodology, and a timetable for the work to be undertaken. b. Monthly Reports: The Consultant shall prepare Monthly Reports on activities and progress status vis-à-vis the work plan, highlighting issues and actions taken (or proposed) to solve identified problems, as well as activities scheduled for the following month. c. Final Report: In no later than ten (10) days before the expected completion date of the assignment, the Consultant shall submitted a final report that summarizes the work performed, results achieved, and recommendations for scaling up this pilot work. A preliminary or draft version of this Report will be presented in a one week training event for consultations with WB experts and representatives from the SEMCAR countries. 2 P a g e

3 10. Technical Reports should be submitted for the following activities: a. Benchmarking Study: Using appropriate methods and tools, the Consultant shall conduct and submit an intra-regional benchmarking study which shall include, among other things, a set of measures for assessing the key drivers of performance in the chosen SOE sector, with a baseline from which to measure improvements. The study shall benchmark performance of each country s SOE relative to its Caribbean peers and against internationally accepted standards. In addition, the study shall identify successful reform strategies that can guide future policy action. Particular attention should be given to a comparison of the legal, regulatory, governance, and monitoring frameworks of each SOE. A draft of the study should be submitted by week 17 and the final version, incorporating all comments and suggestions received from the World Bank, by week 19. b. Intra-Regional Benchmarking Database Tool: Using the data gathered from the pilot countries, the Consultant shall develop and test a user friendly and interactive application (preferably web-base) that assesses the relative performance of SOEs in the region. The tool should aim to address the pressing need for a robust and holistic measurement framework for SOE performance that can be used by leaders in government, SOEs, and civil society to benchmark success and accelerate reform progress for these public enterprises. The benchmarking database tool should allow stakeholders to compare the performance of their SOEs to similar SOEs and thereby help identify potential strengths, weaknesses and opportunities for reform. The tool may allow users to input the characteristics of a specific SOE (e.g. rates, coverage levels, quality of service, labor levels, energy costs, operating and financial ratios, etc.) in order to compare relative performance. The data provided could remain anonymous to other users of the database. 11. In addition to delivering the said reports, the Consultant shall participate in a regional workshop with participants from all SEMCAR countries to present major findings and share insights as needed. IV. REPORTING AND COMMUNICATIONS 12. The Consultant shall report directly to the Program Manager of the SEMCAR Program. Reports that are submitted shall be subject to her review and final clearance. Generally, feedback will be provided within ten (10) business days after a report is submission. If no comments are received within the stipulated timeframe, the report is to be considered accepted on a no-objection basis. Upon receiving comments, the report should be revised accordingly and resubmitted within one week. Under special circumstances, additional time may be allotted for resubmission. 13. All reports should be submitted in English. All reports and studies produced under this assignment are the property of SEMCAR and cannot be published, copied, or otherwise disseminated without prior written approval from the Program Manager. 14. The Consultant will be responsible for all costs associated with site visits to perform the activities described in this terms of reference. The Consultant will also be responsible for accommodation and logistic support including transportation services required to carry out the assignment. The Consultant should plan for at least one visit per country to conduct onsite assessments and faceto-face interactions with the clients, among other things. 3 P a g e

