Terms of Reference 1. BACKGROUND

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1 Terms of Reference Review of the European Commission s Sector Policy Support Programme in Support of Ethiopia s Roads Sector Development Programme (9 ACP ET ACP.ET.30, Financing Agreement No. 9527/ET) and Formulation of a Second Sector Policy Support Programme to be financed from Resources of the 10 th EDF 1. BACKGROUND Ethiopia s classified road network consists of approximately 42,500 km of which 13% is paved. Roads are the country s dominant mode of transport. More than 95% of passenger and freight traffic is served by road. In spite of the relative importance of road transport, the condition of the infrastructure has been generally poor. In recognition of this the Government of Ethiopia (GoE), with the support of its development partners, launched the Road Sector Development Program (RSDP) in 1997 providing a co-ordinating framework for intervention, combining a program for the rehabilitation of critical links in the physical infrastructure with policy, institutional and regulatory reform. The first phase of RSDP covered the period and the second (RSDP II) the period The third phase (RSDP III) covering the period was formally launched in September Financing requirements for the RSDP-III are estimated to be approx Billion ETB (~2.6 Billion Euro). Whereas domestic resources plus expected additional sector budget support cover approx. 80% of the programme financing, the remaining 20% is expected from development partners in form of grants and loans. GoE s major development partners in the sector are the World Bank (WB), the European Commission (EC) and the African Development Bank (ADB). In parallel to the RSDP the Ethiopian Rural Transport and Travel Programme (ERTTP) was developed, with its implementation imminent through the support of Ireland Aid, DfID, the WB, AfDB and Nordic Development Fund (NDF). Since the commencement of RSDP the EC supported the sector through financing projects. In 2006, in line with the commitments made under the Paris declaration on aid effectiveness and the increased capacity and performance of the sector institutions, the EC s support to the sector took the form of a Sector Policy Support Programme (SPSP) with Sector Budget Support (SBS) as the financing modality. Financing Agreement 9527/ET was signed in October 2006 and initially allocated 155 Million Euro to the sector to be spent over 3 years ( ). In September 2007 this amount was increased to Million Euro, all from resources of the 9 th EDF. The European Commission s move towards supporting Ethiopia s RSDP through an SPSP with SBS as the financing modality is based on the outcome of an independent sector study, that was executed in early The results of that study are contained in the revised appraisal report Ethiopia: Sector Policy Support Programme for the Road Sector, May 2005 (see Annex 1). The overall objective of the SPSP is to contribute to the promotion of economic and social development, reducing levels of poverty and enhancing food security. The purpose of the SPSP is to contribute to improved accessibility, mobility and connectivity of the regions and the country; lowering transport costs, linking markets and promoting regional integration for people and goods. The main results of the programme will be the establishment of an efficient road 1

2 network, properly maintained, with increased private sector participation and application of relevant regulations. The Public Finance Management situation in the country was in general judged satisfactory in the latest IMF semi-annual macro-economic surveillance mission (Article IV consultation) from 23 February to 9 March 2007, acknowledging the good progress of the Ethiopian economy in recent years. Procurement of works and service contracts, auditing of accounts and operations and periodic reporting are all considered to be satisfactorily in line with best international practices. GoE and EC now wish to review the impact its innovative Sector Policy Support Programme (SPSP) has had on road sector development and prepare the launch of a 2 nd SPSP under the 10 th EDF. It is expected that this comprehensive review will provide essential information and lessons learnt to national stakeholders, the European Commission and other development partners. It is also expected that the findings of the review will be fed into the preparation of SPSP II. This will require a comprehensive assessment of the sector issues, as described in the following chapters. It is intended that this assessment will be shared with other development partners in the sector in an effort to promote a comprehensive sector wide approach. Owing to the growing size and complexity of the sector program under implementation, GoE, EC and other development partners acknowledge that further support to the capacity building of the Ethiopia Roads Authority (ERA) and other sector entities (Road Fund Office, Regional Road Authorities-RRAs) is required. Financing of institutional capacity building is included under the ongoing SPSP and the respective contract is expected to commence before the end of 2007 Technical Assistance for capacity building has been procured following EDF procedures. A continuation, modification or expansion may have to be included under a 2 nd SPSP. Sector Budget Support is through transfer of fixed and variable tranches to the treasury. So far, the first and second fixed tranches were released, that is 50 million and 35 million respectively. The assessment of conditions for the release of the first variable tranche of 15 million is under way. There has been a fruitful policy dialogue under the leadership of ERA, involving not only the EC but also other national stakeholders and development partners, some of whom consider joining the EC s SPSP approach for supporting the roads sector. 2. DESCRIPTION OF THE ASSIGNMENT 2.1 Beneficiaries The beneficiaries are the National Authorising Officer (NAO Ministry of Finance and Economic Development) and other decision makers in the Government of Ethiopia (such as Ministry of Works and Urban Development and ERA) and the European Commission (EC). 2.2 Global and specific objectives The global objective of the study is to provide the beneficiaries with an independent and reliable assessment of the ongoing SPSP to aid decision making regarding continued support to Ethiopia s Road Sector Development Programme (RSDP) through a Sector Policy Support Programme with Sector Budget Support as the financing modality. The specific objective is to obtain an analysis of the achievements and possible shortcomings of the ongoing SPSP with a view to formulate a proposal for continuation, taking into account the 2

