• Reference: P-LS-K00-002
• Approval date: 24/11/2004
• Start date: 26/05/2006
• Appraisal Date: 31/07/2004
• Status: OngoingOnGo
• Implementing Agency: MINISTRY OF FINANCE
• Location: MASERU

PROJECT DESCRIPTION

The project will focus on supporting capacity building activities in MOFDP and MOPWT. Capacity building support will be provided to MOFDP in the areas of planning, financial and budget management. This will be combined with training in the areas of project analysis, monitoring and evaluation, project appraisal and capital budgeting. The project is expected to lead to sustainable skill transfer and upgrading of capacity in all planning units of government ministries. On the other hand, capacity building will be provided to MOPWT in the areas of policy formulation, project management, environmental management, budgeting and financial management to enhance its capacity in the management and running of the Lesotho Road Management System. Emphasis will be put on upgrading the technical capacity of a number of diploma holders to a first engineering degree level in order to provide a strong pool of qualified technicians to staff the Roads Agency, once established. It is worth noting that in Lesotho, there are massive supply gaps of qualified and trained personnel, even at the first degree level, in all sectors of the economy. Furthermore, those who are employed generally lack the necessary skills. Thus, any form of training, at all levels, would augment the supply of such critically needed skilled and qualified personnel. This is likely to have substantial benefits on the economy as a whole.

The specific objectives are to strengthen:

(i) GOL's capacity in planning as well as financial and budget management; and

(ii) the capacity of MOPWT to manage the road system.

PROJECT RATIONALE

The proposed Institutional Support Project was discussed with GOL during the appraisal mission and the Government accords it high priority. Lesotho faces massive supply gaps of highly educated, skilled and experienced personnel, even at the first degree level, in all sectors of the economy essentially because such people are attracted to better-paid jobs in South Africa. The problem is even worse in the civil service because it cannot compete with the private sector and parastatals even locally. GOL is making efforts to improve the compensation and conditions of service for civil servants in order to help it in retaining its personnel. However, it is recognised that the problem of low salaries, unattractive schemes of service and lack of job satisfaction in the civil service cannot be addressed comprehensively at the level of this project, but rather in the context of a policy-based lending. Further, it is acknowledged that such issues are being looked at within the framework of the PSIRP. This ISP will assist GOL in addressing its immediate and pressing capacity needs.

A couple of options were considered in the preparation of this project. One of them was to be selective by focusing the Bank's assistance on either MOFDP or MOPWT. However, it was felt that in view of the fact that there are acute shortages of qualified, trained and skilled personnel in all sectors in Lesotho, the value added of this assistance could be enhanced if a more comprehensive approach to capacity building was taken by focusing on at least two sectors. Further, it was felt that this assistance could have more impact if the Bank was able to build on its previous experience by focusing on the sectors where it has provided capacity building support before. It should be emphasised that in addition to lending operations in the road transport sector in Lesotho, the CSP for Lesotho identified non-lending activities in the area of capacity building in the transport sector and planning ministry as priority areas for Bank Group interventions in the country during the strategy period.

By putting emphasis on strengthening the capacity of the planning cadre, the project will complement the ongoing donor support to strengthening the capacity of MOFDP, which includes capacity building that is being done in the context of the PSIRP. The ISP will build on Bank Group earlier interventions in the Ministry. It is seen as important because it will contribute towards reinforcing capacity of MOFDP which should lead to improved sectoral planning, budgeting, budget implementation and linkages between planning and budgeting systems. Thus, the ISP will contribute towards addressing the capacity requirements that will enable GOL to succeed in its efforts to implement PRSP objectives.