4 V. CONSULTANT EXPERIENCE AND EXPECTED INPUT 15. The assignment calls for a team comprised of members with detailed knowledge of, and extensive international experience with SOE reforms and specifically with working in the Caribbean region. 16. The assignment is expected to entail approximately man-weeks of input, from a team of 3-5 key specialists covering in-country data collection, coordination, reporting, workshops and presentation of the analysis and recommendations. 17. The team proposed by the Consultant should include a project manager, a sector specialist and a database specialist. 18. The consulting firm must have completed a minimum of one project in the past three years involving benchmarking assessments in similar settings (Listing all project references clearly indicating the work performed, the country of delivery and name of client). 19. The project manager as well as the lead sector and database specialists should each hold a Master s degree (equivalent or higher) in fields related to the project and no less than eight (8) years of demonstrated experience in international consulting. For all other specialists, not less than 5 (five) years of international consulting experience and a university degree (bachelor or higher) in fields related to the project. VI. CONSULTANT PROPOSALS 20. The Consultant should submit a Technical Proposal, inter alia, containing the following information: a. Relevant Experience: This section should indicate the past experience of the Consultant and proposed key specialists in undertaking assignments of this scope and nature, including experience in the Caribbean and provide details of assignments already completed and particulars of persons and organizations who could be contacted as Referees. b. Methodology and Work Plan: This section should indicate the methodology that the consultants propose to follow in executing the assignment and provide a detailed work plan. While paragraphs above broadly describes the activities that need to be undertaken and the approach to be followed, the Consultant should feel free to suggest changes in the activities and the approach that, in its view, would be more appropriate for achievement of the objectives of the assignment. c. Qualifications and Experience: This section should indicate the qualifications and experience of persons who would work on the assignment including: the name and qualifications of the consulting team members, their proposed roles and responsibilities and the duration for which they would work on the assignment. d. Strategy for Transfer of Knowledge: This section should indicate the strategy the Consultant would follow to ensure transfer of knowledge to government counterparts to enable them to 4 P a g e

5 assimilate the technical assistance received and to design and implement actions relating to implementing the recommendations of this assignment. 21. The Consultant should also submit a separate Financial Proposal indicating, inter alia, (i) staff costs; (ii) travel and subsistence costs; (iii) office and equipment costs; (iv) other costs. The financial proposal should clearly describe all costs, as relevant, for each stage separately. 5 P a g e

6 ANNEX Concept Note-World Bank Technical Assistance and Analytical Support to advance SOE reform in the Caribbean under the Integrated Economic Management in the Caribbean ( SEMCAR ) Program Purpose: To strengthen capacity in the Caribbean countries to assess and more effectively manage their state-owned enterprises (SOEs) through: (1) the provision of high-quality, targeted technical assistance; (2) the development of regional analytical products; and (3) the organization of South-South and South-North exchanges with other countries that have successfully implemented good practice SOE reforms. Region: Caribbean Beneficiaries: Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago 1. Purpose of this concept note and Objective of the activity This concept note details a series of activities, which are proposed as follow up to the successful SOE Academy organized under the SEMCAR Program in May The objective of the proposed work is to strengthen capacity in the Caribbean countries to assess and more effectively manage their state-owned enterprises (SOEs) through: (1) the provision of high-quality, targeted technical assistance; (2) the development of regional analytical products; and (3) the organization of South-South and South-North exchanges with other countries that have successfully implemented good practice SOE reforms. 2. Background SOEs defined broadly for the purposes of this activity by the OECD definition of any corporate entity recognized by national law as an enterprise, and in which the state exercises ownership 1 - continue to play an important role in the global economy in general, as well as in Caribbean countries. They are 1 OECD. OECD Guidelines on Corporate Governance of State-Owned Enterprises Edition. OECD Publishing: Paris, P a g e