3 lessons learnt. The analysis shall be based on the seven key areas of assessment as specified in the EC s guidelines Support to Sector Programmes (see Annex I) and should determine whether the assessment and appraisal carried out in early is still valid or needs to be adapted. 3. Requested services and results The consultancy shall consist of three phases, as follows Phase 1 Review and mid term evaluation of the ongoing SPSP The consultant shall assess the relevance, effectiveness, efficiency, impact and sustainability of the ongoing SPSP. The assessment contained in the study report Ethiopia; Sector Policy Support Programme for the Road Sector, May 2005 shall be reviewed and the 7 key areas shall be re-assessed in line with relevant developments since its publication. The consultant shall describe the lessons learnt so far, draw conclusions and, if necessary, propose adaptations for a future continuation of the SPSP. Phase 2 Formulation of a 2 nd SPSP Based on the outcome of phase 1, the consultant shall formulate a 2 nd SPSP to be financed from resources of the 10 th EDF in line with relevant provisions in the National Indicative Programme. Phase 3 Preparation of a draft Financing Proposal Based on the outcome of phase 2, the consultant shall prepare a draft Financing Proposal in accordance with the Commission s latest format. 4. Methodology and issues to be studied The consultant shall familiarise himself with the available documentation listed in Annex 1 to these ToR. The issues to be studied are the same as those included in the study report Ethiopia; Sector Policy Support Programme for the Road Sector, May 2005 and explained in detail in the Commission s Guideline No 2 Support to Sector Programmes, July In brief the issues to be studied comprise of the seven key areas of assessment as follows: 1. Sector policy and strategy 2. Sector budgeting and its medium term perspective 3. Sector and donor coordination 4. Institutional setting and capacity issues 5. Performance monitoring systems 6. Macroeconomic framework 7. Public financial management The following are some key questions that need to be addressed in relation to the above 7 key areas of assessment: 1 Ethiopia: Sector Policy Support Programme for the Road Sector, May 2005, report prepared by ADE on request of the Delegation of the European Commission in Ethiopia (e-version available) 3

4 1.1 Is Ethiopia s road sector policy and strategy coherent with the national poverty reduction strategy as enshrined in PASDEP? 1.2 Does the policy need to be reviewed and adapted in the light of the recently adopted National Transport Master Plan? 1.3 Is the sector policy and strategy widely agreed by the sector stakeholders? 2.1 Is the 3 years expenditure forecast contained in RSDP III realistic and affordable? 2.2 Is GoE s budgeting for the roads sector conducive to bring about improvement at regional, district and sub-district levels regarding access to transport 2.3 Are collected road user charges sufficient to maintain Ethiopia s expanding road network and to sustain the considerable investments in the sector infrastructure 3.1 Is ERA effectively leading the coordination of the sector development partners? 3.2 Is the coordination process formalised and accepted by the sector stakeholders? 3.3 Are the sector donors subscribing to the concept of a sector wide approach with sector budget support as the preferred financing modality? 4.1 How do ERA and other key agencies assess their institutional performance from year to year? 4.2 Are staff development programmes of sector agencies effective and efficient and how is this measured? 4.3 Are staff and resources used in an optimal way? 4.4 What are the key issues regarding development the domestic construction and consulting industry and how can development partners assist 5.1 Are the mechanisms of monitoring and performance assessment adequate and do they render reliable results? 5.2 Are the indicators contained in RSDP and the SPSP well chosen and consistent to assess the sector achievements from year to year? 5.3 Is the process of stakeholder consultation and the flow of information widely accepted as being sufficient and adequate for decision making? 6.1 Is the present process of assessing the macroeconomic context adequate and providing reliable information for decision making? 7.1 Are the present methods of assessing budget credibility, comprehensiveness, unification and reporting adequate for decision making? 7.2 Are procurement procedures used by ERA and other sector agencies transparent and according to best international practices? Do they provide value for money? 7.3 Do sector agencies provide timely audited accounts and reports that confirm good financial management? The study shall be executed and all reports/documents prepared on the basis of the EC s guidelines Support to Sector Programmes of July During the entire period of study execution, the consultant shall liaise closely with the EC Delegation and sector stakeholders (Government, Private Sector, Development Partners). The EC Delegation shall introduce the consultant to these stakeholders after their arrival in Ethiopia. 5. Expertise required The consultancy shall be executed by 2 experts with the following profiles: 1. A (category I) specialist with a macro-economic background and extensive knowledge of public finance management issues, management of road agencies and preparation of sector budget support operations (13 weeks) 2. A (category I) transport sector specialist with extensive knowledge of preparation and operation of road sector programmes (9weeks) 4