The ISP will also help in the development of the institutions and the organisation of human resource capacity required to effectively plan for and manage the road sector. It will build on and consolidate Bank Group earlier interventions in the transport sector. For example, the Bank approved the Institutional Support to the Transport Sector Project in 1989. Most of the engineers, planners, economists and managers trained under the project are still working in the public sector and some are engaged in private sector activities within the country. The proposed institutional support component to MOPWT under this project will be in line with the current transport strategy in Lesotho. RB, DRR and DTT have been given the responsibility of managing roads but are hampered by lack of qualified personnel, particularly in the engineering and planning fields. The project will thus train new staff for diversification of operations and provide specialised training to professional staff. In particular, the project will enable MOPWT to become self-sufficient in managing the transport process and to train Basotho personnel who are in the process of assuming responsibility. Further, MOPWT will have the capability to effectively manage and plan investment which should, in turn, help in stimulating economic growth by opening up access to various regions of the economy. The ISP is, therefore, in conformity with the country's PRSP which seeks to achieve economic growth and poverty reduction through, inter alia, improving public service delivery by reforming planning, monitoring, budgeting and fiscal management processes, as well as maintaining the momentum of proving basic infrastructure such as roads.

In selecting the beneficiaries and the components of the project, consideration was given to complement capacity building efforts of other development partners, notably the World Bank, the EU, DfID, DCI and the UN Agencies. It was on this basis that the proposed support to MOFDP was included and should also be seen as an integral part of GOL's efforts to address the capacity weaknesses in the context of the PSIRP, which is central to the success of efforts to implement PRSP objectives. Through the consultations the appraisal mission held with GOL and some development partners, it was concluded that the ADF support should focus on addressing some of the immediate capacity building needs of MOFDP in planning.

PROJECT BENEFITS

The proposed project will assist GOL to strengthen its capacity in the areas of planning, financial and budget management. Inadequate coordination between the office responsible for budget and the office in charge of planning in MOFDP has sometimes led to omissions of some of the projects in the national budget. Further, this has, in some cases, contributed to poor implementation of national programmes with priority projects stated in the development plans not reflecting the allocation of resources in the public sector investment programme. The integration of the planning and budgeting process, through the introduction of the Medium Term Expenditure Framework approach, which to a certain extent will be made possible through this project, will help GOL to achieve the objectives of sound public expenditure management. This will ensure that aggregate levels of spending and revenues are consistent with macroeconomic stabilisation objectives and that public funds are used efficiently and effectively in meeting Government policy objectives, and in particular those targeted at poverty reduction. By ensuring that the policy, planning and budgeting processes are well linked, the project will also help GOL in meeting its PRSP objectives of achieving a significant reduction in the number of people living in extreme poverty and promoting equity-based growth. The project will also enable GOL to achieve more rigorous planning and budgeting procedures by building capacity in all planning units of Government ministries. This will enable resources to be allocated more efficiently from activities of less need to activities of greater need so that public expenditure is targeted at national development priorities, including provision of social services. The consequence of this will be an enhanced future economic growth in Lesotho, which will create more employment and income-generating opportunities.

In the transport sector, the project will build capacity in order to enhance MOPWT's ability, capacity and efficiency in managing, through RB and RDD, the road system of Lesotho. Since in Lesotho developed infrastructure is largely concentrated in the lowlands and urban areas, and has been slow elsewhere due to the very difficult mountain terrain, improved capacity in the roads sub-sector will, therefore, lead to the development of a road network in Lesotho that is capable of supporting national economic development and providing access to communities, in particular those living in isolated rural areas improving the geographic distribution of income and addressing income inequality. This will, in turn, help in stimulating economic growth in the country. Further, given that road safety is relatively poor in Lesotho with estimates of fatalities of about 130 per 10,000 vehicles, the training that will be provided to the Department of Traffic and Transport is expected to contribute towards a reduction in vehicle accidents. This should, in turn, reduce the economic and social costs of accidents, including: insurance costs; premature scrapping of vehicles involved in accidents; accident repair costs; hospital costs; and temporary or permanent loss of production while casualties are sick or arising from death prematurely during their active working lives.

MATILA Mothobi P.S. - OSGE2

Finance source	Amount
ADF	UAC 790,000
Government	UAC 41,690
Delta	UAC 190
Total	UAC 831,880