7 estimated to account for about ten percent of world GDP 2 (fifteen percent in Africa, eight percent in Asia, and six percent in Latin America and the Caribbean 3 ). In Belize, SOEs and parastatal entities revenues amount to over 18 percent of GDP, while in Dominica they represented more than 6.5 percent, and in St. Kitts and Nevis more than 4 percent 4. Viewed as a means for correcting for market failures and creating social value, through the 1970s, SOEs and state intervention in them were viewed as necessary for the efficient delivery of public services. 5 Spanning a number of important sectors including infrastructure, banking and financial services, oil and gas, and industry and services, in Latin America and the Caribbean, SOEs were created in sectors including energy, water, telecommunications, finance, and transport. However, globally, in general SOEs performance faced a number of challenges including high costs and low quality service provision and were faulted for pushing out the private sector. 6 Following less than hoped for success in reforms to improve performance in the 1980s, a privatization trend followed in the coming decades, but slowed in the late 2000s as the financial crisis hit. Since then, there has been a renewed interest in improving SOE performance. 7 There is a lack of systematic cross-country data on SOEs in the Caribbean which serves both as a challenge to the deep diagnosis of current challenges, as well as a signal of the one of the sectors key challenges lack of good quality information. Information collected through surveys of five selected countries 8 as well as the execution of four case studies prior to the SOE Academy in May 2015 help to sketch out key characteristics. Data from the five surveyed countries point to the existence of a large number of SOEs, many of which are dependent upon Government funds (in Suriname, 97 percent received subsidies from the Government) and which represent a significant share of GDP and public expenditure. Oversight of SOEs was more often than not spread between several entities, and specific challenges in overall compliance, as well as financial and fiscal matters, including compliance with policies and procedures; poor financial reporting; undercapitalization; unprofitable SOEs leading to large debt accumulation; the fiscal and financial sustainability of current subsidies; and poor monitoring of fiscal risks and contingent liabilities were identified. Additionally, overall operational challenges including the efficient and effective use of Government resources; low quality service delivery; previously self-financed SOEs no longer being such; and potential privatization/divestment were also underlined. 9 The four case studies highlight similar challenges. For example, in St. Kitts and Nevis, a lack of reliable financial 2 Economist in Bruton, Garry D., Mike W. Pend, David Ahlstrom, Ciprian Stan, and Kehan Xu. State-Owned Enterprises Around the World as Hybrid Organizations, The Academy of Management Perspectives. Vol.20, No 1, The World Bank. Corporate Governance of State-Owned Enterprises: A toolkit. International Bank for Reconstruction and Development: Washington, DC, World Bank, Summary of Mission Findings, SEMCAR SOE Activity. Belmopan, Belize. September 29-October 3, 2014; World Bank, Field Mission Wrap Up, State-Owned Enterprises and Statutory Bodies in Dominica, Supporting Economic Management in the Caribbean SEMCAR. Roseau, May 5-8, 2015; World Bank, Mission Findings, St. Kitts and Nevis, Strengthening Corporate Governance and Better Management of Fiscal Risks in SOEs. May IDB, Governance, Performance and Best Reform Practices in State-Owned Enterprises in Latin America and the Caribbean and Korea. Forum Report and Proceedings from the International Symposium held November 5-8, 2013 in Seoul, Korea. Discussion Paper No. IDB-DP World Bank, Corporate Governance of State-Owned Enterprises: A toolkit. (2014) and IDB (2013). 7 World Bank, Corporate Governance of State-Owned Enterprises: A toolkit. (2014) 8 Barbados, Grenada, Jamaica, Suriname, Trinidad and Tobago 9 Fanny Weiner and Marta Riveira. Existing framework and practices in the State-Owned Enterprises sector: Survey results in selected countries in the Caribbean. Presentation for SEMCAR Seminar State-Owned Enterprises: Improving Corporate Governance and Better Management of Fiscal Risks. May 12, P a g e