5 6. Work plan, time table and location Start date: 14 January 2008 End date : 25 April 2008 Duration: 15 weeks Location: Ethiopia and the consultant s Head Office. The EC Delegation and the National Authorising Office shall organise office space for the consultant while in Ethiopia. The assignment will mainly be executed as a desk study in Addis Ababa and shall commence with a kick-off meeting on 14 January 2008 at the EC Delegation. The working language of the contract is English. The contact person is Mr. Ioannis Kavvadas, tel: +251 (0) Time allocated for the phases is as follows: Phase 1: 7 weeks Phase 2: 6 weeks Phase 3: 2 weeks 7. Reporting At the end of phases 1 and 2 respectively, the consultant shall submit a draft report summarising the findings of the phase. NAO, ERA, EC Delegation and other interested stakeholders shall review each of the reports within 10 working days and any appropriate and agreed comments shall be incorporated in the final reports. Towards the end of each of the first 2 phases, the consultant shall present his findings at a meeting of the Transport Thematic Working Group (TWG) 2. The members of the TWG will provide feedback to the consultant. The final report relating to phase 1 shall be submitted at the end of week 10. The final report relating to phase 2 as well as a draft financing proposal shall be submitted at the end of phase 3 (end of week 15). All reports relating to phase 1 and 2 shall be submitted in 10 printed versions and 1 electronic version on CD Rom to the EC Delegation. The latter will arrange distribution to NAO, ERA and other interested stakeholders. The draft financing proposal should to be submitted in e-version only to the NAO and EC Delegation (per or CD Rom). The selected consultant is expected to be fully computer equipped. 2 The Transport Thematic Working Group (TWG) is a sub-group under the Development Assistance Group (DAG). It is co-chaired by ERA and the EC Delegation and meets regularly 5

6 Annex 1 List of available documentation 1. Guidelines No 2 Support to Sector Programmes, July 2007, EuropeAid 2. Ethiopia: Sector Policy Support Programme for the Road Sector, Revised Appraisal Report, May Financing Agreement 9527/ET between the European Commission and the Federal Democratic Republic of Ethiopia: Sector Policy Support Programme in Support of Ethiopia s Roads Sector Development Programme, October Financing Proposal for the aforementioned Financing Agreement, May Ethiopia: Building on Progress A Plan for Accelerated and Sustained Development to End Poverty (PASDEP), September RSDP Performance: Ten years later, September Road Sector Development Programme III ( ), September Road Sector Development Programme II ( ), March Ethiopia: PFM Report, September The Federal Democratic Republic of Ethiopia: The Federal PFM Performance Report, October National Transport Master Plan Study (2007) 12. Instruction Note on standard indicators for aggregating the effects of external aid projects financed by the European Commission (June 2007) 6

7 Annex 2 List of Acronyms used in these ToR AfDB DAG DfID EC EDF ERA ERTTP ETB GoE MoFED NAO NDB NIP PASDEP PFM RSDP SBS SPSP ToR TWG WB African Development Bank Development Assistance Group UK Department for International Development European Commission European Development Fund Ethiopian Road Authority Ethiopian Rural Transport and Travel Programme Ethiopian Birr Government of Ethiopia Ministry of Finance and Economic Development National Authorising Officer Nordic Development Fund National Indicative Programme Plan for Accelerated and Sustained Development to End Poverty Public Finance management Road Sector Development Programme Sector Budget Support Sector Policy Support Programme Terms of Reference Thematic Working Group (within DAG) World Bank 7

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