8 information (including audited financial statements) for the country s 17 SOEs complicate efforts to accurately assess the associated fiscal risks, and based on what is known, most entities generate low profits or losses. 10 Information on SOEs and parastatals in Belize, which are governed by a number of legal frameworks is also lacking (with parastatals not presenting financial reports to the Ministry of Finance in spite of receiving budget funds from the Ministry when needed), complicating an assessment of their fiscal position. 11 Significant ambiguities exist in the legal frameworks of some SOEs in Trinidad and Tobago, and many are behind in completing their financial audits, while internal audits are not risk based and systems for performance and value for money audits do not exist. 12 Similarly, in Dominica, there is not a harmonized piece of legislation defining and regulating financial and institutional terms for SOEs and statutory bodies, and comprehensive monitoring of their financial performance and fiscal risk (which is viewed to be high within the sector) is lacking. 13 Building upon past engagement and based specifically on interest expressed in December 2014 by a number of SEMCAR countries, the SOE Academy was organized to provide training and support to strengthening the corporate governance and fiscal risk management frameworks of their state owned enterprises (SOEs). An area of increasing concern for most Caribbean countries given such enterprises responsibility for delivering key public services such as water and electricity, as well as their role in a diverse ecosystem of entities that can contribute to countries economic growth, the core objective of the SOE Academy was to support operational and technical capacity building within SEMCAR s member countries by providing practitioners of SOE policy making and management with information and a handson learning experience on current trends/practices in Latin America and the Caribbean, including other SEMCAR Member Countries. The Academy, which took place May 11-15, 2015 helped to facilitate dialogue across the countries (and regions) on current contexts and best practices in SOE structure and functioning, and supported the strengthening of a network of SOE policy makers across countries, as well as the development of an advisory mechanism on pertinent matters related to SOEs. It brought together approximately 60 participants from ten countries in the Caribbean (Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Jamaica, St. Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, and Trinidad and Tobago) and three African nations (The Gambia, Ghana, Seychelles), including individuals from both Ministries of Finance (officials with responsibility for oversight) and SOEs and international specialists to discuss strengths, existing challenges, and opportunities for advancement. Over the course of the Academy, which emphasized corporate governance, fiscal risks, and performance monitoring, in addition to learning from three country cases (Australia, Chile, and Colombia) solutions to countries previously identified main challenges in the SOE sector - including were performance monitoring, reporting compliance, financing, the regulatory frameworks, compensation, and corporate governance, among others (see Table 1 below) 14 - were discussed, organized into action plans, and presented. 10 World Bank. Landscape of the SOE Sector in St. Kitts and Nevis. May World Bank, Summary of Mission Findings, SEMCAR SOE Activity. Belmopan, Belize. September 29-October 3, World Bank. Mission Findings, Port of Spain, Trinidad and Tobago, SEMCAR SOE Activity. October , World Bank, Field Mission Wrap Up, State-Owned Enterprises and Statutory Bodies in Dominica, Supporting Economic Management in the Caribbean SEMCAR. Roseau, May 5-8, 2015; 14 World Bank. Excel file. (2015) 8 P a g e

9 Table 1. Self-Identified Main SOE Challenges for Discussion at SOE Academy Compliance with (financial) reporting Underfinancing/financing Employee Compensation Political interference Fiscal Risk Lack of a Proper Regulatory Framework Corporate Governance Monitoring & Evaluation/Performance Monitoring Fragmentation in Oversight and Management Following the Academy, participants expressed interest in advancing on the SOE reform agenda, and the possibility for similar support in the future. The main recommendations received centered on the organization of a follow-up sessions to build on what had been learned, support revisions to the prepared action plans, and monitor progress. The activities proposed in this Concept Note seek to advance these recommendations. 3. Components and activities The project will be structured in two components with corresponding activities as follow: Component 1: Developing a set of analytical products, including case studies and performance indicators to be used in sector benchmarking As mentioned above, while work carried out before the first SOE Academy helped to paint a general picture of the main challenges facing SOEs in the Caribbean region, a comprehensive picture of the operational and financial performance of SOEs in the Caribbean region and their budgetary and fiscal impacts is currently lacking. Systematic cross-country data on these issues is not readily available, and the challenges associated with collecting such are magnified by the fact that a number of countries do not have proper performance monitoring systems to capture data on SOE performance. With the goal of building capacity to both effectively manage such systems in the medium to long term and then use the information to inform policy, an important first step in the process is to develop a good understanding of each countries relative strengths, weaknesses, and areas in which more attention is needed. As such, a sector benchmarking exercise, as well as targeted, just in time technical assistance is needed. Work under this area would be strongly informed and guided by the World Bank s Corporate Governance of State-Owned Enterprises: A toolkit (2014). Designed with a primary audience of government officials and SOE managers, the toolkit recognizes that there are not one-size-fits all solutions for good SOE corporate governance, and emphasizes finding approaches which are suitable for the context. It covers a range of topics, from the legal and regulatory framework; state ownership 9 P a g e

10 arrangements; performance monitoring; financial and fiscal discipline; boards of directors; transparency, disclosure and controls; special issues in mixed ownership countries, and implementing reform. Importantly, it also includes country and individual company level tools to assess country s SOE corporate governance frameworks, as well as individual companies corporate governance frameworks, respectively. Both are quite comprehensive, including instruction sheets, questionnaires/matrixes for evaluation, and the corresponding supporting documentation to be requested. The utilization of these existing tools, targeted as necessary to meet the selected countries priorities for benchmarking, is hoped to facilitate the more rapid launching of the data collection process than would be feasible through the creation of a new tool. Subject to data limitations, the team will also potentially facilitate comparisons with other countries outside of the Caribbean who have also collected similar data using the toolkit. The team is also looking into the potential to collect information SOE reforms in a way that is compatible with the SOE reform indicators presented in the Asian Development Bank s Finding Balance 2014: Benchmarking the Performance of State-Owned Enterprises in Island Countries report 15, so as to facilitate comparisons between the two region s entities. Activities aligned to this component will most likely include: Development of a set of three of four case studies of SOEs in selected SEMCAR countries. Having previously collected information on the SOE sectors in Belize, Dominica, St. Kitts, and Trinidad and Tobago, in-depth case studies will be prepared to analyze the SOE sectors in a select number of countries in the Caribbean, based on country demand and reforms priority. Further strengthening the understanding of the challenges faced by SOEs in the region, these case studies will help to shape dialogue with the countries on reform options. Development of proposals to address weaknesses identified through the case studies and provision of just-in-time technical assistance. Based upon the conclusions of the case studies, proposals will be developed to help countries to address their current challenges within the SOE sector and their implementation supported through the provision of just-in time technical assistance. Selection and piloting of data collection for a set of performance indicators in several sectors chosen based on relevancy for pilot countries. Building upon the questionnaires developed in the World Bank s Corporate Governance of State-Owned Enterprises: A Toolkit, the team will identify a list of priority questions to be applied in selected SOE sectors in countries selected for piloting. Given the large number of SOEs in the region, and the range of sectors which they cover, several sectors will be selected by the team and the countries based upon their potential for data availability and representativeness in relation to the universe of SOEs in the region to be the focus of initial benchmarking. Eventually, at a later stage, this information could be combined with information on measures of output performance to examine the relationship between the two in the selected Caribbean sectors (see Box 1 below for a discussion of similar work in other contexts). 15 Asian Development Bank. Finding Balance 2014: Benchmarking the Performance of State-Owned Enterprises in Island Countries. Mandaluyong City, Philippines: Asian Development Bank, P a g e

11 Box 1. Previous Analyses of the Impacts of SOE Corporate Governance on Outcomes The current general lack of data on SOEs has motivated a number of data collection efforts and analytical work. For example, Andres, Guasch and Azumendi (2011) gathered data through a survey on 44 SOEs in the water and electricity sectors of Latin America and the Caribbean. They find a positive correlation between corporate governance and utilities performance. The paper does not address issues of causality; their analysis explores the correlations between six dimensions of corporate governance reform (legal/ownership framework, the composition of the Board, the performance orientation of the enterprise, the level of transparency and disclosure of financial and non-financial information, and the characteristics of staff (e.g level of education, salary and benefits)) and the operational performance of these utilities. They also create a composite index of corporate governance, which they find to be strongly correlated with labor productivity, tariffs and service coverage. Vagliadinsi (2011) collected data for 60 SOEs providing electricity, water and railway services in 15 developing countries, keeping PPPs and private sector enterprises as control groups. The author finds that, regardless of ownership, corporate governance and public listing reforms are the most important determinant of higher cost recovery. The author thus recommends that countries with a functioning capital market may want to consider listing the service provider on the stock exchange, as it can not only provide capital for investment, but also facilitate better disclosure of information and monitoring of performance by shareholders. If public listing is not feasible, enhanced internal governance such as empowerment of Board of Directors is found to be crucial to increase SOE performance. Finally, Estache, Goycochea and Manacorda (2006) assess the effects of independent regulatory agencies (and of privatization) on telecommunications performance by using cross-country panel data from 1990 to 2003, for 204 countries. In general, they find that having independent regulatory agencies positively affects affordability and labor productivity, but negatively affects quality. Component 2: Capacity building and training activities through South-South and South-North exchanges SOE policy makers in the Caribbean struggle to work effectively because of a general low capacity, while the training needs are considerable across the board. Learning from the good practices and reform efforts of others both developed and developing countries can be a particularly helpful tool for policymakers in the midst of the reform process. The experience of Korea s and Malaysia s SOE reform is likely to be of particular interest. Having gone through four stages of reform since the early 1960s, SOEs regulatory frameworks and management structures in Korea have varied significantly over the years. Since 2007, SOEs have been categorized based on the role of government funds (government-invested, government-financed, government-affiliated, and government-contributed institutions), with implications for the applicable management practices. Reforms have helped to make the appointment of directors more fair and transparent, ensure the 11 P a g e

12 financial soundness of the sector through the submission of medium and long term financial plans by large SOEs, and changes that strengthened internal and external audits. 16 Existing case studies documented by the WB experts are also suggesting that Malaysia could offer a very interesting reference point for the region. The sharing of other developing countries experiences including Medellin, Colombia and Chile in the first SOE Academy also proved to be helpful for capacity building. As two countries in the region with experience implementing good practice SOE reforms, the sharing of their case studies was viewed as helpful by participants in the first SOE Academy. Following the conference feedback from participants reflected a desire for more time to work through country-specific solutions based on other countries experiences, a desire for more case studies (particularly within the Caribbean), including a focus on other countries and SOEs specific experiences in addressing issues. This component thus aims to increase capacity through training and South-South and South-North exchanges to promote lessons of experience in advancing good governance and efficiency. The objectives of this component are intended to be achieved by carrying out these and other similar activities: Organize SOE Academy II. As a follow up to the successful SOE Academy I, a follow-up academy will be organized. This event will continue the methodology of the previous Academy focusing on specific areas of interest identified through case studies and self-defined priorities - while focusing more narrowly on issues such as sector benchmarking and performance indicators, etc. Promote Caribbean countries participation in the SOE Global Network established by OECD, CAF and WB. Assure attendance in the Global Knowledge Sharing on Corporate Governance of SOEs Forum organized by the OECD, CAF, and the World Bank in 2016 in Mexico City, which is expected to foster south-south learning opportunities. Representatives from St. Lucia, Jamaica, Antigua and Barbuda, and Dominica will participate in both the Forum s plenary session, as well as workshops and meetings. South-North exchange with Korea and Malaysia. A South-North exchange with Korea and Malaysia to learn best practices in terms of SOE management, transparency, corporate governance and fiscal responsibility is planned. This exchange is expected to include field visits by relevant stake-holders from the region to observe first-hand the experience and progress of SOE reforms advanced in East Asia. SOE E-learning module. There is presently a challenge with retaining capacity that is delivered to the public sector in the Caribbean. High turnover rates of public officers, who are often overburdened with multiple roles and responsibilities, limit the absorptive capacity of the public 16 IDB (2013). 12 P a g e

13 sector to retain or utilize knowledge that is generated from training. Being a learning institution that is widely accessible to all the governments in the region, the University of West Indies (UWI) is ideally placed to institutionalize reforms that are promoted by the project though knowledge retention and replication. The project will therefore collaborate with the UWI to convert the trainings sponsored into an E-learning course to spread and retain the new knowledge across and within the region. 4. Results Framework The results framework below will monitor progress towards achievement of this activity s objective: Component 1 Output Case Studies in Four Selected Countries Proposals to Address Identified Weaknesses/Provisi on of Just-in-Time Technical Assistance Selection and piloting of data collection for a set of performance indicators Intermediate Outcomes Increased awareness of current challenges affecting SOE performance Increased capacity to assess performance of the SOE sector Component 2 SOE II Academy Caribbean countries participation in the SOE Global Network Increased awareness of good practices in SOE management South-North Exchange with Korea Intermediate Outcome Indicators Action plans to address priority challenges prepared by Government Inclusion of good practices in SOE managemen t reflected in action plans prepared by Government Regular interaction between SOE policy Medium/Long Term Outcomes Policies and procedures adopted to address challenges, supporting more effective management of the SOE sector Performance monitoring institutionalize d Introduced policy and procedural changes reflect good practices in SOE management 13 P a g e

14 makers in other countries 5. Relationship to Country Partnership Strategies and the SEMCAR Program The proposed activity s work to strengthen SOE management is aligned with the SEMCAR program s 17 objective of contributing to more efficient, effective, and regionally integrated public financial management institutions, policies, processes, and information and communications technology systems. In particular, given the important role of SOEs within the economies, it contributes to several areas highlighted as needing further consolidation, including expenditure management and control, fiscal reporting, and cash and debt management. It is also aligned with the existing Country Partnership Strategies (CPS) for the countries within the region. The Regional Partnership Strategy for the Organization of Eastern Caribbean States for the Period FY15-19 (Report No LAC, October 17, 2014) which covers Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, aims to support public sector modernization through more effective and transparent public administrations, more robust institutional capacity, and stronger frameworks for partnership with the private sector, and in particular targets improved budget management and transparency as a key outcome. Similarly, the CPS for Jamaica for FY (Report No JM, April 2, 2014) prioritizes public sector modernization as one of the three main areas of engagement, in which focus is placed on improving fiscal and debt management and improving public administration performance. Within the results area focused on creating a conducive environment to private sector development, the Suriname CPS for FY15-19 (Report No SR, April 27, 2015) targets improved standards for financial reporting in the public and private sectors, explicitly mentioning the possibility of Bank support to improve SOE accounting and auditing. 6. Proposed implementation and administration arrangements. The implementation of the activities included in the program will follow SEMCAR s established management structure. SEMCAR was set up as a Multi-Donor Trust Fund, which has currently only received contributions from DFATD. 17 Joint World Bank (WB) International Monetary Fund (IMF). Phase 1 of CIDA s Supporting Economic Management in the Caribbean (SEMCAR) Program ( SEMCAR-Phase 1 ). Proposal for Canadian International Development Agency (CIDA), Regional Development Project Supporting Economic Management in the Caribbean (SEMCAR) CIDA Funded Initiative. Updated March 31, P a g e

15 Steering Committee (SC): The SC is comprised of high level representatives of each country in the Caribbean Sub-region that are beneficiaries of the Program, representatives of donors contributing to the Trust Fund, and the Bank. Non-contributing donors and other relevant regional institutions (e.g., IMF, CARTAC, CDB, CARICAD, ECCB, IDB, CARICOM, and the EU) active in the SEMCAR countries in areas covered by the Program participate as observers. The SC will be informed on progress as implementation advances. The proposed activities are part of the followup to the recommendations made and commitments undertaken during the SOE Academy, vetted again by the SC in Antigua in May Project Management Team (PMT): The PMT consists of World Bank staff based in Washington. The PMT is responsible for managing the day-to-day activities of the program, including monitoring, evaluation and supervision of the work of consultants selected to implement specific activities. The Bank s implementation unit is responsible for developing and executing the Bank s analytical activities and appraising and supervising recipient-executed activities. 7. Risks Risks associated with the activity are assessed to be moderate. Risk associated with data availability and time limitations to complete the activities proposed: Counterpart commitment to the activities is high, as they reflect areas of support demanded by the Client following the conclusion of the first SOE Academy, which is expected to help facilitate access to the information needed to carry out the work planned under Component 1. Nevertheless, work faces risks related to collecting the needed data (which could consequently pose limitations to the depth of the analyses possible under this activity) both due to data simply not being collected, as well as individual institutional reticence to make information available. The team will coordinate closely with the Governments to mitigate these risks through both the selection of (at least some sectors) with solid information, and to ensure entity-level support for work. There is also the risk that the scope of needed technical assistance as identified in the assessments will exceed the Bank s time and resource allocations for this activity. To mitigate this risk, the team will maintain continuous contact with counterparts to assess needs and manage expectations. Furthermore, as future support to the SOE agenda is anticipated under Phase 2 of SEMCAR, work under the current activity will be designed to facilitate and be followed up upon - in the next stage of work under Phase P a g e